Maruti Suzuki: Nuvama Institutional Equities said despite an increase in discounts, raw materials to-sales contracted 250 bps to 70.6 per cent, owing to a softening of commodity prices and favourable forex. 
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Maruti Suzuki: Nuvama Institutional Equities said despite an increase in discounts, raw materials to-sales contracted 250 bps to 70.6 per cent, owing to a softening of commodity prices and favourable forex. An 80 per cent surge in year-on-year (YoY) Q2 profit by Maruti Suzuki India Ltd beat analyst estimates by at least 10 percentage points. The margin expansion was even stronger, despite discounts during the September quarter, thanks to favourable forex and a fall in commodity prices. Analysts have upgraded their earnings estimates for FY24 and, thus, 12-month share price targets for the stock post the Q2 beat. Their targets on the counter suggests up to 14 per cent potential upside.
HDFC Institutional Equities said Maruti Suzuki's Q2 profit at about Rs 3,720 crore came in ahead of its estimate of Rs 3,030 crore due to better-than-expected margin. While the brokerage was expecting a margin improvement due to richer mix, the extent of margin improvement came in as a surprise for it. The management, HDFC Institutional Equities said, did clarify that there are no one-offs in the quarter.
"Given a strong outperformance in Q2, we have raised our FY24-25 earnings by 10 per cent / 7 per cent— lower for FY25— as we expect the mix to gradually normalise as car demand will also pick up. Given this and a roll-forward to September 2025 EPS (from June 2025 earlier), we revised our target price to Rs 12,052/share from Rs 10,920/share)," it said.
Nuvama Institutional Equities said despite an increase in discounts, raw materials to sales contracted 250 bps to 70.6 per cent, owing to a softening of commodity prices and favourable forex. Blended discounts to revenue increased to 2.7 per cent against 2.5 per cent in the year-ago quarter. Ebitda margin expanded of 370 bps YoY to 12.9 per cent, it said adding that other income was also up 38 per cent at Rs 840 crore.
"Going ahead, we forecast revenue CAGR of 12 per cent, driven by moderate growth in cars and robust growth in SUVs on the back of successful launches. Furthermore, better net pricing and scale shall boost profitability, driving PAT CAGR of 24 per cent. All in all, we reiterate ‘BUY’ with Sep-24 target of Rs 12,500, (earlier Rs 12,000), based on 30 times core earnings plus cash of Rs 1,660/share. We increase FY24E/25E EPS by 11 per cent/4 per cent, on better gross margin assumptions," it said.
Motilal Oswal said it sees market share gains and margin recovery in FY24 vis-à-vis FY23. They would be fueled by an improvement in supplies, a favorable product lifecycle, healthy mix, and operating leverage, the domestic brokerage said while raising its FY24 EPS estimates by 10 per cent and FY25 estimate by 6 per cent to factor in better gross margin and higher other income.
The stock, Motilal Oswal said, trades at 23.4 times FY24 EPS and 22.4 times FY25 EPS, as it maintained a 'Buy' call on the stock with a target of Rs 12,300. Arihant Capital finds the stock worth Rs 12,206. "We expect revenue, margins and PAT to grow in coming quarters on back of better product mix, lower RM cost and better operating leverage. We value MSIL at 23 times September 2025 EPS to arrive at a target price (TP) of Rs 12,341," said Nirmal Bang Institutional Equities.
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