Maintain 'BUY' on Maruti Suzuki – TP increased to Rs.1575 - Geojit BNP Paribas

- Maruti's Q2FY13 earnings were encouraging, led by positive surprise on both top-line and margins.

- The improved macro outlook, normalisation of operations and steady commodity and FX trends should help the company sustain a high pace of earnings growth.

- Considering the macro outlook is much improved and some of Maruti's newly launched products have enjoyed encouraging consumer response, the company is expected to outpace industry growth in FY14.

- Scale, improved mix and steady commodity cost should also support margin improvement of 70 bps over FY13-15e.

- Improved outlook and attractive valuations (trading at a 25% discount to peers) are expected to drive the share price.

- FY13-15 earnings estimates have been increased by 5-11%, implying operating earnings CAGR of 24%.

- Maintain Buy on Maruti with a higher target price of Rs.1575 (vs. INR1390 earlier)

- Key risks to Target Price: major negative changes in legislation and consumer confidence.

Source : Equity Bulls

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