Rs 125/Sh Dividend By Mega Auto Stock, Record Date On August 2: BUY To Be Eligible, Target Price Rs 15,160

Just a day before the mega auto stock Maruti Suzuki turned ex-dividend on August 2, the share is recommended to buy. There is potential of over 13% upside in Maruti and the target price is set at Rs 15,160 by Motilal Oswal, which comes after the company's Q1 results. Maruti will pay the highest dividend of August month to the tune of Rs 125 per share.

Motilal Oswal added, "We have marginally tweaked our estimates. We expect MSIL to continue to outperform industry growth over FY25-26E. While the bulk of input cost benefits are likely to be over, we expect MSIL to post a 90bp margin improvement to ~12.5% in FY25E, largely led by an improved mix. This would in turn drive a steady 15% earnings CAGR over FY24-26E."

It added, "Any GST cut or favorable policy for hybrids by the government may drive a rerating as MSIL would be the key beneficiary. The stock trades at 26x/22x FY25E/FY26E consolidated EPS. Reiterate BUY with a TP of INR15,160 (premised on 26x Jun'26E EPS)."

Motilal highlighted that MSIL's 1QFY25 operating performance beat our estimates as margins improved QoQ despite lower volumes and higher discounts. Margin improvement was driven by lower input costs, favorable currency benefits and higher other operating income.

Maruti board has recommended a final dividend aggregating Rs 39,300 million i.e. Rs 125 per share (Nominal value INR 5.00 per share) (previous year Rs 27,187 million i.e. Rs 90 per share) for the financial year 2023'24 which is subject to the approval of the members at the ensuing Annual General Meeting. This is the highest dividend payout of Maruti and also of 2024.