Buy Maruti Suzuki; target of Rs 14800: Motilal Oswal

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Launch pipeline and product mix: Maruti Suzuki has a strong launch pipeline, including seven new SUVs by 2031, which is expected to drive growth and gain share in the passenger vehicle market. The recent launch of the Brezza with a 1L engine has been well received, and the company's focus on SUVs is expected to continue.
  • Domestic demand recovery: The recovery in domestic passenger vehicle demand, aided by the GST rate cut, is expected to support Maruti Suzuki's growth. The company's market share has increased by 220bp to 40.8% in 2QFY27, reflecting strong product positioning and improving affordability.
  • Export strategy: Maruti Suzuki aims to achieve exports of 750-800k units by FY31, which will translate into a 15% volume CAGR during the same period. The company is taking several initiatives, including introducing more models in its markets, making India the export hub for Suzuki's EVs, and expanding into more markets.
  • Multi-tech approach: Maruti Suzuki's multi-tech approach, including CNG, strong hybrids, and EVs, is expected to support the company's growth and help it meet emission compliance requirements.

Thesis Validation Checklist

  • Volume growth: Monitor Maruti Suzuki's volume growth, particularly in the domestic market, to see if the company can sustain its outperformance.
  • Margin expansion: Track Maruti Suzuki's margin expansion, driven by factors such as higher ASP, cost-reduction initiatives, and favorable fixed-cost absorption.
  • Export performance: Monitor Maruti Suzuki's export performance, particularly in terms of achieving its target of 750-800k units by FY31.
  • Competition and regulatory environment: Keep an eye on the competitive landscape and regulatory environment, particularly with regards to emission norms and GST rates, which can impact Maruti Suzuki's growth and profitability.