Maruti Suzuki Share Price Nosedives 3% Despite Upbeat Q2 Earnings; Buy On Dips?

Maruti Suzuki shares were under pressure on Monday despite the auto giant posting an upbeat September quarterly earnings for FY24. Maruti shares have nosedived by at least 2.9% on BSE and traded near its intraday low. Nevertheless, this sharp selling brings in an opportunity for buying as brokerages are optimistic about its growth prospects. Maruti shares are seen to rise between Rs 11,700 to Rs 12,500. The majority of brokerages recommended buying.

After opening at an intraday high of Rs 10,741.30 apiece, Maruti shares took a U-turn and tumbled steeply by 2.9% to hit an intraday low of Rs 10,248.05 apiece. At the time of writing, Matuti stocks were trading at Rs 10,329.15 apiece, down by 2.12% on BSE with a market cap of Rs 3,12,023.03 crore.

Last week, on Friday, Maruti shares touched a new 52-week high of Rs 10,846.10 apiece on BSE.

In Q2FY24, auto giant Maruti Suzuki registered a net profit of Rs 3,716.5 crore, rising by 80.3% from Rs 2,061.5 crore in Q2 of FY22. This was on account of higher Net Sales, softening of commodity prices, cost reduction efforts and higher non-operating income. During the quarter, net sales grew to Rs 35,535.1 crore as against Rs 28,543.5 crore in Q2FY23 on account of higher Net Sales, softening of commodity prices, cost reduction efforts and higher non-operating income.

During the quarter, Maruti said, 552,055 vehicles were sold. Sales in the domestic market were 482,731 units while 69,324 cars were exported. The same period in the previous year had seen total sales of 517,395 units comprising 454,200 units in domestic and 63,195 units in export markets.

Should you buy or sell Maruti Suzuki shares?

Himanshu Singh - Research Analyst, Prabhudas Lilladher in a research note said, "Maruti Suzuki (MSIL) has convincingly broken its double-digit margin mark after 20 quarters (a large part of it being sustainable) and thereby we increase our FY24-FY26E EPS estimates by 9-12% to factor in strong beat on margins & higher other income. MSIL's 2QFY24 revenues were largely in line with PLe and consensus estimates, however, the EBITDA margin was a solid beat (12.9% vs BBGe & PLe: 11.0%) helped by lower RM, controlled other expenses and benefits from inventorisation. The company guided for domestic PV volume growth of 10% compared to c5% for peers in FY24E, while festive season sales were strong for both MSIL and industry; expected to grow by c18% YoY. Management maintained that margins are sustainable in the current scenario and inventory movement is a normal phenomenon. Also, small cars will continue to lag, while exports will improve over the medium term."

Further, Singh added, "We believe MSIL is well placed to benefit from (1) market share gains & ASP increase from a higher mix of the new UV portfolio, (2) c350bps increase (over FY23-26E) in EBITDA margins on the back of lower input price, cost control, operating leverage and higher UV share and (3) export volume. We reiterate the 'BUY' rating and TP of Rs 12,485 (previous Rs. 11,500) at 25x Sep-25E EPS."

Motilal Oswal has also reiterated Buy with a TP of Rs 12,300 (premised on 25x Sep'25E consol. EPS). The brokerage believes stable growth in domestic PVs and a favourable product lifecycle augur well for MSIL. It expects market share gains and margin recovery in FY24 vis-à-vis FY23. These would be fueled by an improvement in supplies, a favourable product lifecycle, a healthy mix, and operating leverage.

According to JM Financial, the company's EBITDA margin improved by 370bps QoQ to 12.9% led by softening commodity cost, cost reduction efforts, higher operating leverage and a favourable mix. Management indicated that while precious metal prices continue to soften, steel prices have inched up. Going forward, a better mix (on improved supplies), cost control, and favourable currency movement are expected to support margins.

JM's note added, "Benefit of richer portfolio mix, softening commodity costs and higher operating leverage is expected to support margins going ahead. We estimate revenue / EPS CAGR of 12% / 22% over FY23-26E. After two consecutive years of market share loss, we believe that MSIL is at the cusp of mkt. share recovery led by recent launches. We ascribe 25x PE to arrive at a Sept'24 fair value of INR 11,750. Maintain BUY. Revival in entry-level segment remains a key monitorable."

On the other hand, Kotak Institutional Equities said, "We have increased our FY2024 EPS estimates by 3% due to higher EBITDA margin assumptions (baking in strong 2QFY24), partly offset by an increase in equity base due to acquisition of SMG. We have increased our FY2025-26 EBITDA estimates by 3% due to a 40 bps increase in EBITDA margin assumptions partly offset by lower volume assumptions given the weakness in the hatchback segment."

