Maruti Suzuki Q2 Results Review - Stellar Performance: HDFC Securities

HDFC Securities Institutional Equities

Maruti Suzuki India Ltd.'s Q2 FY24 profit after tax at Rs 37.2 billion came in ahead of our estimates of Rs 30.3 billion, led by better-than-expected margins.

While we were expecting margin improvement led by a richer mix, the extent of margin improvement has come in as a surprise and management did clarify that there are no one-offs in the quarter which has aided this.

On the back of its aggressive launch spree over the last few quarters, Maruti Suzuki has now gained 900 basis points plus market share in utility vehicles to 25.8% in H1 and is once again the market leader in the UV segment.

While its order backlog has reduced to 250,000 units, it is on expected lines, given the improved supply. The success of Grand Vitara (9,000-10,000 units per month) is a case in point that customers are considering Maruti’s products as 'worthy contenders' even in the more than Rs 15,00,000 segment, where few investors were so far doubting the company’s 'right to win'.

Given a strong outperformance in Q2, we have raised our FY24-25 earnings by 10% / 7%—lower for FY25—as we expect the mix to gradually normalise as car demand will also pick up.

Given this and a roll forward to September-25 earnings per share (from June 2025 earlier), we revised our target price to Rs 12,052/share (from Rs 10,920/share). Maintain 'Buy'.

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