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Maruti Suzuki - Margins decline, guides for 10% domestic volume growth in FY27E

ICICIdirect Research 30 Apr 2026 DISCLAIMER

MSIL reported steady performance in Q4FY26. Sales volume for the quarter stood at 6.76 lakh units, up 11.8% YoY with ensuing ASPs at ₹7.4 lakh/unit, up 4% QoQ,
EBITDA margins for the quarter came in at 11.7%, down 60 bps QoQ. Consequent PAT in Q4FY26 came in at ₹3,590 crore, down ~7% YoY; which includes mark-to-market (MTM) impact of ~₹750 crore (due to ~50 bps hardening of yield).
The company is entering a strong growth phase supported by improving demand and fresh capacity additions. The key positive is the revival in entry-level cars after the GST reduction, visible rise in first-time buyer mix (from 42% in H1 to 51% in Q4), robust pending orders of ~190,000 units, and lean dealer inventory of ~12 days.
Maruti is in the midst of adding ~500,000 units of annual production capacity in a single year which should gradually remove supply bottlenecks and supporting a guided ~10% domestic volume growth expectation. Exports also remain a major strength, with the company contributing 49% of India’s passenger vehicle exports.
While commodity costs and geopolitical risks may create short-term volatility, the broader outlook remains positive with Maruti well placed to benefit from rising car penetration, premiumization, and improving affordability in India.
With strong demand revival and market leadership along with capacity expansion in plans, amidst healthy macro-economic triggers in term of rationalisation of income tax rate, GST rate and 8th pay commission roll out, & new launches, we maintain our BUY rating on the stock with target price of ₹ 16,150; valuing it at 28x PE on of FY28E.

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