Should you buy Maruti Suzuki shares post Q4 results?

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Brokerages retained their bullish view on Maruti Suzuki despite it posted a 6.14% decline in consolidated net profit at Rs 1,241.1 crore for the fourth quarter ended March 31, 2021. It had posted a profit of Rs 1,322.3 crore in the January-March quarter of 2019-20. However, revenue from the sale of products stood at Rs 22,959.8 crore as compared with Rs 17,187.3 crore earlier, up 33.58 per cent.

HDFC Securities maintained ‘Buy’ on the country’s largest carmaker with a price target of Rs 7,750. “Maruti’s order backlog though remains healthy at 2,00,000 units due to sustained demand for personal mobility. We believe the original equipment maker (OEM) will address white spaces in the SUV segment (management has acknowledged gaps in its product portfolio),” the brokerage said. Shares of the company traded 0.39% up at Rs 6,584 at around 10 am (IST). On the other hand, the benchmark BSE Sensex was up 366 points, or 0.75%, at 49,310 at around the same time.

The company said it sold a total of 4,92,235 vehicles during the fourth quarter, higher by 27.8 per cent as compared to the same period previous year. Sales in the domestic market stood at 4,56,707 units, up by 26.7 per cent. Exports were at 35,528 units.

On a standalone basis, the auto major reported a net profit of Rs 1,166.1 crore, down 9.7% from the same period of the previous fiscal, due to “lower non-operating income owing to mark-to-market loss on invested surplus”. Net sales stood at Rs 22,958.6 crore on a standalone basis, an increase of 33.6% compared to the same period previous year.

Motilal Oswal Financial Services is also positive on Maruti Suzuki with a price target of Rs 8,450. “While Maruti Suzuki has seen a strong demand recovery, sharp commodity cost inflation and the recent lockdown have delayed a margin recovery. We expect recovery for both market share and margin in the second half of FY22, led by favourable product lifecycle and mix, and price action/cost-cutting,” Motilal Oswal Financial Services said in a report.