Credit Suisse remains neutral on Maruti Suzuki, target price Rs 5,700

Credit Suisse has maintained neutral rating on Maruti Suzuki India in the long term with a target price of Rs 5,700. At current volumes, negative operating leverage will persist unless demand picks up meaningfully, said Credit Suisse. The stock ended down 0.3% at Rs 6,206.95 on Thursday when the Sensex ended 1.59% down at 36,472.93.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 18738.80 crore, down -9.65 % from last quarter sales of Rs 20740.70 crore and down -14.10 % from last year same quarter sales of Rs 21813.80 crore. The company has reported net profit after tax of Rs 1363.40 Crore in latest quarter.


Investment Rationale

At current volumes, negative operating leverage will persist unless demand picks up meaningfully, said Credit Suisse. With discounts/ incentives rising to drive retails, and an unfavourable yen-rupee, the brokerage has highlighted further risks to margins. On reported P/E, multiples have corrected back to the 5-year average but on core P/E they are still higher, said Credit Suisse.