Maruti Suzuki's Q2 FY27 PAT was below brokerage's estimate due to MTM losses, resulting in lower other income. However, Ebitda margin at 8.9% was higher than Motilal Oswal's estimate of 8.1%, fueled by gross margin expansion. The brokerage expects the auto major to sustain its outperformance in FY27, aided by a healthy launch pipeline, recovery in domestic passenger vehicle demand, lean channel inventory, and capacity ramp-up at its two new facilities. Continued market share gains should support further re-rating, believes the brokerage.

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Motilal Oswal Report

Domestic brokerage firm Motilal Osawl has reiterated its Buy rating on Maruti Suzuki India Ltd. with a target price of Rs 14,800, implying a potenital upside of 28% from the report market price, valuing the stock at 26 times FY28E earnings per share.

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Maruti Suzuki's Q2 FY27 PAT was below brokerage's estimate due to MTM losses, resulting in lower other income. However, Ebitda margin at 8.9% was higher than Motilal Oswal's estimate of 8.1%, fueled by gross margin expansion.

The brokerage expects the auto major to sustain its outperformance in FY27, aided by a healthy launch pipeline, recovery in domestic passenger vehicle demand, lean channel inventory, and capacity ramp-up at its two new facilities.

Continued market share gains should support further re-rating, believes the brokerage.

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Further sustained commodity inflation, an adverse export mix and limited scope for further price hikes are expected to weigh on near-term margins. Consequently, Motilal Oswal has cut its FY27E earnings estimates by 7%.

However, Motilal Oswal still expect gradual margin improvement as raw material costs moderate and volumes scale up and expects the auto major to deliver a 11% earnings compound annual growth rate over FY26–28E.

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