Emkay Global Financial has given Buy recommendation for Maruti Suzuki with a target price of Rs. 8600 in its research report issued on Sep 01, 2021

Emkay Global Financial’s report on Maruti Suzuki

Longer lead times to affect semiconductor supplies for Q2/Q3FY22: Our discussion with industry experts indicates lead times for automotive chips have increased notably from normal levels of 8-12 weeks to 36-40 weeks currently, mainly due to the recent spike in Covid-19 cases and restrictions in the Asian countries that are part of the supply chain. Chip shortages are expected to persist in Q2/Q3FY22 and supplies are expected to improve in a staggered manner. Lead times are likely to decrease to 18-20 weeks by Q4FY22 and may come down to normal 8-12 weeks by FY23-end (Report). MSIL has a healthy order book of over 150,000 units, and supply-related constraints remain the only challenge in the near term. We reduce our volume expectation for MSIL by 15% to 1.64mn units in FY22E, implying 12% growth.


We reduce FY22/23 volume growth estimates by 15%/7% but retain the FY24 forecast. Following the revision, we expect revenue/earnings CAGR of 24%/61% over FY22-24E. We lower our Sep’22 TP to Rs8,600 (Rs9,000 earlier), based on 28x core P/E and net cash/share of Rs1,541. Our core P/E is backed by a DCF model.

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