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Motilal Oswal Report
Maruti Suzuki India Ltd.'s FY23 Annual Report highlighted:
its expectations of 6% volume compound annual growth rate in domestic passenger vehicle industry until FY31,
its estimate of 14-15% export CAGR until FY31,
addition of two million units capacity in nine years,
small cars to report less than 2% CAGR, needing Maruti Suzuki to restructure its production facilities,
its aim for a leadership position in SUVs in FY24,
its first EV launch in FY25E, and
its focus on compressed natural gas and other clean fuels that would reduce its carbon footprint.
We are raising our earnings per share estimates for FY24/FY25 by 5-6% to reflect the sharp improvement in SUV mix, fueled by new product launch benefits since July 2023.
Stable growth in domestic PVs and a favorable product lifecycle augur well for Maruti Suzuki.
We expect market share gains and margin recovery in FY24 driven by an improvement in supplies, a favorable product lifecycle, mix benefit and operating leverage.
The stock trades at 25.8 times/23.7 times FY24E/FY25E consolidated EPS. Reiterate 'Buy' with a target price of Rs 11,900 (premised on 25 times September 25E consolidated EPS).
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