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IDBI Capital
Maruti Suzuki (Buy)
Target: ₹10,405
CMP: ₹7425.75
Over the last 12 months, Maruti Suzki India Ltd (MSIL) has faced barrage of bad news including Covid -19 lockdown, unprecedented rise in Commodity prices, Bumper to Bumper Insurance and Semiconductor Chip shortages etc. We anticipate majority of these events are temporary in nature and may not last beyond 12 months. Hence the company falls in the category of "Great Company in Temporary Trouble". During FY12-21, MSIL’s volume grew by 3.8 per cent CAGR compared to Indian PV market which grew by 0.3 per cent CAGR due to poor consumer sentiments, demonetisation, GST implementation, BS4 to BS6 transition and Covid – 19 lock-down prevailed in the last decade. We believe, Indian PV market is on the verge of turnaround as Indian economy and manufacturing industry is in expansion mode followed by increasing trend towards having own vehicle among the masses.
Although MSIL has witnessed tepid volume growth over FY12-21, it has tripled its distribution outlet from 1100 to 3200+ and has well established itself to serve upcoming 4W demand in India. We remain super bullish on MSIL’s growth prospects. Over FY22-24, we expect MSIL to report 20.1 per cent volume CAGR and 46.7 per cent PAT CAGR. We recommend Buy and upgrade our price target from ₹8,585 to ₹10,405.
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