Maruti Suzuki Q2: Profit miss prompts brokerage target cuts, cautious outlook

Maruti Suzuki's Q2 FY25 results have triggered a cautious response from brokerages, many of whom have adjusted their ratings and price targets. The automaker's net profit declined by seventeen per cent year-on-year to Rs 3,103 crore, missing analysts' expectations despite a slight revenue increase to Rs 37,449 crore. India's largest carmaker attributed this drop partly to a deferred tax liability of Rs 1,018 crore, linked to recent regulatory changes impacting tax benefits and capital gains from debt mutual funds.  

Jefferies issued a “Double Downgrade,” reducing Maruti Suzuki’s rating to “Hold” from “Buy” and slashing its target price from Rs 15,200 to Rs 10,900. Citibank maintained its “Buy” rating but revised its target to Rs 13,700 from Rs 16,300, indicating a tempered but positive outlook. CLSA also adjusted its target down to Rs 12,631, observing a drop in Maruti’s EBITDA margin to 11.9 per cent, mainly due to heightened discounting and rising commodity costs. CLSA also noted that gross margins declined by 128 basis points year-on-year.  

JP Morgan and Goldman Sachs both maintained a “Neutral” stance, adjusting their price targets to Rs 12,160 and Rs 12,200, respectively. They attributed the decision to Maruti's weaker-than-expected margins and the uncertain near-term demand environment. Similarly, HSBC retained its “Buy” rating but cut the target price to Rs 14,000, citing concerns over high discounting, though it anticipates demand improvement and potential tax benefits in FY26.  

Nomura echoed HSBC’s cautious optimism, maintaining a “Neutral” rating and lowering its target to Rs 12,455, as it expects festive season sales to rise fourteen percent year-on-year. They anticipate that Maruti’s inventory will stabilize by the end of the festive season, easing the current pressure on discounts. Macquarie also maintained a “Neutral” rating with a target of Rs 12,282.  

The report notes that Maruti Suzuki's shares have declined eighteen per cent over the past month, reflecting ongoing market scepticism about the company’s near-term growth prospects. With brokers adjusting price targets and outlooks, the company is closely watched as it navigates demand fluctuations, regulatory impacts, and new product launches aimed at stabilizing its performance.