Sharekhan has given Buy recommendation for Maruti Suzuki India with a target price of Rs. 7707 in its research report issued on Sep 01, 2021

Sharekhan’s research report on Maruti Suzuki India

MSIL is likely to benefit from buoyant demand for passenger vehicles, driven by rising offtake in tier-2 and tier-3 cities and rural areas. MSIL is expected to defend its market share despite rising competition in the compact SUV segment, aided by strong product portfolio and position, brand appeal and ability to frequently launch new models. Earnings to clock a 37.8% CAGR during FY2021-FY2023E, driven by 19.9% revenue CAGR and a 340 bps rise in EBITDA margin. Stock trades at P/E of 25.5x and EV/EBITDA of 18.7x.

Outlook

We lower Maruti Suzuki’s (MSIL’s) earnings estimates and price target led by production cuts owing to a shortage of semiconductor chips. We retain a Buy rating with a revised price target of Rs 7,707.

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