INSUBCONTINENT EXCLUSIVE:
Brokerages have cut earnings estimates for Maruti Suzuki (India) by 3-13 per cent for the ongoing financial year after the auto maker
reported a weak set of numbers for the March quarter.
“MSIL’s strong brand, wide distribution, apt portfolio for India and low
penetration of cars in India keep us constructive on MSIL in the long term
However, given near-term pressure on volumes and elongated margin recovery, we cut our EPS estimates by 7-13 per cent for FY20/21,” said
Investec, downgrading the stock to ‘hold’.
Edelweiss also downgraded the stock to ‘reduce’, saying that the 25 per cent dip in
EBITDA in the fourth quarter reflects concern over a weakening revenue profile in a subdued demand and competitive environment.
Nomura
believes that Maruti Suzuki India is best positioned to capitalise on the long-term growth of India’s passenger vehicle industry but the
they too have downgraded the stock given the subdued near-term demand outlook for the industry and the company’s ability to fully pass on
the regulatory costs.
CLSA has also cut EPS estimates for FY20 by 3 per cent but it has maintained buy rating on the stock
While CLSA is cautious on Indian auto space, but it is bullish on Maruti given its solid franchise, benign competition and good longterm
growth outlook.
Bloomberg data shows that 36 of 55 analysts tracking the stock have a buy rating on it, while 11 have hold rating and eight
analysts have a sell rating
The consensus target implies an upside of 7.7 per cent to the stock’s current price
The stock ended down 1 per cent at Rs 6,832.15 on Friday.
