Active Stocks
Mon Apr 15 2024 15:59:36
  1. Tata Steel share price
  2. 160.90 -1.59%
  1. ITC share price
  2. 425.90 -0.98%
  1. State Bank Of India share price
  2. 757.75 -1.17%
  1. ICICI Bank share price
  2. 1,078.80 -2.30%
  1. NTPC share price
  2. 361.35 -0.08%
Business News/ Markets / Stock Markets/  Maruti Suzuki Q3 results to be weak, outlook remains muted; target price cut on the stock: Emkay Global
BackBack

Maruti Suzuki Q3 results to be weak, outlook remains muted; target price cut on the stock: Emkay Global

With the best of the SUV product upcycle largely behind for Maruti Suzuki and absence of any revival in small cars, outlook seems muted prompting the brokerage to cut volume estimates by 3% and 7% for FY24 and FY25-26. It also cut its earnings per share (EPS) estimates to below consensus.

Maruti Suzuki’s FY25-26 outlook appears muted amid limited new launches and absence of revival in small cars, said the brokerage house. Premium
Maruti Suzuki’s FY25-26 outlook appears muted amid limited new launches and absence of revival in small cars, said the brokerage house.

Maruti Suzuki share price declined in the early trade on Tuesday. The stock fell as much as 0.55% to 9,891.80 apiece on the BSE.

Emkay Global Financial Services cut the target price for Maruti Suzuki shares as it believes the outlook for the company remains muted and expects the company’s earnings for the quarter ended December 2023 to remain weak.

The fears regarding the Passenger Vehicle (PV) industry and Maruti Suzuki India are playing out, amid rising PV industry inventory levels, sharp run-down in orderbook amid near-normalized production, and steadily increasing discounts, Emkay Global Financial Services noted.

Also Read: Adani Ports share price rallies over 3% to hit 52-week high; Motilal Oswal raises target

With the best of the SUV product upcycle largely behind for Maruti Suzuki and absence of any revival in small cars, outlook seems muted prompting the brokerage to cut volume estimates by 3% and 7% for FY24 and FY25-26. It also cut its earnings per share (EPS) estimates to below consensus.

Emkay Global maintained an ‘Add’ rating on Maruti Suzuki and cut the target price to 10,700 per share from 11,700 earlier. It expects a slower core EPS CAGR, at 9% over FY24E-26E as against 21% YoY in FY24E. 

Growth in the PV industry over the past 5-7 years has been entirely driven by new launches. Companies with a strong product cycle have gained market share with healthy volume growth, while those with fewer launches have suffered loss in market share. 

(Exciting news! Mint is now on WhatsApp Channels :rocket: Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!)

During the past 12-18 months, led by healthy response to its SUV launches, particularly the new Brezza, Grand Vitara and Fronx, Maruti Suzuki has reported healthy, 100 bps market share gains YoY in FY24YTD.

While share gains are expected to continue over FY24E-26E by virtue of the freshness of the company’s recent product actions combined with major competition launches now largely being behind, the brokerage believes emerging trends need to be monitored. For instance, higher inventory levels, rapid run-down in orderbook and rising discounts even in SUVs.

Also Read: Bajaj Auto share price jumps nearly 6%, hits fresh record high as board approves 4,000-crore share buyback

Emkay Global also expects Maruti Suzuki’s Q3 results to be weak given lack of operating leverage with 9% decline in volumes QoQ, deterioration in mix as SUV share of total volumes at dropped to 31% from 33% in Q2, and higher discounts, which were up 10% QoQ, partially on account of the seasonal spike for model-year change every December.

The brokerage builds-in 90 bps EBITDA margin decline QoQ to 12% versus 12.9% in Q2 which is likely to have represented peak performance driven by healthy 11% QoQ volume growth, 800 bps improvement in the SUV mix, favorable commodities and forex, and lower discounts.

Maruti Suzuki’s FY25-26 outlook appears muted amid limited new launches and absence of revival in small cars, said the brokerage house.

At 10:45 am, Maruti Suzuki shares were trading 0.05% lower at 9,942.00 apiece on the BSE.

Catch Live Market Updates here

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 09 Jan 2024, 10:48 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App