ICICI Direct Sets Target of Rs 16,750 for Maruti Suzuki India

Maruti Suzuki India Faces Near-Term Margin Pressure, Maintains BUY

Maruti Suzuki India's (MSIL) fourth quarter fiscal year 2026 (Q4FY26) earnings before interest, taxes, depreciation, amortization, and management fees (EBITDAM) saw a 30 basis points (bps) decline from the estimated value. This dip, however, is expected to be offset by healthy pending bookings of over 190,000 units and a low channel inventory level. The ongoing demand momentum, fueled by the Goods and Services Tax (GST) cut, particularly in the small car segment (~70% of pending bookings), is likely to sustain domestic volume growth.

In contrast to export growth, which may be moderated by ongoing geopolitical tensions in the near term, MSIL's medium- to long-term prospects remain constructive. The company is expected to add approximately 0.5 million units in capacity in fiscal year 2027 (FY27), which may support overall volume growth. Our analysts forecast a compound annual growth rate (CAGR) of 10% for volumes, 17% for revenues, and 20% for earnings per share (EPS) over the period of FY26 to FY28.

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The company's outlook is expected to be influenced by commodity headwinds, which may weigh on margins in the near term. However, demand buoyancy and operating leverage could partially mitigate this impact. As a result, we maintain a BUY recommendation for MSIL, with a target price revised to INR 16,750 (previously INR 17,000) based on an earnings multiple of 25 times fiscal year 2028 (FY28) earnings per share.