Motilal Oswal is bullish on Maruti Suzuki has recommended buy rating on the stock with a target price of Rs 10468 in its research report dated April 27, 2018.
Motilal Oswal's research report on Maruti Suzuki
Revenue grew 15.4% YoY to INR211.6b (in-line), led by a rise of 11.4% in volumes and 3.6% in realizations to INR458k (est. of INR452k). Lower discounts (100bp QoQ, 40bp YoY) drove adj. gross margin improvement of ~60bp QoQ. Adj. EBITDA margin of 14.4% (est. of 16%) shrunk 140bp QoQ (+40bp YoY) due to higher marketing spend (Auto Expo + Swift launch), adverse FX impact on royalty (~INR970m incl. MTM of 3QFY18) and higher employee cost due to actuarial valuation of retirement benefits. Adj. PAT grew 20% YoY to ~INR20.6b (est. of INR23b). FY18 revenue grew 13.8% to INR208.6b and adj. PAT rose 7% to INR79b.
Outlook
We have cut our FY20 consol. EPS by ~2%, but maintained FY19 estimates. The stock trades at 25.1x/19.7x FY19E/20E EPS. Maintain Buy with a TP of INR10,468 (~25x Mar-20 core EPS + ~INR1,603 cash/share).
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