Maruti Suzuki’s Q1 net profit rose 2%, with revenue up 8% on strong exports
Operating margin fell 227 bps to 10.4% due to higher costs and forex impact
Jefferies and Nuvama raised price targets, betting on exports and new SUV launches
Brokerages have raised their price targets on Maruti Suzuki even as India's largest carmaker posted just a marginal 2% rise in its Q1 FY26 net profit along with a sharp drop in operating margins. The optimism stems from the company’s resilient export performance, upcoming product launches, and long-term growth potential despite near-term headwinds.
Maruti Suzuki reported a net profit of ₹3,712 crore for the June quarter, up from ₹3,650 crore in the same period last year. Revenue climbed 8% year-on-year to ₹38,414 crore, buoyed by a 37.4% surge in exports that offset a 4.5% fall in domestic sales volumes.
However, margins took a hit. Operating margin slid by 227 basis points to 10.4% from 12.67% in the year-ago quarter, weighed down by a combination of higher input costs, adverse foreign exchange movement, increased sales promotions and spending tied to its upcoming Kharkhoda plant. Still, the company managed to cushion the blow through cost-reduction efforts and a substantial increase in non-operating income.
Despite this, Jefferies has maintained its 'buy' rating on Maruti and raised its price target to ₹14,750 from ₹13,600, even as it flagged the fall in Ebitda, as a key concern. Jefferies noted that while the average selling price (ASP) improved, it was not enough to counter the margin pressure.
"Optimism on demand remains intact, but we've trimmed FY25–28 industry volume compound annual growth rate (CAGR) forecast to 6% from 8%. Market share loss in the passenger vehicle segment is still a concern," the brokerage said. That said, Jefferies expects a healthy 12% earnings per share (EPS) CAGR for Maruti over FY25–28, banking on new launches like a fresh internal combustion engine (ICE) SUV in FY26 and the company’s robust export segment.
Echoing similar optimism, Nuvama Institutional Equities highlighted promising launches ahead, including an electric Vitara and a new ICE SUV along with continued momentum in the SUV and CNG segments. With exports remaining a strong growth lever, Nuvama projects a revenue/Ebitda CAGR of 9%/10% over FY25–28, and expects a return on invested capital of over 50%. It retained its 'buy' call with a revised target of ₹14,300, up from the earlier ₹13,400.
