Maruti Suzuki Shares In Fast Track After Q2 Profit Jumps Fourfold; What Should Investors Do?

Maruti Suzuki Share Price Today: Maruti Suzuki crossed over the Rs 9,000 mark this week as investors made more buying in the stock. Shares of Maruti Suzuki India climbed nearly 3 per cent to hit a fresh 52-week high of Rs 9,737.40 in Monday’s intra-day trade, after the auto-maker reported a strong September quarter results (Q2FY23). The stock has surged 8 per cent in the past two trading days.

Stock Price History

The stock of automobiles major traded close to its record high level of Rs 10,000, which it had touched on December 20, 2017. In the past one week, it has rallied 11 per cent, as compared to 1.2 per cent rise in the S&P BSE Sensex.

Now, Maruti shares have skyrocketed by more than Rs 3,000 or nearly 46 per cent from their 1-year lows. This stellar performance in stock took place in less than seven months. Maruti has a strong product pipeline and experts have factored expansion in margins going forward. They have suggested a buy rating with a five-digit target price ahead.

Maruti Suzuki Q2 Results

The automaker reported a massive 334 per cent year-on-year growth in its standalone net profit for the quarter ended September on a low base.

The standalone profit jumped to Rs 2,061.5 crore for the quarter, from Rs 475.3 crore logged in the same period last year. Standalone revenue from operations surged 46 per cent YoY to Rs 29,931 crore.

Higher commodity prices and chip shortage concerns had impacted earnings in the year-ago period.

Maruti Suzuki sold a total of 5.17 lakh vehicles during the quarter ended September FY23, the highest ever in any quarter, increasing 36 per cent YoY.

What Should Investors Do Now?

ICICI Direct analysts said, “MSIL’s stock price has grown at ~2.2 per cent CAGR from Rs 8,114 levels in October 2017, broadly in tandem to Nifty Auto index in this time.”

Analysts note further added, “We retain our BUY rating tracking industry tailwinds of underpenetrated PV segment domestically, benign RM price outlook and robust order book,” adding, “upgrading our estimates, we now value MSIL at Rs 11,200 i.e., 32x P/E on FY24E EPS of Rs 350/share (earlier target price Rs 10,000).”

With a Buy call on the stock, global brokerage firm Jefferies has raised its target price to Rs 12,000 per share. “Q2 EBITDA rose 45 percent quarter-on-quarter to a 16-quarter high. As the company provided positive commentary on customer response for its new SUV, we see demand, product and margin cycles aligning favourably,” it noted. Jefferies’ analysts have raised FY23-25 earnings per share (EPS) estimates by 3-8 per cent.

Citi, too, has raised its target price on the stock to Rs 12,500 from Rs 10,300 per share. Its analysts have increased volume estimates by 3 per cent over FY23-25 and EBITDA estimate by 6 per cent. On the back of better ASP (average selling price) and strong SUV comeback, UBS also has a Buy call on the stock with a target of Rs 12,000 apiece.

With a Neutral call, JPMorgan has upped its target to Rs 8,700 from Rs 8,400 per share. “Stock is pricing in continued margin expansion. We increase FY23-25 EPS estimates by 3-4 per cent to factor slightly higher margin,” it noted.

Meanwhile, CLSA and Kotak Institutional Equities have a Sell call on Maruti Suzuki with targets of Rs 7,597 and Rs 8,150 respectively.

CLSA expects growth in passenger vehicle industry to be slow in FY24. It is also bearish because the company does not expect any major commodity cost savings in H2FY23.

Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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