Sharekhan has given Buy recommendation for Maruti Suzuki India with a target price of Rs. 8587 in its research report issued on Apr 27, 2021
Sharekhan’s research report on Maruti Suzuki India
We remain positive on Maruti Suzuki India Limited (MSIL) as its structural growth outlook remains intact, balance sheet is healthy and valuations are attractive. Revenues slightly beat our expectations but operating performance missed the mark owing to a sharp rise in raw material prices and adverse forex fluctuations. MSIL is likely to benefit from buoyant demand for passenger vehicles, driven by rising demand in tier-2 and tier-3 cities and rural areas. MSIL is expected to sustain dominant market share, aided by a strong product portfolio and positioning, brand appeal and ability to frequently launch new models. We expect earnings to clock a 43% CAGR during FY21-23E, driven by 21.9% revenue CAGR and a 390 bps improvement in EBITDA margin.
The stock is trading at P/E of 22.9x and EV/EBITDA of 16.5x its FY2023 estimates. We retain a Buy rating with a revised PT of Rs 8,587.