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Most analysts cheer Maruti Suzuki's multi quarter high margin, SUV share gain

Most analysts cheer Maruti Suzuki's multi-quarter high margin, SUV share gain

Most analysts cheer Maruti Suzuki's multi-quarter high margin, SUV share gain
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By Hormaz Fatakia  Jan 25, 2023 11:15:29 AM IST (Published)

Most analysts who track the stock have raised their price targets on the company.

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Buy / Sell Maruti Suzuki share

Shares of Maruti Suzuki India Ltd. have opened higher for the second day in a row after India's largest passenger car maker beat earnings estimates for the December quarter.

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The company's EBITDA margin, which expanded to 9.7 percent, was the highest in 17 quarters. The management also said that volumes during the March quarter would be higher compared to December. It also does not expect any major headwind with regards to commodities or the yen in the March quarter.
Order backlog of 3.63 lakh vehicles provides visibility for at least two-and-a-half months.
Most analysts who track the stock have raised their price targets on the company.
UBS believes that Maruti's December quarter performance reinforces their thesis on the company's SUV bets. It expects Maruti's EV and flex-fuel vehicle launch in 2025 coupled with robust rural and export demand. The brokerage has maintained its buy rating and raised its price target to Rs 12,650.
Goldman Sachs also concurs with the thesis of Maruti's improving SUV mix. The brokerage said that Maruti's recent launches, Jimny and Fronx SUVs will begin reaching customers by the June quarter of 2023. It also has a buy rating with a price target of Rs 11,000.
Citi has also increased its price target on Maruti to Rs 13,100. The brokerage has also raised its EBIT estimate by 10-12 percent and earnings estimate by 9-16 percent over financial year 2023-2025.
Jefferies sees Maruti's demand, product and margin cycles aligning favourably and may drive a quadrupling of the company's Earnings per Share (EPS) over financial year 2022-2025. Maruti's EBITDA was five percent higher than Jefferies' estimate due to better realisations. The brokerage has maintained its buy rating on the stock with a price target of Rs 11,250.
However, CLSA on the flip side has maintained its sell recommendation on Maruti. Its price target of Rs 8,240 is a potential downside of 6 percent from current levels. While it expects Maruti to gain market share in the SUV segment, overall market share gains may end up being limited over the next two years.
Out of the 52 analysts that track Maruti, 37 have a buy recommendation on the stock, eight say hold, while seven have a sell rating.
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