Maruti Suzuki shares down 2% after Q1 show; analysts mixed amid margin woes

Maruti Suzuki's stock has declined 16.48 per cent year to date and has underperformed the BSE barometer, the Sensex, which is down 7.74 per cent during the same period.

Maruti Suzuki share price: Shares of India's biggest carmaker Maruti Suzuki traded over 2 per cent lower on Monday, August 3, following a decline in net profit for the quarter ended June (Q1) amid higher input costs. Analysts, meanwhile, remain mixed on the counter.

 

Maruti Suzuki's share price hit the day's low of ₹13,903.05 on the BSE, down 2.4 per cent from the last closing price of ₹14,239.40. The automaker has declined 16.48 per cent on a year-to-date (Y-T-D) basis and underperformed the BSE barometer Sensex, which is down 7.74 per cent during the same period. 

 

As of 9.50 AM, shares of Maruti traded 1.75 per cent lower at ₹13,990. 

 

 

Maruti Suzuki Q1 results

Maruti Suzuki, on Friday, posted a 9.11 per cent decline in its Q1 consolidated net profit to ₹3,446.9 crore as against ₹3,792.4 crore in the same period last year. Total revenue from operations was up 35.9 per cent year-on-year (Y-o-Y) at ₹52,469.8 crore. 

 

Total expenses in Q1 FY27 were higher at ₹50,000.3 crore as compared to ₹35,585.4 crore in the year-ago period, the company said. READ MORE

 

Earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted by 380 bps Y-o-Y to 8.2 per cent on commodity headwinds (300bp), higher gas costs and employee costs.

 

In other development, Maruti reported its highest-ever monthly production at 248,845 units in July, a jump of 33 per cent, over the same month last year.

 

Maruti Suzuki share price outlook

Despite margin pressure and a decline in profit, brokerages largely retained their bullish views on the counter, even as Nomura said that it sees upside capped for Maruti's stock.

 

The global brokerage said it believes production can be ramped up faster than guidance given past track record. However, as car prices go up, it would monitor risks to the small car segment where consumers are more price sensitive. "In the medium term, MSIL will face market share risks if the industry’s EV growth is much faster as its EV market share is likely to be much lower than 40 per cent," it said.

 

Nomura raised its volume estimates by 12.5 per cent to 2.72 million for FY27 but lowered the Ebitda margins to factor in higher cost pressures. It has a target price of ₹14071 (from ₹13,435 earlier) on the counter, signalling a 1 per cent downside. "We believe current valuation at ~27x FY28F core EPS is fair. We prefer M&M and Hyundai Motor among four-wheeler OEMs," it said as it retained its 'NEUTRAL' call.  Also Read | Maruti sales engine to keep humming through FY27

 

On the other hand, Motilal Oswal Financial Services (MOFSL) said that it expects Maruti to sustain its outperformance in FY27, aided by a healthy launch pipeline, revival in car demand, lean inventory, and ramp-up of its two new facilities.

 

"A sustained market share recovery is likely to, in turn, drive the stock re-rating, in our opinion. Further, after a relatively weak 1Q, margins are expected to normalize, given the moderating raw material costs and steady volume growth. We expect MSIL to deliver a 20% earnings CAGR over FY26-28," it said while reiterating its 'BUY' rating with a target price of ₹17,064, valued at 26x FY28E EPS.

 

Elara Securities also remains bullish on the stock (with BUY rating) for its dominant, broadening franchise — small-car resurgence post-GST 2.0, an improving SUV mix and export leadership — with Q1 margin compression appearing largely transient and set to unwind through Q2FY27, as price hikes flow, the settlement cycle normalizes, and commodity cost reverses. 

 

It tweaked the FY27-29 EPS estimates by 2-4 per cent and raised Maruti Suzuki target price to ₹17,298 from ₹16,546, as it rolls forward by a quarter, valuing MSIL at 26x (unchanged) September 2028E EPS. 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.