Shares of Maruti Suzuki India slipped in trade on Friday after the company reported a fall in its net profit for the fourth quarter ended March 31, hurt by industry-wide weak demand. The carmaker's net profit fell by 4.6 percent to Rs 1,795.6 crore.

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Maruti Suzuki shares fell as much as 2.2 percent to Rs 6,749 per share intraday on the BSE.

The company's Q4 earnings were in line with Street expectations and brokerages believe that it remained well positioned to benefit from the transition to BS-VI given its higher share of petrol variants. However, they expect the demand to remain low in the near future.

Most brokerages maintained "buy" ratings on the stock and have raised their target price. However, Morgan Stanley cut its target to Rs 8,149 from Rs 8,188 per share on low margin, while maintaining an "overweight" call.

Kotak Securities was the only brokerage bearish on the stock. It downgraded the stock to "reduce" from "add" due to concerns on volume growth of the passenger vehicle industry over the next two years.

"We expect the domestic PV industry to grow at a muted pace over the next two years due to – increase in costs related to safety and emission regulations and the slowdown in urban areas. We cut our EPS estimates by 10-12 percent for FY20-21 and reduce our target to Rs 6,700 (from Rs 7,500 earlier) mainly led by a 4 percent cut in volume estimates and EBITDA margin," Kotak said in a report.

Deutsche Bank was 'neutral' on the stock on disappointment in profitability and does not expect a meaningful reduction in discounts anytime soon.

Macquarie gave an "outperform" call and has raised the target to Rs 7,600 from Rs 7,400 per share. Q4 EBITDA of 12 percent was lower than the brokerages' expectations. Lower volumes and higher discounts led to a 370 bps decline in margin, it added. It cut the company's FY20-21 EPS estimate by 8-9 percent to factor in lower volumes and margin.

Jefferies also had a "buy" rating, with target raised to Rs 8,000 from Rs 7,600 per share. Near-term cyclical challenges provide good entry opportunity and shift to Bs-VI spread across FY20, well ahead of the deadline will be beneficial for the carmaker.

Credit Suisse believes stock correction has been driven by earnings downgrades and may see further correction in the stock price. Valuations still remain steep and expect a margin of 12.8 percent in FY20. The brokerage maintains a "neutral" rating, target raised to Rs 6,300 from Rs 6,100 per share.

According to CLSA, demand remains weak but franchise strong and valuations finding support. They do not expect a recovery in demand in FY20, as well as the competition in passenger vehicles, remains benign. Margin to improve in coming quarters as the benefit of lower commodity flow through, it added.

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First Published:Apr 26, 2019 12:38 PM IST