Maruti Suzuki India Limited, the country's largest passenger vehicle manufacturer, has released its results for the first quarter of fiscal year 2025-26. While the market witnessed a slight downturn following these results, brokerage firms have adopted a positive outlook towards the company's future. Several major brokerage houses have given a 'BUY' rating to Maruti's shares and expect a return of 13 to 17 percent in the coming months.
Initial Dip in Shares but Brokerage Confidence Remains Intact
Maruti Suzuki's shares fell by nearly 2 percent in early trade on August 1st. This was mainly due to the Q1 results, which were in line with market expectations. However, despite the decline, brokerage houses are optimistic about the stock. They believe that the company's new products, increasing exports, and improved mix strategy can deliver better performance in the future.
Motilal Oswal Expresses Confidence in the Share
Brokerage firm Motilal Oswal has maintained a 'BUY' rating on Maruti Suzuki's shares. The company has set a target price of ₹14,476 for this stock. This shows an upside of approximately 15 percent from the current price.
The brokerage believes that Maruti can register an annual income growth of 10 percent between FY25 and FY27. This growth will primarily be driven by the company's new models, improved product mix, and expansion in exports. Additionally, the company's valuation is considered attractive, with an estimated 25.9 times for FY26 and 23.4 times for FY27.
Nuvama Also Shows Momentum, Target ₹14,300
Nuvama Institutional Equities has also advised buying Maruti Suzuki shares. The brokerage house has set a target price of ₹14,300, which indicates an expected return of about 13 percent.
The company's first-quarter income has increased by 8 percent year-on-year to ₹38,410 crore, which is 5 percent higher than estimated. The brokerage says that this growth was possible due to a good model mix, improvement in regional sales, and increasing demand for CNG vehicles.
Although EBITDA has registered a decline of 11 percent, it was in line with expectations. Nuvama has increased the company's EPS estimate for FY26 and FY27 by 2 to 4 percent. This is attributed to the upcoming e-Vitara model, ICE SUV, and the surge in the SUV and CNG segments.
How was the Company's Performance in Q1?
In the first quarter of fiscal year 2025-26, Maruti Suzuki's net profit increased slightly to ₹3,792.4 crore. In the same quarter last year, the company's profit was ₹3,759.7 crore.
Although domestic sales were affected due to a decline in sales of small cars and weak demand in urban markets, the 37 percent export growth compensated for the loss.
During the quarter, the company's total income increased by 10 percent to ₹40,493 crore, while it was ₹36,840 crore in the same period last year.
What was the Status of Vehicle Sales?
Maruti sold a total of 5,27,861 vehicles in the April-June quarter. Out of these, 4,30,889 vehicles were sold in the country and 96,972 vehicles were exported.
There is a continuous increase in demand for CNG vehicles and the SUV segment, which has helped the company to increase sales. On the other hand, there has been a slight slowdown in the demand for small cars in urban areas.
Company Strategy
Maruti Suzuki is now focusing on SUVs and electric vehicles. The company intends to increase its stake in the SUV segment, where brands like Hyundai, Tata, and Mahindra currently dominate.
The company may launch e-Vitara and some new ICE SUVs in the coming months. Also, new markets are being focused on to increase exports.
