Target: ₹16,200
CMP: ₹13,260.20
Maruti Suzuki India Ltd has reported a steady Q4, with revenue up 28 per cent y-o-y led by 12 per cent y-o-y volume growth and ASPs up 4 per cent q-o-q. EBITDAM was down by 60bps QoQ at 11.7 per cent vs 12.4 per cent in Q3-FY26 (adjusted for a one-off ₹590 crore/120 bps labour core impact) due to 70bps gross margin (GM) contraction.
PAT missed estimates due to lower-than-expected other income (MTM loss: ₹750 crore). MSIL targets 10 per cent FY27 domestic PV volume growth (vs 5-7 per cent for the industry, per SIAM) aided by strong underlying demand and consumer sentiment despite the West Asia war (reflected in the 190k unit orderbook, 130k of which is from small cars), low channel inventory (12 days, as of FY26-end), and faster ramp up of 2 new plants (250kpa units each) given strong demand (with limited margin impact in the ramp-up phase).
Commodity pressure is seen sustaining (80bps EBITM hit in Q4), but multiple mitigation measures are underway; per the management, there is further headroom for improvement in ASPs from Q4FY26, led by higher-end models/rising EV mix. MSIL targets gaining PV market share led by a healthy pipeline (7 new SUVs, multiple EVs by FY30). FY27E/28E EPS is unchanged; maintain Buy with TP of ₹16,200 at 28x FY28E core PER.
We favour 2W/CV OEMs over PVs, on a similar demand trajectory, albeit with better pricing flexibility, amid commodity pressures.