Maruti Suzuki (MSIL IN) – Q3FY26 Result Update – Capacity expansion plans amid margin pressure – HOLD
Published on 31 Jan 2026
Supply constraints seen with 6-7% increase in 1st time buyers
MSIL’s Q3FY26 operating revenue was marginally below estimates (met PLe), while gross margin faced pressure due to commodity inflation. Inventory depletion, price reduction and Fx movement further weighed in on EBITDA margin. Additionally, with expansion into the EV space, we expect near-term margins to remain under pressure, partially offset by improving mix and operating leverage. New model launches, pass through of commodity inflation, especially after the re-introduction of steel safeguard duties, and sustenance of demand post-GST 2.0 will determine changes in growth expectations in the medium term. Further, higher depreciation from capacity expansion will impact EPS in the upcoming years. We estimate overall volume/ blended realization CAGR of 8.0%/ 9.1% over FY25-28E translating into revenue/EBITDA/EPS CAGR of 17.7%/17.4%/15.8%. Retain ‘HOLD’ rating with TP of Rs15,750 (previously Rs16,700), valuing the stock at 25x P/E on its Sep’27 earnings.
