Maruti Suzuki Q2 Results Review - Beat On Margins On Back Of Raw Material Tailwind, Product Mix: Nirmal Bang

Nirmal Bang Report

Maruti Suzuki India Ltd.’s Q2 FY24 revenue were in line with our estimates. However, margins and profit after tax came in higher than estimates on account of better product mix, raw material cost tailwinds and better operating leverage. Ebitda margin came in at 12.9% higher by 230 basis points and PAT came in 23% above our estimate.

Maruti Suzuki’s plan to expand its production to 4 million units and increase number of models from 17 to 28 by 2030-31 will help it to increase overall market share. This will also enable the company to achieve its export volume target of 750,000 by 2030.

Valuation and outlook:

We remain positive on Maruti Suzuki and expect 5% volume compound annual growth rate over FY23-FY26E, led by new model launches and market share gains.

The company is doing very well in the utility vehicle segment and had ~23.3% market share in Q2 FY24. We are building revenue/Ebitda/PAT growth of 13%/26%/28% over FY23-FY26E.

We maintain 'Buy' on Maruti Suzuki and it at 23 times September-25E earnings per share to arrive at a target price of Rs 12,341.

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