Buy Maruti Suzuki: target of Rs 8500 : Sharekhan

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Sharekhan's research repor on Maruti Suzuki

We maintain our Buy rating on Maruti Suzuki Limited (MSL) with a revised PT of Rs. 8,500, factoring earnings upgrade on better sector outlook. MSL is likely to be beneficiary of buoyant demand in the passenger vehicle (PV) segment, driven by rising demand in tier 2 and 3 cities, and rural areas. MSL is expected to sustain its dominant market share, aided by its strong product portfolio and positioning, brand appeal, and ability to launch new models frequently. We expect MSL’s earnings to grow strongly by 44.5% and 19.5% in FY2022E and FY2023E, respectively, driven by 20.7% revenue CAGR (FY2021E-FY2023E) and 300 bps improvement in EBITDA margin.

Outlook

The stock is valued at P/E multiple of 24.5x and EV/EBITDA multiple of 17.4x its FY2023 estimates. Our revised PT of Rs. 8,500, giving an upside of further 10% from current levels. We recommend Buy rating on the stock.

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