Maruti Suzuki has underperformed the markets
thus far in calendar year 2018 (CY18) by falling around 8% as compared to 0.4% rise in the Nifty50 and around 4% fall in the Nifty Auto index, ACE Equity data shows.
Analysts expect the earnings upgrade cycle for Maruti to continue in FY19 as well, driven by higher volumes and margins.
"Our FY19/20 consolidated earnings per share (EPS) is higher by 5% / 13% than the consensus, led by higher margins. The stock trades at 26x/20.1x FY19/20E consolidated EPS. Maintain 'buy' with a one-year target price of Rs 10,525. Over 3 years, we estimate total return of 15.3% CAGR with target price of Rs 14,213," says an analyst tracking the company with Motilal Oswal Research in a recent report.
Meanwhile, here's what leading brokerages expect from Maruti's Q4FY18 numbers due later on Friday.
BNP Paribas research
4QFY18E revenue to grow at 14.7% y-o-y supported by 11.6% y-o-y volume growth and higher realisations on a better mix. Strong realisation due to better product mix (Dzire and Baleno) and less discounting vs 4QFY17 which was impacted by demonetisation and Gujarat plant ramp-up costs.
Expect 135bp y-o-y EBITDA margin gain on higher volume, better mix and less discounting, partly pulled down by higher commodity costs. Watch out management commentary on retail demand; industry discounting; inventory; rural demand trends; Gujarat plant ramp up; EVs; collaborations; road-map for FY19 and ahead. Our 12-month DCF-based target price is Rs 10,600.
Kotak institutional equities
We expect revenues to increase by 14% y-o-y in 4QFY18 on the back of 12% y-o-y volume growth and 4% y-o-y increase in realizations due to a better product mix (higher Baleno and Brezza volumes). We expect EBITDA to increase by 27% y-o-y in 4QFY18 led by strong revenue growth and operating leverage benefits.
We expect revenue growth of 13% y-o-y driven by volume growth of 11.4% Y-o-y and favourable mix. We expect operating margins to remain flat sequentially at 15.8% as benefits of a favourable mix are offset by slightly lower volumes and Gujarat plant ramp up.
We expect revenues to grow by 13% y-o-y (+7% q-o-q) to Rs 206 billion, led by growth of +11% y-o-y (+7% q-o-q) in sales volumes. EBITDA margin is pegged at 15.5%, due to better scale and favourable product mix. Adjusted PAT (profit after tax) is likely to increased +22% y-o-y (+15% q-o-q) to Rs 20.7 billion.