Maruti Suzuki stock falls 1

Maruti Suzuki stock falls 1.7% despite 2-fold surge in Q1 net profit; should you buy or sell Maruti shares?

Maruti Suzuki share price fell 1.7% to Rs 9,650.30 today after the company’s net profit surged more than 2-fold on-year to Rs 2,485 crore in Q1FY24. Q1 sales stood at 4,98,030 units, a growth of 6.4% compared to the same period last year. Maruti Suzuki’s domestic sales stood at 4,34,812 units, growing 9.1% on-year. Most of the brokerages have recommended a ‘Buy’ rating on the stock. Maruti Suzuki stock has fallen nearly 1% in the last one month while it has risen 8% in the past one year.

Meanwhile, Maruti Suzuki’s board has approved the termination of the contract manufacturing agreement with Suzuki Motor Gujarat (SMG). Presently, Suzuki Motor Corporation holds 100% equity capital of SMG. The acquisition of 100% equity capital by Maruti Suzuki India from SMC is a related party transaction and is expected to be completed by FY24.

Choice: Add – Target Price: Rs 11205

“We expect MSIL’s revenue/PAT to grow at a CAGR of 14%/28% over FY23-25E, and we value the company at 26x FY25E EPS to arrive at a target price of Rs 11,205 and recommend ADD.”

Nuvama: Buy – Target Price: Rs 11400

“MSIL has announced an amalgamation of Suzuki Motor Gujarat with itself. This should lead to simplification of structure and provide cost synergies. On the flip side, this would lead to ~4% EPS dilution. All in all, we reiterate ‘BUY’ with a target price of Rs 11,400 (earlier Rs 11,700) as we factor in the impact of this acquisition,” said analysts at Nuvama Institutional Equities.

Motilal Oswal: Buy – Target Price: Rs 11150

“We increase our FY24E EPS by 3% to factor in better ASPs and higher other income. However, we cut our FY25E EPS by 1%, as the benefits of higher ASP and higher other income are more than offset by the acquisition of SMG (assuming consideration of Rs 130b paid in cash). Maintain Buy.”

HSIE: Buy – Target Price: Rs 10920

“Given the new growth opportunities, we continue to maintain our BUY with a revised target price of Rs 10,920/share (from Rs 10,214 earlier) as we roll forward to June-2025 earnings (from FY25 earlier).”

Nirmal Bang: Buy – Target Price: Rs 11503

“We expect the positive momentum to continue in the coming quarters. We maintain BUY on MSIL and value it at 23x June 25E EPS to arrive at a target price of Rs 11,503.”