Maruti Suzuki reported a 129.76 per cent year-on-year (YoY) surge in net profit to Rs 1,012.80 crore in the June quarter compared with Rs 440.80 crore in the same quarter last year.
Sales volume for the quarter stood at 4,67,931 units as against 3,53,614 units in the year-ago quarter. However, the base quarter was affected by Covid-related shutdowns and disruptions and, thus, the YoY comparison is not comparable.
Ebit margin for the quarter improved to 5 per cent, an improvement of 450 basis points over 0.5 per cent in the year-ago quarter. The increase in prices of commodities adversely impacted the operating profit, the company said.
Global brokerage BofA Securities maintained a ‘buy’ rating on
with a target price of Rs 9,500 as it believes that demand and new model comments are positive.
However, margins were a miss on the back of a weaker yen but were not that bad, it said. “New Brezza’s response is solid and Grand
‘s pricing is still awaited.”
CLSA, however, had a ‘sell’ tag on the stock with a target price of Rs 7,374 given Maruti’s expensive valuations.
CLSA said material cost tailwinds are yet to play out, while airbag regulation is a threat. “EBITDA was significantly lower than estimates. The market is keenly watching Grand Vitara bookings,” it added.
Mitul Shah, Head of Research,
Securities expects the domestic PV industry to record double-digit volume growth in FY23 and FY24, which would support Maruti’s business. Moreover, sales of premium products would further increase.
In view of expected healthy PV sales over the next 2 years owing to low penetration and rising affordability, strong product portfolio across markets, strong return ratio and healthy balance sheet, we retain a buy rating and a target price of Rs 9,700 on Maruti, said Shah.
Prabhudas Lilladher’s Research analyst Mansi Lall said that Maruti’s Q1 performance was impacted by adverse commodity costs, lower other income and higher sales promotion expenses for new product launches.
“Market share gains remain key for Maruti due to the competitive intensity in the UV space. We expect entry-level demand momentum ahead of the festive season,” she added.
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