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Shares of Maruti Suzuki India Ltd rose more than 3% to 8,800 apiece on the BSE in Wednesday's trading session after posting strong set of earnings for the third quarter ended December 2022 (Q3FY23). The automajor, which is the market leader in the domestic passenger vehicle (PV) space, saw its net profit more than double to 2,351 on account of robust sales aided by enhanced product portfolio. The stock is inching towards its record high level of 9,768 per share that it hit in October 2022 on the BSE.

“The large pending order book at ~363,000 units, along with recently-launched products, provides strong sales visibility for subsequent quarters. We expect FY23E revenue growth to be robust at 32%, and the uptrend is likely to endure with FY23-25E revenue CAGR at 14%. Driven by better scale and pricing, we expect EBITDA margin to expand. We increase FY23E EPS by 7% to Rs263 on higher margin and other income assumptions," said brokerage Emkay which has retained Buy rating on Maruti Suzuki shares with target price of 10,700/share (from 10,500 earlier). 

Key downside, as per Emkay, could be risks including macro slowdown, lower-than-expected volumes in new products, higher competitive intensity and adverse movement in commodity/currency rate.

Analysts at Prabhudas Lilladher remain positive on the auto stock as they believe the company will benefit from market share gains and ASP increase coming from filling white spaces in UV portfolio, c260bps increase (over FY23-25E) in EBITDA margins on the back of commodity cost softening and higher UV share and rural revival. They have reiterated ‘BUY’ with a revised target price of 10,600 ( 10,000 earlier).

“Maruti's stock price has de-grown at ~1.3% CAGR from around 9,280 levels in January 2018, underperforming the broader Nifty Auto index. We retain our BUY rating tracking reignited focus on SUVs, market share gain ambition, clear timeframe for EV launch and robust order book with a target price of 11,200 per share," said another domestic brokerage and research firm ICICI Securities in a note.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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