Shares of Maruti Suzuki fell 0.59 per cent to hit an intraday low of Rs 12,610.05 apiece on the BSE on Monday. By comparison, Sensex was trading 0.72 per cent higher at 74,263.07 levels in intraday deals.
The fall came as investors booked profit after the company posted strong March quarter performance. Auto manufacturer’s standalone net profit rose 47.8 per cent to Rs 3,877.8 crore for the quarter ending on March 31 in financial year 2023-24 (Q4FY24), from Rs 2,623.6 crore a year ago. Sequentially, net profit zoomed approximately 24 per cent from Rs 3,130 crore in Q3.
The company reported total revenue from operations of Rs 38,234.9 crore for the fourth quarter, up 19.3 per cent from Rs 32,048 crore in the same quarter previous fiscal.
Maruti Suzuki sold a total of 2,135,323 vehicles during the year, rising 8.6 per cent from FY23. Sales volume in the domestic market stood at 1,852,256 units, and exports at 283,067 units.
In the fourth quarter, the company sold a total of 584,031 vehicles, up 13.4 per cent, compared to the same period the previous year, the company said in a statement.
“For the first time, the company surpassed the annual total sales milestone of 2 million units in FY24,” the company said.
The company also declared its highest-ever dividend of Rs 125 per share.
Here’s what brokerage said:
HSBC Global Research
Q4 was the best quarter in terms of operating leverage, discounts, mix, and commodities, and hence this Ebit margin miss was a bit of disappointment. Positively though, we think a 10 per cent Ebit is still quite achievable, which is our current forecast. On volume growth, we expect the entire incremental volume in FY25 to come from CNG itself (we expect 5 per cent growth in FY25, which is around 120,000 incremental cars in FY25 and the company has guided for 150,000 higher CNG sales itself and around 30,000 from exports).
Over FY25 and FY26, growing penetration of CNG and gradual improvement in entry level car demand (Rs 500,000-800,000 segment) may add to Maruti Suzuki market share. Cutting taxes on hybrids is an upside risk, analysts said.
JM Financial
Healthy momentum in Hybrids/CNG portfolio (total order backlog of 200,000 units) and new launches is expected to drive better than industry volume growth. Benefit of higher operating leverage and richer portfolio mix is expected to support margins going ahead. “We estimate revenue / earnings per share (EPS) cmpound annual growth rate (CAGR) of 13 per cent / 16 per cent over FY24-26E. We ascribe 25x price-to-earnings (PE) to arrive at March 2025 fair value (FV) of Rs 14,250. Maintain ‘Buy’. “Rationalisation of Hybrid taxation remains a key catalyst for re-rating. Additionally, revival in the entry-level segment remains a key monitorable,” it added.
Motilal Oswal
We have marginally raised our FY25-26 estimates by 2-4 per cent. “We expect Maruti Suzuki to continue to outperform industry growth in FY25. While the bulk of input cost benefits are likely to be behind, we expect Maruti Suzuki to post about 70 basis point margin improvement to approximately 12.5 per cent in FY25, largely led by an improved mix. This would, in turn, drive a steady 13 per cent earnings CAGR over FY24-26E,” the brokerage said in a note.
Any GST cuts or favourable policy for hybrids by the government may drive a rerating as Maruti Suzuki would be the key beneficiary of such changes. Considering these factors, Motilal Oswal reiterated ‘Buy’ with a target price of Rs 14,700.
Nuvama Institutional Equities
We forecast a revenue CAGR of 11 per cent led by moderate growth in cars and robust growth in SUVs. “We anticipate market share to sustain at 43 per cent over FY24–26E with potential upside if the government reduces GST on hybrid vehicles. Furthermore, better net pricing and scale shall boost profitability, driving a PAT CAGR of 14 per cent. All in all, we retain ‘Buy’ with a target price of Rs 14,800,” it added.
InCred Equities
We feel the concerns over the car industry’s growth slowdown are short-term in nature as interest rates peak while the feel-good factor continues from strong returns generated by different asset classes. Maruti Suzuki is better placed in the short term to ride this slowdown by debottlenecking CNG vehicle supply chain and meeting the long waiting period. The new EV launch in early CY25F should ease technology transition risk. We raise our DCF-based target price to Rs 14,486, as we roll forward the increased cash flow. Key downside risk, they believe, is car demand collapse due to oil price spike and high interest rates.
First Published: Apr 29 2024 | 12:50 PM IST
