Maruti Suzuki Shares Fall After Q1 Miss, But Analysts Stay Upbeat
Shares of Maruti Suzuki India Ltd. declined after the nation’s largest carmaker missed estimates in the first quarter of the ongoing fiscal. Yet, most analysts remained upbeat.
The automaker saw its profit slump 62% sequentially in the three months ended June as the second Covid-19 wave disrupted production and sales. Its revenue, too, fell over the preceding quarter and margin contracted.
IDBI Capital, however, expects the company to witness a robust volume recovery with cost pressures likely to ease after the second half of the financial year ending March 2022.
According to Prabhudas Lilladher, Maruti Suzuki is well placed among peers to manage supply shortage and benefit from a shift towards personal mobility and CNG vehicles.
Shares of Maruti Suzuki fell as much as 3.2% before paring losses, compared with the benchmark Nifty 50 index's 0.42% gain. Of the 49 analysts tracking the company, 31 recommend a ‘buy’, seven suggested a ‘hold’ and 11 have a ‘sell’ rating, according to Bloomberg data.
Here's what brokerages have to say about Maruti Suzuki after the first-quarter FY22 results:
Maintains ‘buy’ with a target price of Rs 9,000, implying an upside of 25.8% from Wednesday’s close.
Lackluster performance but demand outlook remains positive.
Order book healthy at 1.7 lakh units, and expect volumes to improve to 19 lakh units in FY22 and 22 lakh units in FY23.
Maruti’s relatively lower presence in utility vehicles adversely affected market share.
To retain its pole position in the market, led by the launch of new products to fill white-spaces and network expansion.
Maintains ‘accumulate’ rating with a target price of Rs 7,970, implying an upside of 11.46% from Wednesday’s close.
Improving volume outlook but margin pressure continues.
Maruti least affected due to chip shortage as they use standardised chips and alter its production pattern according to the chip supply in its large portfolio.
Despite near-term margin pressure, Maruti remains an attractive long-term bet for domestic discretionary consumption.
Margin recovery gradual from Q2FY22.
Volume outlook looks promising.
Maintains ‘buy’ rating with a target price of Rs 8,585, implying an upside of 20% from Wednesday’s close.
Maruti likely to witness robust volume recovery hereon, while cost pressure likely to ease out post H2FY22.
Increases volume and PAT estimates by 2.9%/26.7% for FY23.
Continues to face cost-related challenges like raw material price increase in the near term, which are expected to soften during H2FY22.
Maintains ‘accumulate’ with a target price of Rs 7,684, implying an upside of 7.4% from Wednesday’s close.
Margin pressure to continue, but strong recovery visible.
Concerns over raw material inflation, product pipeline and supply shortages sustain.
Maruti well placed amongst OEMs to manage supply shortage and benefit from shift towards personal mobility and CNG vehicles.
Systematix Institutional Equities
Maintains ‘hold’ rating with a target price of Rs 6,650, implying a downside of 6.9% from Wednesday’s close.
Weak quarter and input cost pressure continues.
Sees limited scope for margin improvement over the next 12 months and expects the new product cycle to kick in only from FY23.
Maruti’s inability to increase its CNG production in Q1FY22 hurt its retail market share.