Global brokerage Citi raised Buy-rated Maruti Suzuki India Ltd.’s target price to 15,500 rupees from 15,100 rupees per share after the Indian automaker’s 1QFY25 results beat its estimates.

“Maruti’s 1QFY25 results were above our estimates, driven by a strong margin expansion despite escalated discounts,” the brokerage said in an investor note.

Revenue at 355 billion rupees (+10% YoY) was 2% above estimate due to better mix and higher other operating income, while cost reduction, benign commodity prices and favorable foreign exchange trends boosted margin, Citi said.

EBITDA at 45 billion rupees (+51%YoY) was 7% above estimate, while net profit at 36.5 billion rupees (+47%YoY) was 11% above estimate, it added.

The brokerage said the management noted that heat wave and general elections impacted demand in 1Q, but the upcoming auspicious period could see some pent-up demand translating into volume uptick.

The company, a 58.19%-owned subsidiary of Japan’s Suzuki Motor Corporation, is making customer-focused efforts to boost volume and market share, it added.

Citi said the rural demand is witnessing stronger growth compared to urban demand, though overall industry volumes are likely to see modest year-on-year growth in FY25 due to a strong base.

It trimmed its volume estimates slightly as high base is impacting year-on-year volume growth in FY25, but lifted its earnings estimates marginally.

Citi said cost reduction, better mix, and expectations of benign commodity costs result in a 2%-4% increase in its EBIT estimates and a 2%-5% increase in earnings estimates over FY25-FY27.

“We maintain Maruti as the top sector pick, given strong profitability trends,” it said.

The brokerage said its positive stance on Maruti is predicated primarily on the company’s sustained dominance in the passenger vehicles (PVs) space in India.

The company has around 42% market share in overall domestic PVs, while in the passenger cars segment, its market share is even higher at around 63%, it noted.

“With the widest sales and service network, strong recall value in the small cars segment, and support from Suzuki (in terms of technology and new models), we expect Maruti to continue to dominate the India PV market,” Citi said.

Meanwhile, Morgan Stanley said Maruti posted “impressive results” in a tough quarter and lifted the Overweight-rated stock’s target price to 15,145 rupees from 14,105 rupees after rolling forward valuation to June 2026.

The brokerage also raised its earnings estimates by 7% for FY25 and 4% for FY26 on the back of the strong 1Q margin performance.

“Trailing underperformance versus Nifty Auto, relatively lower multiples, and consensus earnings estimate upgrades to drive outperformance,” Morgan Stanley said.

Maruti closed at 13,115.80 rupees on the National Stock Exchange in Mumbai trading yesterday.

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India Watch List For Wednesday - June 28