Maruti Suzuki India Ltd. share price target

For MSIL we build sales, PAT CAGR of 16.3% & 27.1% respectively in FY21E23E. In our view, lack of sufficient margin expansion triggers puts already stretched valuations under further strain (trades at ~33x FY23E EPS). We also await decisive commentary from MSIL on the EV front. We maintain our cautious stance on MSIL and value it at | 7,000 i.e., 30x P/E on FY23E EPS...

We downgrade our rating from BUY to HOLD and revise our TP downwards to Rs. 7,150 (from Rs 7,920 earlier) valuing the stock at 25x its FY23E EPS.

For Q3FY21, MSIL reported lower than estimated EBITDA at Rs22.3bn (PLe Rs25.6bn) led by combined impact of 1) RM inflation (+330bp QoQ), 2) weak product mix and 3) unfavorable forex. However higher other income at Rs9.9b (PLe Rs6.8b) boosted adj.PAT at Rs19.4b (Rs18.5b). The recent price hike should partially dilute RM inflation in 4Q, however we expect gross margins...

Maruti (MSIL) reported Q3FY21 earnings of Rs 19bn backed by higher other income and a lower tax rate.

Domestic auto industry volumes have been on a steady mend in the months post lifting of lockdown restrictions. Manufacturing and distribution activities have been getting ramped up gradually since June 2020, in step with the rest of the economy. However, the impact of the pandemic on the supply chain continues to inhibit a complete return to production normalcy. Nevertheless, most automotive industry segments have reported successive improvement in offtake throughout June-November 2020 (Exhibit 1) on the back of (i) initial bounce provided by pent-up aspect,...

Demand recovery has been good and driven by: a) first-time buyers and second car sales (due to the COVID-19 pandemic), b) pent-up demand, and c) rural markets aided by government stimulus....

MSIL's Q2 FY21 revenues grew by 10.4% yoy and 380% qoq to 187.4 bn on the back of strong recovery in volumes, which grew by 16.2% yoy driven by pent-up demand stemming from personal mobility, Realizations fell by 5.6%/6.3% yoy and qoq respectively, due to shift to low value hatchbacks and absence of diesel variants. EBITDA margins stood at 10.3%, 80bps higher yoy on lower selling and operating expenses and higher capacity utilization, which was partly offset by adverse product mix, higher commodity prices and currency fluctuations. Discounting in the quarter was at 17.3K v/s 25 k yoy. PAT for the quarter. On the back of lower other income (34%...

Maruti Suzuki India Limited is the market leader in the PV segment, commanding a market share of about 50%. The Company has 2 state-of-the-art manufacturing facilities located in Gurugram and Manesar in Haryana, capable of producing ~1.5 mn units per annum.

MSIL Q2FY21 results were below our and consensus estimates at revenue and Adj. PAT level due to lower realisation and lower other income. EBITDA margin for the quarter stood at 10.3% vs our and consensus estimates of 9.5% and 10.6% respectively. We believe pent demand and preference for personal mobility has helped MSIL to register good numbers during festive season. We marginally cut our volume/revenue estimates for FY21E/FY22E factoring lower premium car sales and lower realisation due to absence of diesel portfolio/adverse product mix. We also cut our other income estimates for FY21E/FY22E factoring the lower yields. We introduce our FY23 estimates...

For MSIL, share of UVs in total domestic volumes was at 18.2% in H1FY21 vs. 16.6% in FY20. Despite improvement in category mix, however, the company's UV market share has reduced from 24.9% as of FY20 to 22.9% as of H1FY21. Its chief offerings in the category i.e. Brezza, Ertiga, XL6 are witnessing intense competition from the likes of Venue, Nexon, Seltos, Creta and Hector (Exhibit 7). MSIL's commentary suggests that demand for PC category is higher vis--vis UV (i.e. downtrading) post Covid. This could lead...