Maruti’s Profit Beat, Reduced Yen Exposure Keep Brokerages Bullish
Maruti Suzuki Q1 Earnings: Brokerages’ Thumbs Up Lifts Stock
Most brokerages re-affirmed their positive outlook on the Maruti Suzuki India Ltd. stock after the auto maker reported a 25 percent jump in first quarter net profit. Broking firms like Motilal Oswal, Goldman Sachs, Nomura and Kotak Securities increased their price targets on the stock.
The bullish view stems from the expectation that Maruti will maintain the ratio of petrol and diesel cars at 70:30 given the shift in consumer preference towards petrol. The management said in its earnings conference call on Tuesday that it will look to export around 50,000 units of the new Baleno hatchback in financial year 2016-17, which again is being seen as a positive trigger by analysts.
Goldman Sachs
- Maintains buy rating; hikes price target to Rs 4,923 from Rs 4,750.
- Says Maruti’s rural growth was flat, implying urban consumption was the key driver.
- Increases FY17-18 EPS estimates by 8 percent and 4 percent, respectively.
- Says Maruti’s edge over the competition is rising led by better product execution, increasing acceptance at higher price points and steady network expansion.
Motilal Oswal
- Maintains buy rating; hikes price target to Rs 5,510 from Rs 4,446.
- Expects earnings per share for FY17 at Rs 214, up 41.6 percent.
- Expects price-to-earnings ratio to be around 20 times.
- Says improvement in product mix will aid realisations, and consequently margins.
- Says the auto maker is reducing yen exposure.
Nomura
- Maintains buy rating; increases price target to Rs 5,581 from Rs 4,560.
- Sees earnings per share for FY17 at Rs 223.3, up 48 percent.
- Expects industry growth to be around 14 percent led by implementation of the Seventh Pay Commission and pent-up demand.
- Expects the auto maker to maintain price-to-earnings ratio at 18 times.
Kotak Securities
- Maintains accumulate rating; hikes price target to Rs 4,753 from Rs 4,153.
- Expects earnings per share for FY17 to be Rs 199.1, up 32 percent.
- Expects price-to-earnings ratio for FY17 to be around 22.5 times.
- Says net yen exposure stands reduced to 11-12 percent of net sales against
more than 20 percent a few years back.
Maruti shares rose 3.5 percent intraday to Rs 4.628 on the National Stock Exchange.
