Maruti Suzuki Shares Dip Over 2% Post-Q1 Results as Analysts Morgan Stanley and Motilal Oswal Assess Future Outlook.
In the latest quarter, Maruti Suzuki reported a standalone net profit of Rs 3,352 crore for the April–June period, reflecting an 11% decline year-on-year. This downturn occurred within a broader context of a 36% increase in revenue from operations, which reached Rs 52,456 crore. The company’s profit figures, while disappointing, were largely aligned with market expectations. Rising material costs, exacerbated by geopolitical tensions, significantly pressured profitability, indicating that the benefits from robust sales growth were offset by higher input expenses. This dynamic underscores the lurking challenges in the automotive sector, especially concerning cost management amid fluctuating commodity prices.
Brokerage firm Morgan Stanley remains bullish, maintaining an Overweight rating on Maruti Suzuki and adjusting its target price to Rs 16,381, which implies a 15% potential upside. Their analysis suggests that the company’s guidance of approximately 10% domestic volume growth for FY27 may be conservative, with expectations leaning toward mid-teens growth rates due to factors such as low dealer inventory and a strong order book. The firm anticipates that margins have bottomed out, with expected price hikes and easing costs for aluminum and precious metals poised to act as positive catalysts moving forward.
On the other hand, Nomura has adopted a more cautious stance, keeping a Neutral rating with a target price of Rs 14,071. The brokerage acknowledges the positive demand outlook but highlights persistent margin risks following the first-quarter underperformance. They predict that reduced commodity expenses and potential incremental price adjustments could support margin recovery, although they express concerns that rising vehicle prices might deter demand for smaller cars. Additionally, Nomura notes the potential pressure from accelerating electric vehicle adoption as a medium-term threat to Maruti’s market share.
Meanwhile, Motilal Oswal offers a more optimistic view, reaffirming a Buy rating with a target price of Rs 17,064, which signals a potential 20% upside. The brokerage anticipates that Maruti will outperform driven by new product launches, recovering demand for passenger vehicles, and optimized dealer inventories. They also project a substantial recovery in margins, bolstered by easing raw materials costs and steady volume increases, underpinning an expected earnings CAGR of 20% for FY26–FY28. Collectively, these analyses reflect a landscape where Maruti Suzuki is positioned for challenges yet simultaneous growth opportunities in a dynamically evolving market.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)