Maruti Suzuki India Ltd. share price target

During Q2FY22, MSIL's profit declined by 65.3% YoY to Rs4.8bn (below our estimates Rs7.8bn). Sharp decline in profitability was attributed to lower EBITDA margins which declined by 615bps YoY to 4.2% (below our estimates of 5.5%) and lower other income which declined by 13.2% YoY. MSIL could not produce ~116,000 vehicles during the quarter due to electronics component shortage. Without semiconductor chip shortages, MSIL's volume growth would have been 26% in Q2FY22 vs -3% currently. The Company has more than 200,000 pending customer orders at the end of Q2FY22. We believe the Company falls in the category of Great Company in Temporary Trouble and remain...

Lowest ever EBITDA margins at 4.2%; 250bps impact from high RM costs. Maruti's 2QFY22 EBITDAM disappointed at 4.2%, led by soaring raw material costs (250bps impact) and low production levels (116k units) regardless of three price hikes over 1HFY22 (~1.9% in Sep-21). Despite strong demand, orders remained unfulffilled due to production cut of 60%/40% in Sep-21/Oct21. Further, 2Q market share declined to 43% vs 48% of FY21 due to new product launches from competitors and rising demand in SUV segment....

We upgrade our rating from HOLD to BUY and revise our TP upwards to Rs 8,500 (from Rs 7,500 earlier) and value the stock at 25x its FY24E EPS, implying an upside of 16% from CMP.

Great Company in Temporary Trouble: Over the last 12 months, MSIL has faced barrage of bad news including Covid -19 lockdown, unprecedented rise in Commodity prices, Bumper to Bumper Insurance and Semiconductor Chip shortages etc. We anticipate majority of these events are temporary in nature and may not last beyond...

Resumption of new product launches to drive growth ahead While the EV threat together with the supply constraints due to semiconductor shortage have made MSIL underperform the NIFTY massively during the last one year, we believe that its new launch cycle aided by its massive scale and network advantage makes risk-reward favourable....

Strategy for net zero emissions needs to be India focused CAF-2 compliance strategy in place | Car subscription service for easy access MSIL's FY21 annual report highlights the initiatives (digitization, online financing, subscription service, etc.) it took to emerge stronger from the COVID-19 pandemic. The management has shared its thought process on the path to attaining net zero emissions....

Maruti Suzuki India Limited (MSIL) is an automobile manufacturer with a 56.2% ownership in Japanese car and motorcycle manufacturer Suzuki Motor Corporation. It is one of the largest passenger car companies and...

During Q1FY22, MSIL's profit declined by 62.2% QoQ to Rs4.4bn (below our estimates Rs13.3 bn). Sharp decline in profitability was attributed to lower EBITDA margins which declined by 367bps QoQ to 4.6% (below our estimates of 8%) and lower other income which declined by 61.5% YoY. Despite poor show in Q1FY22, We believe, MSIL is likely to witness robust volume recovery hereon while cost pressure is likely to ease out post H2FY22. To factor in improved business outlook and expected improvement in profitability, we increase our volume and PAT estimates by 2.9%/26.7% for FY23E. We rate the stock as...

We maintainour HOLD rating whilerevising our TP upwards to Rs 7,500(from Rs 6,950 earlier) and valuethe stock at 25x its FY23E EPS,implying an upside of 5% from CMP.