KR Choksey has given Buy recommendation for Maruti Suzuki India with a target price of Rs. 9106 in its research report issued on May 03, 2022

KR Choksey’s research report on Maruti Suzuki India

For Q4FY22, Maruti Suzuki India reported revenue growth was 11.3% YoY (15% QoQ) to INR 2,67,492 Mn. For FY22 revenues stood at INR 8,83,298 Mn, up 25.5% from FY21. For Q4FY22 total vehicle sales were down 0.7% YoY, domestic market vehicle sales were down by 8% YoY. Total PV sales were down 7.7% YoY for the quarter. For FY22, total PV sales were up 2.9% from FY21 and total exports were up 148% standing 2,38,376 units. EBITDA up by 21.6% YoY/55.5% QoQ, standing at INR 24,290 Mn in Q4FY22. In FY22 EBITDA was up by 7.8% at INR 57,062 Mn. For the quarter, Net profit stood at INR 18,758 (+51.1% YoY), with NPM at 7.0% (+185 bps YoY). For FY22, Net profit was at INR 38,795 (down 11.6% YoY). NPM for the year was at 4.4% (-184 bps YoY). The Board recommended a final dividend of INR 60 per share (Nominal value INR 5.00 per share).

Outlook

We have accounted for recovery in domestic sales as chip shortages subside and we expect the company to continue to do well with exports. We have assigned a P/E multiple of 32x on FY24E EPS of INR 284.6 to arrive at a revised target price of INR 9,106/share (earlier target INR 8,000/share). The target price implies a potential upside of 19.3% from the CMP. Accordingly, we revise our rating to “BUY” from “ACCUMULATE” on the shares of Maruti Suzuki India Ltd based on the re-rating assumption with improvement in the overall financial metrics.

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