Hold Maruti Suzuki target of Rs 7500: Sharekhan
Sharekhan’s research report on Maruti Suzuki
After four consecutive quarters of decline, Maruti Suzuki India Ltd (MSIL) witnessed marginal growth of 1% in October-November 2019 with onset of festive. MSIL cleared excess inventory and the current stock is less than one month. Maruti also raised production by 4% in November 2019 after a gap of 9 months. While worst is over for MSIL, sustained recovery is some time away as weak economic growth coupled with cost increases (BS 6 norms and price hikes) would continue to impact the demand. We expect muted sales for the next two to three quarters. Have raised FY21 estimates by 4% to factor benefit of price hike announced from Jan 20.
Valuations at 23.2x FY22 earnings are expensive and at the higher end of the long term historical average. We retain Hold rating with unchanged PT of Rs 7,500.
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