Buy Maruti Suzuki; target of Rs 15,350: Anand Rathi

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Domestic Volume Growth: Expected to clock 10% CAGR over FY26-29e, driven by healthy domestic volume, GST cuts, and first-time buyers.
  • Market Share Gain: Compact segment demand shift due to 18% GST, supporting market share rise. New launches in whitespaces will further aid market share gain.
  • Export Volume: Expected to clock a strong 10% CAGR, aided by leveraging Toyota/Suzuki's global network and portfolio expansion.
  • Margin Improvement: EBITDA margin expected to gradually rebound due to price hikes and scale.

Thesis Validation Checklist

To validate the thesis, watch for:

  • Domestic Volume Growth: At least 10% YoY growth in H2FY27.
  • Export Volume: Strong growth, leveraging global networks and portfolio expansion.
  • Margin Expansion: Gradual improvement in EBITDA margin due to price hikes and scale.
  • Commodity Prices: Stability in commodity prices, particularly steel and copper, to support margin improvement. The analyst expects Maruti Suzuki's volume, revenue, and EBITDA to clock 10%, 14%, and 11% CAGR over FY26-29e, driven by domestic and export volume/realization growth and margin rebound. The stock trades at a P/E of 21/18x FY28/29e EPS, close to -1SD, supporting the BUY rating with a revised SOTP-based target price of Rs15,350.