What Should We Expect From Maruti Suzuki India Limited’s (BOM:532500) Earnings In The Next Couple Of Years?

The most recent earnings release Maruti Suzuki India Limited’s (BOM:532500) announced in March 2018 confirmed that the business gained from a small tailwind, eventuating to a single-digit earnings growth of 4.93%. Today I want to provide a brief commentary on how market analysts perceive Maruti Suzuki India’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Maruti Suzuki India

Analysts’ outlook for this coming year seems buoyant, with earnings increasing by a robust 24.91%. This growth seems to continue into the following year with rates reaching double digit 48.63% compared to today’s earnings, and finally hitting ₹132.93b by 2021.

BSE:532500 Future Profit June 11th 18
BSE:532500 Future Profit June 11th 18

While it’s informative understanding the growth each year relative to today’s figure, it may be more insightful to estimate the rate at which the business is moving on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Maruti Suzuki India’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 17.51%. This means, we can assume Maruti Suzuki India will grow its earnings by 17.51% every year for the next couple of years.

Next Steps:

For Maruti Suzuki India, I’ve compiled three important aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is 532500 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 532500 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 532500? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!