Maruti Suzuki, India’s largest passenger carmaker, looks set to top Nifty profit growth chart in the September quarter, largely on a low base. Brokerages expect the auto major to log up to 356 per cent year-on-year (YoY) surge in profit, the highest among Nifty constituents, on a 40-45 per cent rise in sales, with at least 500 basis points expansion in year-on-year (YoY) margin.
Owing to its distribution and reach and pent-up festive demand, Maruti Suzuki, analysts say, may do well with recent launches New Brezza and Grand Vitara. The Delhi-headquartered company may also partly benefit from a decline in raw material (RM) cost and rupee-yen appreciation, they said.
For now, the average target price on the stock, based on 41 analyst recommendations, stands at Rs 9,602.67, as per publicly available data with Trendlyne. The target suggests a potential 9.38 per cent upside potential over Friday’s closing price of Rs 8,779.10.
Elara Securities sees Maruti Suzuki reporting a profit of Rs 2,105 crore, up 342.90 per cent YoY on a 45 per cent YoY rise in sales at Rs 29,828 crore. Kotak Institutional Equities, on the other hand, sees Maruti’s adjusted net profit for September quarter rising 355.5 per cent to Rs 2,165.10 crore. This brokerage sees net sales for the automaker jumping 44 per cent YoY to Rs 29,573.70 crore.
On a sequential basis, “We expect revenues to increase by 12 per cent led by 11 per cent increase in volumes and 1 per cent increase in ASPs due to richer product mix. We estimate Ebitda margin to increase 340 bps led by operating leverage benefits, RM tailwinds and benefit of Yen depreciation against rupee resulting in lower cost of RM imports partly offset by higher marketing spends,” Kotak said.
ASP stands for average selling price
Easing of supply-chain constraints and a low channel inventory is aiding Maruti’s wholesales, said Motilal Oswal Securities, which added that success in Maruti Suzuki’s recent product launches would be a key monitorable.
Motilal Oswal expects Maruti Suzuki to report an adjusted profit of Rs 1,887.40 crore for September quarter compared with a profit of Rs 475.30 crore in the year-ago quarter. It sees net operating revenue rising 43 per cent YoY to Rs 29,374.30 crore from Rs 20,538.90 crore crore in the year-ago quarter. Ebitda margin is seen expanding 500 basis points to 9.2 percentage points from 4.2 percentage points YoY.
To be sure, adverse commodity prices and lower sales volume due to electronic component shortages and, thus, lower capacity utilisation, had hit the carmaker’s year-ago profit that had slumped 65.35 per cent YoY.
ICICIdirect sees profit for Maruti rising 248.80 per cent YoY to Rs 1,656.70 crore while another brokerage Prabhudas Lilladher sees Rs 1,650 crore, up 247.20 per cent.