Maruti Suzuki India’s third quarter performance delivered healthy volume growth but fell short on profitability, prompting brokerages to trim earnings estimates and target prices even as they remain constructive on near-term demand trends.
Here is what brokerages had to say:
Jefferies: Good Growth, But EBIT Miss a Concern
Jefferies maintained a Hold rating on Maruti Suzuki while cutting its target price to Rs 16,000 from Rs 17,500, citing a miss at the operating profit level despite robust growth. Maruti’s December-quarter EBIT rose 21% year-on-year, but was about 7% below Jefferies’ estimates, primarily due to lower-than-expected average selling prices and margins.
Volumes grew a strong 18% year-on-year during the quarter, but ASPs declined 2% sequentially, largely due to a lower contribution from non-vehicle revenues. EBIT margin, excluding one-time labour code costs, improved 90 basis points quarter-on-quarter to 8.9%, aided by lower discounts, improved product mix and operating leverage. These gains were partly offset by price cuts, commodity cost pressures, higher fixed costs, foreign exchange impact and rare-earth constraints.
Jefferies remains positive on India’s passenger vehicle demand and Maruti’s export growth, supported by easing liquidity, GST cuts, upcoming government wage hikes and improving registrations. However, it is skeptical about any meaningful improvement in domestic market share or margins. Maruti’s PV market share has fallen to a 13-year low of around 40% in the first nine months, reflecting the industry’s shift toward SUVs, where the company’s presence has historically been weaker.
While the new SUV Victoris has seen encouraging traction, Jefferies believes margin improvement will remain modest as the company prioritises regaining market share amid intense competition and rising commodity prices. As a result, the brokerage cut FY26–FY28 EPS estimates by 3–5% and continues to prefer Mahindra & Mahindra in the passenger vehicle space.
Morgan Stanley: Overweight on Valuations, Margin Upside Capped
Morgan Stanley maintained an Overweight rating but reduced its target price to Rs 17,804 from Rs 18,489. The brokerage flagged that third quarter EBIT was about 4% below estimates, with commodity headwinds limiting margin upside despite a robust volume outlook.
Morgan Stanley believes Maruti’s strong volume growth, combined with valuations that are below the sector median, justifies its overweight stance. However, it has trimmed fiscal year 2026 and financial year 2027 earnings estimates to factor in sustained commodity cost pressures that could cap near-term margin expansion.
Citi: Near-Term Demand Buoyant, Long-Term Sustainability Unclear
Citi retained a Buy rating while cutting its target price to Rs 18,200 from Rs 19,000. The brokerage noted that third quarter results were below estimates, with the miss amplified by one-off costs related to new labour code norms that were included in operating expenses.
Adjusted for these one-offs, EBIT and profit still came in below expectations, largely due to weaker ASPs. Citi highlighted that demand has turned buoyant in the near term following GST cuts and improved consumer sentiment, reflected in strong volumes and a healthy order book. However, it cautioned that the sustainability of this demand surge remains an “imponderable,” with clearer trends expected over the next few months.
Citi added that while commodity costs are rising, management expects operating leverage from higher volumes to offset margin pressures, making volume growth critical for profitability. The brokerage modestly cut its EBIT and profit estimates for FY26–FY28 but continues to see Maruti as well positioned given improving demand and market share trends.
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