Maruti Suzuki Q4 Results Review: CNG To Drive Sales Growth In FY25
Tax cut on hybrids is an upside risk for the company, HSBC said.
Maruti Suzuki India Ltd.'s standalone net profit rose in the fourth quarter of fiscal 2024, meeting analysts' estimates. Despite disappointing Ebitda margin, analysts expect CNG sales to drive growth in the new fiscal.
Net profit of Maruti Suzuki rose 48% to Rs 3,878 crore in the quarter-ended March, according to an exchange filing on Friday. Analysts polled by Bloomberg had estimated the bottom line at Rs 3,839.2 crore in the January–March period.
Here’s a look at what the brokerages made of the earnings.
Nomura
Nomura has a 'neutral' rating on the company with a target price of Rs 12,523 per share, implying a 1% downside.
Ebitda margin was 12.3%, compared to Nomura's estimate of 13.9%. While consensus was at 13%.
The key miss was RM/sales at 74.4%, +20 bp q-q (Nomura: 73.1%), while staff cost/sales and other expenses/sales at 3.7%/13.3% were largely in line.
Demand inquiries are growing in the high single digits. While small car demand is slow, CNG sales may rise to 6 lakh in FY25E vs 4.5 lakh in FY24.
SUV mix may continue to rise and MSIL will launch more SUVs.
Margins were weak in light of tailwinds. Domestic discounts (+140bp) plus pricing (+45bp) plus operating leverage benefits (+110bp) led to margin expansion year-on-year.
Estimates passenger vehicle industry growth at 4%/6% in FY25–26F.
The survey indicates there are signs of demand moderation, with rising inventory and discounts.
Estimates Ebitda margins at 12.4%/12.1% vs 12.5%/12.1%.
FY24-26F EPS estimates are largely unchanged as a modest Ebitda cut is offset by higher other income.
HSBC
The brokerage has a 'buy' rating on the stock with a target price of Rs 14,700 apiece, which is an upside of 9.7%.
Maruti reported an EBIT of 10.8% in Q4, which was a miss compared to expectations of 12%.
FY25 growth of 5-6% is expected to be largely driven by CNG and exports. Cut in taxes on hybrids is an upside risk.
Lower CNG sales in Q4 had a negative impact on ASP and margins.
The fourth quarter was the best quarter in terms of operating leverage, discounts, mix, and commodities, and hence this margin miss was a bit of a disappointment.
Entire incremental volumes in FY25 are likely to come from CNG itself. Expect a 5% growth in FY25, which is approximately 1.2 lakh incremental cars.
Cut in taxes on hybrids is an upside risk.
Post-run-up, the stock is likely range-bound in the near term, but the medium-term outlook remains positive.
