Brokerage firm Prabhudas Lilladher has upgraded Maruti Suzuki India to 'Buy' with a price target of Rs 13,750. The firm cites improved profit margins following a return to quarterly commodity settlements with suppliers. While domestic demand looks steady, investors may keep an eye on potential export risks due to geopolitical factors.
Prabhudas Lilladher has upgraded Maruti Suzuki India to a 'Buy' rating, setting a new target price of Rs 13,750. This shift from its previous 'Accumulate' stance follows a review of the automaker's second-quarter performance and its recent operational changes. A primary reason behind this upgrade is the company’s transition back to a quarterly commodity settlement cycle with its suppliers. By reviewing and settling raw material costs on a quarterly basis rather than shorter or longer intervals, the company expects better cost management, which has already started to support operating margins.
Growth Projections and Volume Outlook
The brokerage anticipates a steady growth trajectory for the automaker through the 2029 fiscal year. Projections point toward a compound annual growth rate (CAGR) of 14% for revenue, 13.3% for EBITDA, and 12.1% for adjusted profit after tax. These estimates reflect confidence in the company’s ability to maintain its market position despite the broader challenges in the automotive sector. The target price of Rs 13,750 was calculated using a price-to-earnings (P/E) multiple of 23 times the anticipated earnings per share for September 2028.
While the company has updated its domestic volume guidance to reflect expected demand, the international outlook remains cautious. Management has indicated that exports are likely to remain flat in the near term. This is primarily because of ongoing geopolitical tensions, which can create uncertainty in global trade and impact the company's export realizations. Even with healthy underlying demand, these external pressures could lead to short-term volatility.
Sector Context and Investor Focus
Investors should note that the automotive industry continues to face headwinds from raw material price inflation, which can put pressure on profit margins. However, the brokerage suggests that the recent correction in Maruti Suzuki’s stock price may offer a more attractive entry point for those looking at long-term earnings potential.
For investors, the most critical monitorable will be the company’s margin performance in the coming quarters. Tracking whether the quarterly commodity settlements successfully protect profitability against raw material inflation will be important. Additionally, watching how the company manages the flat export growth against the resilient domestic demand will provide a clearer picture of its overall financial health in the coming months.