Domestic brokerage firm
expects a 297% YoY growth in Maruti’s Q2 profit at Rs 1,900 crore while Kotak Institutional Equities expects Maruti’s net profit to jump 355% to Rs 2,165 crore.
Besides the easing of supply-chain constraints, the auto major’s EBIT margin is expected to improve on a QoQ basis due to price hikes, forex benefits, and operating leverage.
“We estimate EBITDA margin to increase by 340 bps QoQ led by operating leverage benefits, raw material tailwinds and benefit of Yen depreciation against INR, resulting in lower cost of RM imports (7% of the direct and indirect RM imports are Yen denominated) partly offset by higher marketing spends due to new product launches in 2QFY23,” Kotak said.
Most brokerages expect revenues to grow in double-digits led by increase in volumes and improvement in average realisation on the back of richer product mix.
Sharekhan sees Q2 revenue growing 11.8% YoY to Rs 25,627 crore while
Securities has pegged the revenue growth rate at 42.7% YoY.
Kotak, on the other hand, sees net sales at Rs 20,538.9 crore in the quarter. Earlier in the month, Securities had raised its FY22E/FY23E EPS by 5%/11% while upgrading the stock to buy from hold with a revised target price of Rs 10,685. A day before its Q2 result, shares had ended the day flat at Rs 9,046 on the BSE.
Global brokerage firm UBS also raised its 12-month price target on Maruti to Rs 12,000 citing higher earnings expectations.
What should traders do?
Technical analysis indicates bullishness on the stock, which is above all of the EMAs (20, 50, 100, and 200). The RSI is nearing 54, which is close to the bull trend zone.
“Given that there are good chances of breakout on both the sides but downside is normally remained limited in Maruti historically. It is advisable to be on the bullish side,” said Vishal Vasant Wagh of Bonanza Portfolio.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)