Maruti Suzuki Q1 Results Review - Operationally Stable Quarter; Entering Festive Season Now: ICICI Securities

ICICI Securities Report

Maruti Suzuki India Ltd. has reported Ebitdam of 9.2%, down 130 basis points QoQ, despite 50 bps QoQ improvement in gross margin, as 80 bps non-recurring expenses under staff cost impacted margins in Q1 FY24.

Average selling price was up 4% QoQ to Rs 6.50 lakh/unit with blended discount being up ~Rs 3,000/unit QoQ. Ebitda came in at ~Rs 30 billion versus consensus estimate at Rs 32.5 billion.

Maruti Suzuki is planning to acquire Suzuki Motor Gujarat, with valuation being equal to the net residual book value. Gross block of Maruti Suzuki would get enhanced by ~Rs 130 billion as against the enhancement in Ebitdam by ~150 basis points (4% depreciation/sales for SMG going away from P/L of Maruti Suzuki with-respect-to ~40% of production).

We maintain 'Add' rating on Maruti Suzuki, largely keeping our estimates unchanged and revising up our discounted cash flow-based target price to Rs 10,923 (from Rs 10,329), implying 24 times FY25E core earnings.

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