Kotak's note added, "We believe the company's market share in the domestic PV segment will remain around 41-42% over FY2024-25E as there are no mass market launches from MSIL and newer launches from the competition. Also, we expect the volume trajectory for the industry to remain muted over FY2024-25E led by weakness in entry-level segment demand and a declining order book. This will also weigh on margins as we expect the discounts to increase. SELL stays with a revised FV of Rs8,450 based on 22X December 2025E standalone core EPS."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodretur

\

Maruti Suzuki shares were under pressure on Monday despite the auto giant posting an upbeat September quarterly earnings for FY24. Maruti shares have nosedived by at least 2.9% on BSE and traded near its intraday low. Nevertheless, this sharp selling brings in opportunity for buying as brokerages are optmistic on its growth prospects. Maruti shares are seen to rise over between Rs 11,700 to Rs 12,500. Majority of brokerages recommended buy.

After opening at an intraday high of Rs 10,741.30 apiece, Maruti shares took a u-turn and tumbled steeply by 2.9% to hiit an intraday low of Rs 10,248.05 apiece. At the time of writing, Matuti stocks were trading at Rs 10,329.15 apiece, down by 2.12% on BSE with market cap of Rs 3,12,023.03 crore.

Last week, on Friday, Maruti shares had touched a new 52-week high of Rs 10,846.10 apiece on BSE.

In Q2FY24, auto giant Maruti Suzuki registered a net profit og Rs 3,716.5 crore, rising by 80.3% from Rs 2,061.5 crore in Q2 of FY22. This was on account of higher Net Sales, softening of commodity prices, cost reduction efforts and higher non-operating income. During the quarter, net sales grew to Rs 35,535.1 crore as against Rs 28,543.5 crore in Q2FY23 on account of higher Net Sales, softening of commodity prices, cost reduction efforts and higher non-operating income.

During the quarter, Maruti said, 552,055 vehicles were sold. Sales in the domestic market were 482,731 units while 69,324 cars were exported. The same period in the previous year had seen total sales of 517,395 units comprising 454,200 units in domestic and 63,195 units in export markets.

Should you buy or sell Maruti Suzuki share?

Himanshu Singh - Research Analyst, Prabhudas Lilladher in a research note said, "Maruti Suzuki (MSIL) has convincingly broken its double digit margin mark after a period of 20 quarters (large part of it being sustainable) and therby we increase our FY24-FY26E EPS estimates by 9-12% to factor in strong beat on margins & higher other income. MSIL's 2QFY24 revenues were largely in-line vs PLe and consensus estimates, however, EBITDA margin was a solid beat (12.9% vs BBGe & PLe: 11.0%) helped by lower RM, controlled other expenses and benefits from inventorisation. The company guided for domestic PV volume growth of 10% compared to c5% for peers in FY24E, while festive season sales were strong for both MSIL and industry; expected to grow by c18% YoY. Management maintained that margins are sustainable in current scenario and inventory movement is a normal phenomenon. Also small cars will continue to lag, while exports will improve over the medium term."

Further, Singh added, "We believe MSIL is well placed to benefit from (1) market share gains & ASP increase from higher mix of the new UV portfolio, (2) c350bps increase (over FY23-26E) in EBITDA margins on the back of lower input price, cost control, operating leverage and higher UV share and (3) export volume. We reiterate 'BUY' rating and TP of Rs 12,485 (previous Rs. 11,500) at 25x Sep-25E EPS."

Motilal Oswal has also reiterated Buy with a TP of Rs 12,300 (premised on 25x Sep'25E consol. EPS). The brokerage believes stable growth in domestic PVs and a favorable product lifecycle augur well for MSIL. It expect market share gains and margin recovery in FY24 vis-à-vis FY23. These would be fueled by an improvement in supplies, a favorable product lifecycle, healthy mix, and operating leverage.

According to JM Financial, the company's EBITDA margin improved by 370bps QoQ to 12.9% led by softening commodity cost, cost reduction efforts, higher operating leverage and favourable mix. Management indicated that while precious metal prices continue to soften, steel prices have inched up. Going forward, better mix (on improved supplies), cost control, favourable currency movement is expected to support margins.

JM's note added, "Benefit of richer portfolio mix, softening commodity costs and higher operating leverage is expected to support margins going ahead. We estimate revenue / EPS CAGR of 12% / 22% over FY23-26E. After two consecutive years of market share loss, we believe that MSIL is at the cusp of mkt. share recovery led by recent launches. We ascribe 25x PE to arrive at Sept'24 fair value of INR 11,750. Maintain BUY. Revival in entry-level segment remains a key monitorable."

On the other hand, Kotak Institutional Equities said, "We have increased our FY2024 EPS estimates by 3% due to higher EBITDA margin assumptions (baking in strong 2QFY24), party offset by increase in equity base due to acquisition of SMG. We have increased our FY2025-26 EBITDA estimates by 3% due to 40 bps increase in EBITDA margin assumptions partly offset by lower volume assumptions given weakness in the hatchback segment."

Kotak's note added, "We believe the company's market share in the domestic PV segment will remain around 41-42% over FY2024-25E as there are no mass market
launches from MSIL and newer launches from competition. Also, we expect the volume trajectory for the industry to remain muted over FY2024-25E led by weakness in entry-level segment demand and a declining order book. This will also weigh on margins as we expect the discounts to increase. SELL stays with a revised FV of Rs8,450 based on 22X December 2025E standalone core EPS."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.

