Maruti Suzuki Sees Target Price of Rs 14,550, Says Prabhudas Lilladher

Maruti Suzuki's Q4FY26 Results Surpass Estimates, but Margins Face Pressure

Maruti Suzuki India Limited (MSIL) has reported its Q4FY26 operating revenue, which exceeded market estimates. However, the company's margins were impacted by rising commodity prices and expenses related to new model launches. MSIL is projecting a 10% year-over-year (YoY) growth in domestic passenger vehicle (PV) volume for FY27, surpassing the Society of Indian Automobile Manufacturers (SIAM) recent industry estimates of 5-7%. This growth is expected to be driven by the company's efforts to address order backlogs through accelerated capacity expansion, robust exports, and a depreciating Indian rupee (INR).

Key Factors Influencing MSIL's Performance

The company's near-term margins are expected to remain under pressure due to geopolitical risks, higher raw material (RM) prices, and the ramp-up of electric vehicles (EVs). However, this will be partially offset by a better product mix, price increases, and operating leverage. Given the recent correction in the stock, Prabhudas Lilladher's research team believes that it presents a good entry point to accumulate MSIL shares.

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Outlook and Recommendations

The research team estimates that MSIL's volume and realization will grow at a compound annual growth rate (CAGR) of 6.2% and 6.3%, respectively, over FY26-28E. This is expected to translate into revenue, earnings before interest, tax, depreciation, and amortization (EBITDA), and profit after tax (PAT) CAGR of 12.8%, 14.2%, and 17.3%, respectively.

We reiterate our 'Accumulate' rating for MSIL with a target price (TP) of INR14,550 (previously INR15,200), valuing the company at a price-to-earnings (P/E) ratio of 23x FY28E earnings per share (EPS).

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