Maruti Suzuki stock likely to cruise towards Mount 10K in next 12 months: Brokerages

Moneycontrol News

Maruti Suzuki, which has already rallied over 50 percent so far in 2017, could rally another 20 percent to hit Mount 10K in the next 12 months, according to brokerage reports.

Most global brokerage firms maintain their positive stance on Maruti and raised their 12-month target price closer to 10,000 after the automaker reported a rise of 3.44 percent in profit after (PAT) tax at Rs 2,484.3 crore for the quarter ended September 30 which was higher than most analyst’ estimates.

The company sold a total of 492118 units during the quarter, a growth of 17.6 percent over the same period of the previous year.

Sales in the domestic market stood at 457401 million units, a growth of 19.4 percent. Exports were at 34,717 units.

Reacting to the results, Maruti Suzuki rose to a fresh record high of Rs 8,242 on the BSE on Monday.

Most global brokerages expect the stock to beat industry growth rate and grow at a compounded annual growth rate of 17 percent over March 2020.

The Delhi-based company reiterated intentions of foraying into the electric car segment, though the company has been slower than rivals in product development. Maruti Suzuki also emphasises their intentions to increase the dealership.

Country's largest carmaker Maruti Suzuki India (MSI) has earmarked Rs 1,000 crore in the current fiscal to buy land parcels for new dealerships.

As part of its network expansion strategy, the company plans to buy land parcels, build dealerships and then lease them to selected dealers. MSI has already finalised 120 such land deals across the country in the first half of the current financial year, said a report.

Here’s what different global brokerage reacted post-Maruti Suzuki Q2 results:

Credit Suisse: Neutral| Raises target price of Rs 7300 from Rs6800 earlier

Credit Suisse maintains a neutral rating on Maruti Suzuki post Q2 results but raised its target price to Rs 7300 from Rs6800 earlier.

The previous quarter showed strong numbers supported by lower-than-expected costs. The pay commission benefit is likely to scale up and first-time buyers were half of September quarter volumes.

The margins will be impacted by a higher share of Gujarat production and commodities. Maruti Suzuki’s execution remains best in class but valuation appears stretched at current levels.

Macquarie: Outperform| Raises target price to Rs10,000 from 8250 earlier

Macquarie maintains an outperform rating on Maruti Suzuki post Q2 results and raised its target price to Rs10,000 from Rs8250 earlier.

Maruti is the best play on the Indian auto growth. The global investment bank expects Maruti to grow ahead of the industry given new model launches and extensive dealership network.

It expects the net profit for Maruti Suzuki to grow at a compound annual growth rate of 17 percent over March 2020.

Nomura: BUY| Raises target price to Rs9843 from Rs8993 earlier

Nomura maintains a buy call on Maruti Suzuki post Q2 results and raised its 12-month target price to Rs9843 from Rs8993 earlier.

There is a high growth visibility and premiumisation is likely to drive profitability. The global investment bank raised volume growth outlook for the current financial year to 15 percent from 13.5 percent due to strong demand.

Nomura dealer check suggests festive demand is up 15-20 percent (YoY). It expects volume, revenue, and earnings per share to grow at a compound annual growth rate of 13 percent, 17 percent and 21 percent respectively over March 2020.