Maruti Suzuki - Demand Momentum Remains Strong: Motilal Oswal
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Motilal Oswal Report
The Maruti Suzuki India Ltd. stock has underperformed (27% versus Nifty and 23% versus NSE Auto Index) in the last six months, impacted by market share loss and pressure on margin, despite a strong volume recovery.
We see both these concerns abating as -
- product life cycle improves, and
- price increase/discount moderation drives a recovery in profitability.
We expect approximately 30% volume growth in FY22E and positive evolution of margin.
Demand for passenger vehicles was stronger than expected once Covid-19-related lockdown restrictions were lifted due to shift in preference towards personal mobility.
This was reflected in strong demand with first-time buyer share increasing to 50% in FY21 year-to-date (from 45% in FY20) of domestic volumes.
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