Target: ₹16,200
CMP: ₹13,260.20
Maruti Suzuki India Ltd (MSIL) has demonstrated steady performance in Q4, reporting a revenue increase of 28% year-on-year driven by a 12% growth in volumes and a 4% rise in average selling prices (ASPs) quarter-on-quarter. Earnings before interest, taxes, depreciation, and amortization margin (EBITDAM) decreased by 60 basis points quarter-on-quarter to 11.7% from 12.4% in Q3 FY26, after adjusting for a one-time impact of ₹590 crore, which affected labor costs.
Profit after tax (PAT) fell short of expectations, largely due to lower-than-anticipated other income, including a market-to-market loss of ₹750 crore. The company aims for a 10% growth in domestic passenger vehicle (PV) volumes for FY27, compared to the industry’s estimated growth of 5-7%, as reported by SIAM. This optimistic outlook is supported by a robust underlying demand and consumer sentiment, notwithstanding the geopolitical tensions in West Asia, illustrated by their order book of 190,000 units, including 130,000 from small cars. Additionally, channel inventory stands at a low 12 days as of the end of FY26, and the company is ramping up production in two new plants, which have capacity for 250,000 units each, in response to strong demand without significantly impacting margins during the ramp-up phase.
Commodity pressures are expected to persist, with an 80 basis points EBIT margin hit in Q4; however, the management is implementing several mitigation strategies. They noted potential for further improvement in ASPs beginning in Q4 FY26, driven by a shift towards higher-end models and an increasing electric vehicle (EV) mix. MSIL aims to gain market share in the PV sector, supported by a promising pipeline that includes seven new SUVs and multiple EVs expected by FY30. Earnings per share (EPS) estimates for FY27E and FY28E remain unchanged, and the company maintains a “Buy” rating with a target price of ₹16,200 based on a 28x FY28E core price-to-earnings ratio.
In conclusion, the preference is given to two-wheeler and commercial vehicle original equipment manufacturers (OEMs) over passenger vehicles, given a similar demand trajectory and greater pricing flexibility amid commodity pressures.
Published on April 29, 2026
