Maintain 'buy' on Maruti Suzuki - TP Rs.1800 - Geojit BNP Paribas Financial Services

- Buy rating on Maruti Suzuki is maintained with an unchanged target price of Rs.1800. Current price of the stock is in the range of Rs.1600.

- Maruti's earnings surprised significantly on operating and net earings level though sales growth was a marginal disappointment.

- Normalisation of operations, improved market outlook and favorable foreign exchange trend would help the company sustain a high pace of earnings growth.

- Though the demand trends are weak, leading indicators suggest that demand will recover considerably in FY14 and FY15.

- It is expected that the company could report double digit volume growth aided by low inventory levels, additional diesel engine capacity, new product launches in 2HFY14 and continued uptrend in the existing models.

- A positive outlook and attractive valuations would continue to drive the share price performance.

- The target price of Rs.1800 is based on a P/E multiple of 15 of the expected earnings in FY15.

- Major changes in legislation and consumer confidence are major risks to the target price.

Source : Equity Bulls

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