Buy Maruti Suzuki India; target of Rs 10,298: LKP Research

LKP Research's research report on Maruti Suzuki India

MSIL reported a strong margin performance in the quarter on better product mix, higher ASPs, lower input costs and higher utilization rates. The demand is going quite strong driven by personal mobility theme, first time buyers, new variant launches and hybrid & CNG variants. Going forward, with supply issues getting resolved sooner or later, we believe that the strong order book, newer SUV launches (“eVX”, Jimny and Fraunx), digitization of sales, expanding dealer network (now 3,500 sales outlets across India), higher capacity utilization rates, softening of commodities, favourable currency movement and product mix should trigger a superior volume and margin profile in the ensuing years. An aggressive EV + Hybrid plan + Flex Fuel strategy of the management led by ₹105 bn capex at Gujarat and new capacity outlay of 250K vehicles in FY25 at Karnataka entails a big bang volume growth. With ability to combat competition coming from EV shift and better growth in rural markets which were severely impacted by covid Wave #2, company is poised for a healthy growth here-on.

Outlook

With multiple positive drivers in place, we remain sanguine on the stock with a rolled over FY25E target of ₹10,298. Maintain BUY.

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MARUTI SUZUKI INDIA - 27 -01-2023 - lkp