Maruti Suzuki Q1 Results Review - Higher-Than-Normal CNG Mix Drives Profitability Beat: ICICI Securities

ICICI Securities Report

Favourable CNG mix, we believe, helped Maruti Suzuki India Ltd. deliver a 110 basis points Ebitdam beat, up 12.7% in Q1 FY25. Ebitdam was up 40 bps QoQ versus Street’s 11.6% with improved gross margins (+120bps QoQ) driving the delta amid lower scale QoQ impacting other cost line-items.

Better gross margins were led by favorable mix of CNG models, stable commodity prices and beneficial forex moves.

Average selling price rose 4% QoQ despite blended discount escalating ~Rs 7200/unit QoQ (Rs 21,700/unit) due to the higher CNG mix. Maruti Suzuki’s Q1 FY25 CNG mix was at 33% versus 27% in FY24.

We factor in ~2.2 million units for FY25E, 8% YoY growth and Ebitdam of ~12.2%. Retain Add; DCF-based target price at Rs 13,995 (from Rs 13,381), implying 26 times FY26E core earnings. Target price change is driven by a 6% rise in FY26E EPS (led by 30 bps higher margin); and earnings rollover.

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