Maruti Suzuki shares in focus after Q1 beat estimates. Should you buy, sell, or hold?

Time of India

4 days ago

Maruti Suzuki posted a marginal 0.9% YoY rise in consolidated net profit to Rs 3,792 crore for Q1FY26, with revenue growing 8% to Rs 38,605 crore. On a standalone basis, profit and revenue beat ET NOW estimates, while EBITDA came in higher at Rs 3,996 crore. The performance reflects resilience despite cost pressures and modest top-line growth.
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What should investors do? Here's what brokerages say
Nuvama
Avendus
Shares of Maruti Suzuki India will be in focus on Friday after the automaker reported a marginal 0.9% year-on-year (YoY) increase in consolidated net profit to Rs 3,792 crore for Q1FY26, compared to Rs 3,760 crore in the same quarter last year. Revenue from operations rose 8% YoY to Rs 38,605 crore, up from Rs 35,779 crore a year ago.On a standalone basis, the company reported a net profit of Rs 3,712 crore, beating ET NOW's poll estimate of Rs 3,087 crore. Revenue stood at Rs 38,414 crore, above the forecast of Rs 36,288 crore. EBITDA came in at Rs 3,996 crore, compared to an estimate of Rs 3,790 crore.Despite the earnings beat, sequential performance showed some softness. Net profit dipped 3% quarter-on-quarter (QoQ) from Rs 3,911 crore in Q4FY25, while revenue declined 0.5% from Rs 38,605 crore.Maruti reported a 1% YoY increase in total sales volume to 5,27,861 units during the quarter. Net sales rose 8% YoY to Rs 36,625 crore. However, operating EBIT declined 19% YoY to Rs 3,058 crore, indicating margin pressure despite revenue growth.The margin decline was attributed to adverse commodity prices, foreign exchange headwinds, increased sales promotion expenses, and new plant-related costs at the Kharkhoda greenfield facility. Segment-wise, domestic sales fell 4.5% YoY to 4,30,889 units, weighed down by a sharp 36.6% drop in Mini segment sales to 19,522 units. Exports, however, rose 37.4% YoY, helping offset weakness in domestic volumes.In its earnings release, the company noted, 'In Quarter 1, the domestic passenger vehicle industry continued to witness a sluggish demand environment. For the company, a decline in domestic sales of 4.5% was compensated by robust export growth, resulting in an overall sales volume increase of 1.1%.'Nuvama raised its target price on Maruti to Rs 14,300 from Rs 13,400 and maintained a 'Buy' rating.It said Q1 EBITDA was in line with expectations and expects a revenue/EBITDA CAGR of 9%/10% over FY25–FY28E. RoIC is expected to remain strong at 50%+, and EPS estimates for FY26E and FY27E have been revised upwards by 2% and 4%, respectively. The valuation is based on 27x Sep-27E EPS and Rs 2,225/share in cash.Avendus raised its target price to Rs 13,350 from Rs 13,155, maintaining an 'Add' rating.It warned of margin pressures due to a higher EV mix and discounting amid slowing demand, but expects improved product mix and favorable operating leverage to help. UVs are projected to comprise 41% of domestic volumes by FY27E.Strong export growth is expected through Suzuki and Toyota's global networks. FY27E margin is estimated at 9.9%, translating to an EBITDA per unit of around Rs 84,000.