Broker’s call: Maruti Suzuki (Buy)

Target: ₹15,533

CMP: ₹ 12,695.75

Maruti Suzuki’s Q4-FY24 print was in-line with our estimates. Revenue/EBITDA/PAT grew 19.3/39.8/47.8 per cent y-o-y. Overall volumes grew 13.4 per cent backed by 12.2/21.7 per cent growth in domestic and international business. Strong demand trend and customer skewness towards SUV/CNG led to highest ever quarterly sales volume/exports in Q4.

Management alluded strong performance to, improved consumer sentiment post lean phase Nov 23, better product mix of SUV’s and CNG/Hybrid in fuel, and surge in export volumes. Share of firsttime buyer at about 43 per cent, inventory level at 130k. Green vehicle contribute 42 per cent of sales, Avg. discount decline to ₹14,500k/unit, yet supply constraint of CNG vehicle led to pending order backlog of about 200K units (111k CNG), along with 60bp one off impacted margins in Q4.

Gross margin inched up to 28.6 per cent (+192p) y-o-y. Despite higher A&P spend, other exp. (19.5 per cent), employee cost (22.7 per cent) EBITDA margins grew to 12.3 per cent (+180bp). MSIL crossed 2 lakh mark in FY24. Management expect CNG/exports volume to reach 600k/300k units in FY25, though weakness in Mini/compact to continue. MSIL would outperform industry in our view.

We tweak earnings and remain upbeat on MSIL’s operating performance and maintain Buy rating with revised TP of ₹15,533.