Maruti Suzuki (MSIL IN) – Q2FY26 Result Update – Strong realization, post GST 2.0 volume spurt – HOLD
Published on 02 Nov 2025
MSIL reported mixed numbers with operating revenue surging due to better-than-expected realization, but profitability missing estimates due to higher commodity & promotions costs (which we expect to continue along with margin pressure from EVs) and lower non-operating income. However, improved mix from new launches and better scale should partially offset the drag on margins ahead. The management expects overall industry to grow by 6% and its small cars (18% GST bracket) to grow by ~10% in H2FY26 & beyond. Post-festive sustenance of demand and response to new launches & related cannibalization are to be watched out for. We marginally tweak volume, realization and margin estimates. The stock has run up ~25% since the 1st GST change announcement on 15th Aug’25. We expect its overall volume and blended realization to grow at 7.5% & 9.3% CAGR, respectively, over FY25-28E translating to revenue/EBITDA/EPS CAGR of 17.5%/15.7%/16.1%. Retain “HOLD” rating with TP of Rs16,215 (previous Rs15,764), valuing the stock at 25x P/E on its Sep’27 earnings. The stock currently trades at a P/E of 27.5x/24.4x based on FY27E/FY28E consensus earnings.
