Brokerage firm Anand Rathi has set a target price of ₹15,350 for Maruti Suzuki, citing a projected 10% volume growth through FY29. The outlook relies on increased manufacturing capacity and export expansion, though investors are watching for a recovery in profit margins after a recent quarterly decline.
Anand Rathi has set a target price of ₹15,350 for Maruti Suzuki, placing a focus on the automaker's strategy to ramp up production and grow its export business. The brokerage projects that the company will achieve a 10% volume growth rate annually through the 2029 financial year, supported by continued demand for its compact car models in the domestic market.
At the core of this growth expectation is a plan to add 500,000 units of manufacturing capacity. Expanding production is essential for the company to capture future demand, particularly as the compact segment continues to contribute significantly to its market share. Additionally, the company is leveraging its relationship with Toyota to boost exports, which analysts believe could help the company reach new international markets and diversify its revenue sources.
Despite the positive outlook on volume, the company faced financial headwinds in the second quarter of the 2027 financial year. Operating profits, or EBITDA, saw a 6% year-on-year decline to ₹47.6 billion. Protecting profit margins remains a key challenge for the company as it navigates the current economic environment. The brokerage expects a recovery in the second half of the fiscal year, driven by economies of scale as new production capacity comes online and potential adjustments to product pricing.
The target price for the stock has been adjusted down from the previous estimate of ₹16,250, reflecting changes in valuation models. The stock currently trades at price-to-earnings multiples of 21 times and 18 times for FY28 and FY29 estimates, respectively. While Maruti Suzuki maintains a strong position in the entry-level and compact vehicle segments, it faces intense competition from rivals such as Tata Motors, Mahindra & Mahindra, and Hyundai, particularly in the high-growth SUV segment. The company must carefully manage its costs and competitive pricing strategies to maintain its market standing against these peers.
Investors will likely track the company's ability to execute its capacity expansion plans on time and whether it can effectively improve its profit margins in the coming quarters. Monitoring how the company maintains its market share in the face of aggressive competition in the SUV category will also be important for assessing long-term performance.