MARUTI - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.5

Maruti Suzuki is a fundamentally strong auto stock with excellent financial health, zero debt, and consistent growth. While valuation is fair, short-term caution is advised due to margin pressure.

📊 Financial Overview

• Revenue Growth: Q2 FY26 revenue rose 13.07% YoY to ₹42,344 Cr

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• Profitability: PAT stood at ₹3,293 Cr, up 7.3% YoY but down QoQ

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• Margins: ROCE at 21.7%, ROE at 15.6% — solid capital efficiency
• Debt Profile: Debt-to-equity ratio of 0.00 — completely debt-free
• EPS: ₹453 — supports strong valuation and dividend payout

📈 Valuation Metrics

• P/E Ratio: 35.8 — in line with industry average of 35.0
• P/B Ratio: ~5.2 — reasonable given book value ₹3,098
• PEG Ratio: 0.50 — indicates undervaluation relative to growth
• Intrinsic Value: Estimated around ₹16,500–₹17,000 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: India’s largest passenger car manufacturer with dominant market share
• Moat: Strong brand equity, extensive dealer network, and cost-efficient manufacturing
• Growth Drivers: EV expansion, export growth, and premium segment penetration

📌 Entry Zone Recommendation

• Suggested Entry: ₹15,500–₹15,800 — near DMA50 and RSI neutral zone
• Technical Indicators: RSI at 55.8 (neutral), MACD positive — bullish momentum

📈 Long-Term Holding Guidance

• Strong fundamentals, zero debt, and leadership in auto sector make Maruti a reliable long-term hold
• Ideal for growth-oriented investors with a multi-year horizon

✅ Positive

• Consistent revenue and profit growth
• Zero debt and strong return metrics
• PEG ratio indicates undervaluation
• FII holding increased by 0.58%

⚠️ Limitation

• QoQ profit declined from ₹3,712 Cr to ₹3,293 Cr
• EBITDA margin contracted by 140 bps to 10.5%

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• DII holding declined by 0.70%

📰 Company Negative News

• EBITDA margin pressure due to higher discounts and marketing spends

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🌟 Company Positive News

• Q2 FY26 profit up 8% YoY; revenue up 13%

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• Stock delivered 46% gains over the past year

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🏭 Industry

• Auto industry P/E at 35.0 — Maruti trades in line
• Sector driven by EV adoption, export demand, and premiumization

🧾 Conclusion

• Maruti Suzuki is a fundamentally sound auto leader with strong growth and financial stability
• Accumulate near support zones for long-term gains; monitor margin trends

Sources

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