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Analysts bullish on Maruti Suzuki post Q3, positive on CNG, EV growth

The Maruti Suzuki's e-Vitara electric vehicle (EV) is expected to fuel long-term growth, especially with strong export potential, analysts said.

Maruti Suzuki Vittara Brezza

Tanmay Tiwary New Delhi

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Automobile giant Maruti Suzuki's performance in the December quarter of FY25 (Q3FY25) reflected a mix of hits and misses, but analysts remain generally upbeat about the company's future prospects.
 
While there were some challenges, including higher promotional expenses and slight margin pressures, analysts continue to be optimistic on key growth drivers. Notably, the e-Vitara electric vehicle (EV) is expected to fuel long-term growth, especially with strong export potential. 
 
Additionally, rural demand remains robust, outpacing urban markets, and there is growing optimism around CNG vehicles.
 
Despite subdued overall PV demand, analysts are confident in Maruti Suzuki's ability to navigate market headwinds and capitalise on emerging opportunities.
 
 
Overall, Maruti Suzuki’s standalone profit rose 12.6 per cent Y-o-Y to Rs 3,525 crore in Q3FY25, from Rs 3,130 crore in Q3FY24. The revenue rose 15.6 per cent Y-o-Y to Rs 38,492.1 crore in Q3FY25, from Rs 33,308.7 crore a year ago.
 
Operationally, Ebitda rose 14.4 per cent Y-o-Y to Rs 4,470.3 crore in Q3FY25, from Rs 3,907.9 crore in Q3FY24. Meanwhile, Ebitda margin remained flat (down 10 bps) to 11.6 per cent in Q3FY25, as against 11.7 per cent in Q3FY24. 
 
Maruti Suzuki sold 5,66,213 units in Q3, while sales in the domestic market stood at 4,66,993 units. The company exported 99,220 units in Q3 (highest-ever in any quarter).
 
Meanwhile, here’s what brokerages said about Maruti Suzuki Q3 results:
 
Nuvama | Buy | Target: Rs 13,900
 
Maruti Suzuki’s Q3FY25 revenue grew 16 per cent Y-o-Y, in-line with estimates. Ebitda expanded 14 per cent, slightly above expectations due to better-than-expected gross margin. 
 
The launch of the e-Vitara model and a gradual recovery in hatchback demand, analysts believe, are expected to drive volume growth. 
 
Analysts estimate total volume (domestic + exports) of 72,000 units for FY26E. Their forecast indicates an 11 per cent/10 per cent CAGR in revenue/Ebitda over FY25–27E, driven by strong SUV growth and moderate car growth.
 
Emkay | Add | Target: Rs 12,800
 
Maruti Suzuki’s Q3 profitability was well-maintained despite pressure from higher discounts and marketing expenses, with a slight 26bps Ebitda margin decline Q-o-Q to 11.6 per cent, better than the 150bps decline seen at Hyundai. 
 
The management expects a 3.5 per cent Y-o-Y retail volume growth in Q4, with rural markets outperforming. 
 
Moreover, small cars performed well in December 2024, while higher-end categories did better overall. Maruti’s global production hub for the newly unveiled e-Vitara will see exports to 100 countries, with the company aiming to be a leader in EV production by next year.  
InCred Equities | Add | Target: Rs 14,261 (previously Rs 14,593)
 
InCred Equities analysts noted, Q3 EPS increased 13 per cent Y-o-Y to Rs 117, aligning with the Bloomberg consensus estimate and only 3 per cent below its projection. The quarter saw lower average selling prices (ASP) and higher discounts affecting results. However, the ramp-up in export volumes over recent quarters, along with the e-Vitara global production plan for CY25F, is expected to help mitigate the short-term challenges in domestic demand.  
Hence, analysts have limited their FY25F-27F EPS revision to a 2-5 per cent decrease as the company works to address product and technology gaps for sustained profitable growth. 
BoFA | Buy | Target: Rs 14,000
  BoFA noted that despite a small miss in Q3, both volumes and margins are expected to improve moving forward, according to reports. While discounts have had some impact, they are not major, and margins are expected to recover in Q4.
 
CLSA | Outperform | Target: Rs 13,446 (Rs 12,361 earlier)
 
CLSA reportedly highlighted that the company has incurred higher promotional expenses to drive retail sales but remains positive on the demand for CNG vehicles.
 
Investec | Buy | Target: Rs 14,230 (Rs 14,300 earlier)
 
Investec reportedly said that the company’s operational performance was in-line, with moderately positive expectations for demand. The company anticipates a 3-5 per cent Y-o-Y retail growth in Q4. They noted that rural demand was stronger than urban, with an uptick in entry-level hatchbacks and positive traction for the new Dzire model.
  Jefferies | Hold | Target: Rs 11,300  
According to reports, Jefferies noted that passenger vehicles (PV) demand remains subdued, with retail demand in Q4 expected to remain flat. The company's market share has slipped to a 12-year low. Thus, Jefferies has lowered its FY25-27 EPS estimates by 2 per cent. Exports, however, are performing well, it added.

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First Published: Jan 30 2025 | 8:05 AM IST

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