Analysts Remain Bullish on Maruti, Raise Price Targets

Most analysts maintained their bullish stance on Maruti Suzuki and raised their price targets after net profit at India's largest carmaker more than doubled in the three months ended December 2022, beating analysts expectations by a wide margin.

Shares advanced nearly 1% to close at ₹8,770 apiece on the NSE - their highest levels in two months. Citi, CLSA, and Nuvama raised their respective price targets and see up to 50% upside from current levels. Analysts raised earnings estimates on expectations the company will gain leadership in the SUV segment with two new launches.

"At its current valuation, MSIL (Maruti Suzuki India) will benefit from a strong franchise, product cycle tailwind, favourable product mix, and commodity benefits - outstripping margin concerns," said Nuvama (formerly Edelweiss) in a client note. Of the 35 analysts who reviewed the company's earnings, 25 of them have a 'buy' or 'outperform' rating on the stock. Seven analysts remain neutral while three of them have a sell rating, showed a Bloomberg poll of analysts. On aggregate, these analysts raised the consensus price target by 1% to ₹10,498.07. This translates into an upside potential of 20% from the current levels.

"After two consecutive years of volume decline, we believe that MSIL is at the cusp of a new upcycle. New model launches, healthy order book and commodity/operating leverage tailwinds will further support strong performance going ahead," said JM Financial in a client note. The brokerage values the stock at 25 times its one-year forward price-to-earnings as it raised the price target.