Buy Maruti Suzuki; target of Rs 13,750: Prabhudas Lilladher

What happened

Prabhudas Lilladher upgraded Maruti Suzuki to Buy from Accumulate and raised its target price to Rs 13,750. The brokerage said Q2FY27 operating revenue was fairly in line with estimates, while margins improved as Maruti partly reverted to a quarterly commodity settlement cycle with suppliers.

Confirmed

Global impact / market context

A higher target price signals the brokerage expects more earnings ahead, partly because quarterly supplier settlements give Maruti faster relief when commodity costs fall, supporting profit per sale. For investors, the upgrade implies the recent share price drop may be a buying opportunity rather than a warning.

Analyst inference

Maruti revised its second-half domestic volume guidance on sustained demand, but export volumes are expected to be roughly flat as geopolitical issues weigh on otherwise healthy demand. The brokerage expects raw material inflation to keep pressuring the industry, even as it projects revenue growth of 14.0% a year.

Analyst inference

What to watch

1. Watch whether Maruti's revised second-half domestic volume guidance is met, since sustained demand supported the revision, while export volumes are expected to be flattish because geopolitical issues overshadow healthy underlying demand. Confirmed
2. The brokerage's targets assume volume and realization growth of 9.7% and 4.0% a year over its forecast period, so watch actual sales and pricing to see whether those assumptions hold. Proposed
3. Watch raw material inflation, which the report says continues to hit the industry, and any further shift in how Maruti settles commodity costs with suppliers, because both feed directly into margins and profit per sale. Analyst inference

Evidence

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