What should investors do with Maruti Suzuki post Q3? Brokerages see over 20% upside till Rs 10,600

Global brokerage firms maintained their rating on Maruti Suzuki India Ltd post-December quarter results.

The most aggressive target price of Rs 10,600 was put out by Morgan Stanley, which translates into an upside of over 23 per cent from Rs 8,600 recorded on 25th January.

Maruti Suzuki India earlier this week reported a 47.82 per cent decline in consolidated net profit to Rs 1,041.8 crore for the December 2021 quarter, mainly due to the ongoing semiconductor shortage and increase in commodity prices.

The auto major had posted a consolidated net profit of Rs 1,996.7 crore in the October-December period of the last fiscal, Maruti Suzuki India said in a regulatory filing.

Also Read: Maruti Suzuki Q3 Results: Net profit falls 48% to Rs 1,042 crore
https://www.zeebiz.com/companies/news-maruti-suzuki-q3-results-net-profit-falls-48-to-rs-1042-crore-177001

The consolidated revenue from operations declined marginally to Rs 23,253.3 crore in the third quarter, compared to Rs 23,471.3 crore a year ago, it added.

We have collated a list of recommendations from various global brokerage firms according to a Zee Business TV report:

Morgan Stanley: Overweight| Target Rs 10,600

Morgan Stanley maintained the overweight rating on Maruti Suzuki post-December quarter results with a target price of Rs 10,600, which translates into an upside of over 23 per cent Rs 8,600 recorded on 25th January.

Low inventory, strong order book, and upcoming new model cycle are likely to drive volume growth ahead, said the note.
 
The global investment bank expects prudent price hikes and leverage gains to drive EBIT/unit a touch above previous upcycle average. It raised FY24e EPS by 11%.

Goldman Sachs: Buy| Target Rs 10,100

Goldman Sachs maintains a buy rating on Maruti Suzuki India Ltd post Q3 results with a target price of Rs 10,100 which translates into an upside of nearly 17 per cent from Rs 8,600 recorded on 25th January.

The December quarter results beat estimates. The margin beat was led by a combination of expense control, consistent price hikes over the past 12 months as well as lower channel discounts.
 
The company indicated that margins in the March quarter should recover further, which is a positive sign.

Jefferies: Buy| Target Rs 10,500

Jefferies maintained a buy rating on Maruti Suzuki post Q3 results but raised the target price to Rs 10,500 from Rs 9,250 earlier which translates into an upside of over 22 per cent from Rs 8,600 recorded on January 25.

The December quarter EBITDA rose by 82 per cent on a QoQ basis (5% above JEFe). EBITDA margin improved by 250bps on a QoQ basis after four consecutive quarters of decline.
 
“We see better times for MSIL ahead given strong demand recovery, easing chip constraints, input cost pressures behind, and a product cycle likely around the corner,” said the note.
 
The management commentary was positive on all the above parameters which is a positive sign. “Our FY23-24 EPS is 19-30% above consensus,” said the note.

Credit Suisse: Outperform| Target Rs 10,389

Credit Suisse maintained outperform rating on Maruti Suzuki post-December quarter results with a target price of Rs 10,389 translates into an upside of over 20 per cent from Rs 8,600 recorded on 25th January.

The global investment bank raised FY23/24 EPS by 3-4%. Up ahead — supply pick-up, return of replacement demand, market share gains, & margin uplift are some of the factors which will be tracked.
 
The global investment bank maintained outperform rating on healthy demand, strong new model cycle, margin normalisation, and benign valuation.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)