\

Maruti Suzuki shares were under pressure on Monday despite the auto giant posting an upbeat September quarterly earnings for FY24. Maruti shares have nosedived by at least 2.9% on BSE and traded near its intraday low. Nevertheless, this sharp selling brings in opportunity for buying as brokerages are optmistic on its growth prospects. Maruti shares are seen to rise over between Rs 11,700 to Rs 12,500. Majority of brokerages recommended buy.

After opening at an intraday high of Rs 10,741.30 apiece, Maruti shares took a u-turn and tumbled steeply by 2.9% to hiit an intraday low of Rs 10,248.05 apiece. At the time of writing, Matuti stocks were trading at Rs 10,329.15 apiece, down by 2.12% on BSE with market cap of Rs 3,12,023.03 crore.

Last week, on Friday, Maruti shares had touched a new 52-week high of Rs 10,846.10 apiece on BSE.

In Q2FY24, auto giant Maruti Suzuki registered a net profit og Rs 3,716.5 crore, rising by 80.3% from Rs 2,061.5 crore in Q2 of FY22. This was on account of higher Net Sales, softening of commodity prices, cost reduction efforts and higher non-operating income. During the quarter, net sales grew to Rs 35,535.1 crore as against Rs 28,543.5 crore in Q2FY23 on account of higher Net Sales, softening of commodity prices, cost reduction efforts and higher non-operating income.

During the quarter, Maruti said, 552,055 vehicles were sold. Sales in the domestic market were 482,731 units while 69,324 cars were exported. The same period in the previous year had seen total sales of 517,395 units comprising 454,200 units in domestic and 63,195 units in export markets.

Should you buy or sell Maruti Suzuki share?

Himanshu Singh - Research Analyst, Prabhudas Lilladher in a research note said, "Maruti Suzuki (MSIL) has convincingly broken its double digit margin mark after a period of 20 quarters (large part of it being sustainable) and therby we increase our FY24-FY26E EPS estimates by 9-12% to factor in strong beat on margins & higher other income. MSIL's 2QFY24 revenues were largely in-line vs PLe and consensus estimates, however, EBITDA margin was a solid beat (12.9% vs BBGe & PLe: 11.0%) helped by lower RM, controlled other expenses and benefits from inventorisation. The company guided for domestic PV volume growth of 10% compared to c5% for peers in FY24E, while festive season sales were strong for both MSIL and industry; expected to grow by c18% YoY. Management maintained that margins are sustainable in current scenario and inventory movement is a normal phenomenon. Also small cars will continue to lag, while exports will improve over the medium term."

Further, Singh added, "We believe MSIL is well placed to benefit from (1) market share gains & ASP increase from higher mix of the new UV portfolio, (2) c350bps increase (over FY23-26E) in EBITDA margins on the back of lower input price, cost control, operating leverage and higher UV share and (3) export volume. We reiterate 'BUY' rating and TP of Rs 12,485 (previous Rs. 11,500) at 25x Sep-25E EPS."

Motilal Oswal has also reiterated Buy with a TP of Rs 12,300 (premised on 25x Sep'25E consol. EPS). The brokerage believes stable growth in domestic PVs and a favorable product lifecycle augur well for MSIL. It expect market share gains and margin recovery in FY24 vis-à-vis FY23. These would be fueled by an improvement in supplies, a favorable product lifecycle, healthy mix, and operating leverage.

According to JM Financial, the company's EBITDA margin improved by 370bps QoQ to 12.9% led by softening commodity cost, cost reduction efforts, higher operating leverage and favourable mix. Management indicated that while precious metal prices continue to soften, steel prices have inched up. Going forward, better mix (on improved supplies), cost control, favourable currency movement is expected to support margins.

JM's note added, "Benefit of richer portfolio mix, softening commodity costs and higher operating leverage is expected to support margins going ahead. We estimate revenue / EPS CAGR of 12% / 22% over FY23-26E. After two consecutive years of market share loss, we believe that MSIL is at the cusp of mkt. share recovery led by recent launches. We ascribe 25x PE to arrive at Sept'24 fair value of INR 11,750. Maintain BUY. Revival in entry-level segment remains a key monitorable."

On the other hand, Kotak Institutional Equities said, "We have increased our FY2024 EPS estimates by 3% due to higher EBITDA margin assumptions (baking in strong 2QFY24), party offset by increase in equity base due to acquisition of SMG. We have increased our FY2025-26 EBITDA estimates by 3% due to 40 bps increase in EBITDA margin assumptions partly offset by lower volume assumptions given weakness in the hatchback segment."

Kotak's note added, "We believe the company's market share in the domestic PV segment will remain around 41-42% over FY2024-25E as there are no mass market
launches from MSIL and newer launches from competition. Also, we expect the volume trajectory for the industry to remain muted over FY2024-25E led by weakness in entry-level segment demand and a declining order book. This will also weigh on margins as we expect the discounts to increase. SELL stays with a revised FV of Rs8,450 based on 22X December 2025E standalone core EPS."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.