Maruti Suzuki Q1 Results Review - Higher Staff Cost Leads To Ebit Miss: Motilal Oswal

Motilal Oswal Report

Maruti Suzuki India Ltd.'s Q1 FY24 Ebit miss was led by high employee costs due to one-time retention payments and marketing spends on new launches (~80 basis points impact).

Aided by new products, Maruti Suzuki is expected to outperform underlying industry growth of 6-8% in FY24, resulting in market share gains and margin recovery. This should be further supported by easing supply challenges.

We increase our FY24E earnings per share by 3% to factor in better average selling prices and higher other income. However, we cut our FY25E EPS by 1%, as benefits of higher ASP and higher other income are more than offset by the Suzuki Motor Gujarat acquisition (assuming consideration of Rs 130 billion paid in cash).

The stock trades at 25.8 times/23.5 times FY24E/FY25E consolidated EPS.

Maintain 'Buy' with a target price of Rs 11,150/share (premised on 25 times September-25E consolidated EPS).

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