Brokerage houses are bullish on Maruti Suzuki stock. The brokerage house says that the company’s EBITDA has been excellent due to cost control. On the other hand, the recovery in the December quarter is strong and there is a lot of improvement from the supply side.
Brokerage on Maruti Stock: Many brokerage houses are looking bullish on the stock of India’s leading auto maker Maruti Suzuki. However, the impact of semiconductors on Maruti Suzuki’s December quarter profit is clearly visible. The company’s profit in the third quarter fell by about 48 percent year-on-year to Rs 1011 crore. Whereas the profit in the same quarter a year ago was Rs 1941 crores. The brokerage house says that the company’s EBITDA has been excellent due to cost control. On the other hand, the recovery in the December quarter is strong and there is a lot of improvement from the supply side. The brokerage says that the fourth quarter of the financial year is going to be strong for the company. The challenge of semiconductor shortage going forward will also be less.
Strong recovery in market share and margins
Brokerage house Motilal Oswal says that the performance of Maruti Suzuki has been better than expected. The December quarter saw a strong recovery in market share and margins. The recovery remained strong even after losing 90000 units due to semiconductor shortage. Positive reports have also come from the supply side. The company will get the benefit of launching a new product. It is expected that both the market share and margin of the company will increase in the coming days.
Supply expected to be better
The brokerage house says that the supply is expected to be better in the coming March quarter. The company’s order book is currently standing at 264000, out of which 117000 orders are for CNG vehicles. The pressure of RM cast on the company has reduced. This pressure will ease further if commodity prices remain stable. He says that Maruti Suzuki’s target is to increase market share. Product portfolio is strong. The brokerage has increased the EPS estimate for FY22E/FY23E by 21 per cent and 6 per cent and has given a target of Rs 10,300 for the stock.
Global Brokerage Opinion
While advising to buy in the stock, brokerage house Jefferies has kept a target of Rs 10500. Morgan Stanley has given an overweight rating in the stock and has set a target of Rs 10600. Whereas Credit Suisse has set a target of Rs 10390 while recommending a purchase. However, CLSA has given a sell opinion in the stock and has set a target of Rs 6440. While giving investment advice, Golluman Sex has given a target of Rs 10100 and Macquarie has given a target of Rs 9753 while giving outperform rating.
Company results at a glance
Maruti Suzuki’s profit declined 48 percent to Rs 1041.8 crore in the December quarter. The company had made a profit of Rs 1996.7 crore in the same quarter a year ago. The company’s consolidated revenue declined to Rs 23,253.3 crore during the December quarter as compared to Rs 23,471.3 crore in the year-ago quarter. The company’s total sales during the third quarter declined by 13.1 per cent to 4,30,668 units as against 4,95,897 units in the year-ago quarter.
(Disclaimer: Investing or Selling in Stock is advised by the brokerage house. These are not the personal views of Financial Express. Markets are at their own risk. Hence, consult an expert before investing.)
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