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Maruti Suzuki up 8% in 2 days; stocks close to record high in Q2 2023

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Actions rose nearly 3 percent to hit a fresh 52-week high of Rs 9,737.40 during intra-day trade on Monday after the automaker reported strong results for the September quarter (2QFY23). The stock is up 8 percent over the past two trading days.

Shares of the major auto maker were trading close to the record high of Rs 10,000 they touched on December 20, 2017. They have gained 11 percent in the past week, compared to the S&P BSE’s 1.2 percent rise. Sensex.

Maruti Suzuki India’s consolidated net profit jumped 334 percent year-on-year to Rs 2,112 crore in the second quarter of 2023 on the back of chip supply issues, highest-ever sales and a favorable exchange rate.

The gain was also driven by higher operating margins as well as other income. At the same time, EBITDA margin increased by 204 basis points quarter-over-quarter (QQ) to 9.3 percent in Q2 2023.

“The company’s unit sales jumped 36.32% YoY to 517,395 units in Q2 2023, while exports stood at 63,195 units. Sales profit jumped 48% YoY to Rs 28,545 crore. Backlog of customers stood at around 412,000 vehicles at the end of Q2, of which 130,000 pre-bookings are for newly launched models,” the company said.

Hence, analysts at ICICI Securities maintain their ‘buy’ rating, tracking the industry’s headwinds of under-penetration in the domestic PV segment, benign RM price outlook and robust order book.

“High demand for SUV space is driving model refreshes, higher-end model bookings and consistent ASP growth. A pipeline of new product launches coupled with a robust order backlog of over 4 lakh units, of which ~130,000 pre-orders are for newly launched vehicles Looking ahead, we expect the UV portfolio to outperform,” the brokerage firm said while sharing a target price of 11,200 rupees per share.

Meanwhile, analysts at Motilal Oswal Financial Services (MOFSL) believe the company is on a solid footing to recover market share and margins as launches gain momentum and chip shortages are resolved.

“High demand and a favorable product life cycle for bodes well for market share and margins. We expect both market share and profitability to recover in H2 2023 on the back of improved supply, favorable lifecycle and product mix, RM and currency related benefits and operating leverage,” brokerage MOFSL said.

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