“Maruti Suzuki India continues to consider raising prices as last resort and focus will be on improving efficiencies and cost reduction. At Rs 1303, the stock trades at PER of 14.7x and 12.8x and EV/EBIDTA of 8.1x and 6.5x our FY11 and FY12 estimates respectively. We have upgraded our volume and EPS estimates as indicated below. Our volume upgrades for FY12 represents faster capacity addition. We have valued the stock at 7.5x EV/EBIDTA (lowest among large cap two wheelers and passenger vehicles), given structural change in margin profile and higher currency risk. Key upside risk arise from higher capacity increase vis a vis our expectation and pricing action. We upgrade the rating to ACCUMULATE from REDUCE. Raise TP to Rs 1450,” says Emkay Global Financial Services research report.
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