Add Maruti Suzuki India Ltd For Target Rs. 13,100 By Choice Broking Ltd
Exports continue to be a growth driver for MSIL:
Exports for the quarter stood at 96,972 units showcasing a growth of about 37.4% over Q1FY25. MSIL commanded nearly a 47.1% share of India's total passenger vehicle exports in Q1FY26. MSIL also plans to export its first electric SUV, the e-Vitara, to around 100 countries. We believe that exports will play a crucial role for MSIL and provide a cushion when domestic growth is currently muted. MSIL has been successful in its efforts to increase exports, and we expect growth momentum to continue with the revenue from the export segment to grow at a CAGR of 25.4% over FY25-28.
View and Valuation: We remain positive on the long term growth of the company driven by a large distribution network; largest low emission product portfolio with new launch in the EV segment and growing export volumes. However, the domestic PV industry is expected to have lower single digit growth for FY26. Consequently we revise our FY26/27 EPS estimates downwards by 3.3%/1.6% and introduce FY28E estimates. We maintain our ‘ADD' rating on the stock with a revised target price of INR 13,100, valuing the company at 22x (unchanged) on the average FY27/28E EPS.
Q1FY26 results slightly better than estimates
* Revenue was up 8.1% YoY and down 5.6% QoQ to INR 3,84,136Mn (vs consensus est. at INR 3,63,713Mn) led by 1.1% YoY growth in volume and 6.9% YoY growth in ASP.
* EBITDA was down 11.3% YoY and down 6.3% QoQ to INR 39,953Mn (vs consensus est. at INR 37,958Mn). EBITDA margin was down 227bps YoY and down 8bps QoQ to 10.4% (vs consensus est. at 10.4%). The decline in EBITDA margin was driven by higher RM cost and employee cost.
* PAT was up 1.7% YoY and flat QoQ to INR 37,117Mn (vs consensus est. at INR 30,758Mn), mainly due to higher other income.
EBITDA Margin Impacted by Ramp-Up Costs and EV Launch; Normalization Expected Ahead:
EBITDA margin for Q1FY26 declined to 10.4% from 12.7% in Q1FY25, primarily due to higher expenses related to the new Kharkhoda plant (which began production in Mar-25), adverse commodity costs (mainly steel) and increased advertising spend for the e-Vitara unveil. We expect the EBITDA margin to normalize going forward as the plant ramps up production in the coming quarters. The EV segment which is set to begin sales in H1FY26 with an expected 3–4% penetration by FY26 may have a slight drag on the margin due to much lower profitability compared ICE vehicles.
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