Citi lowers Suzuki Motor stock price target on India sales concerns

Citi lowered its price target on Suzuki Motor Corp (7269:JP) (OTC: SZKMY) to JPY2,000.00 from JPY2,200.00 while maintaining a Buy rating, citing reduced India sales prospects and higher fixed costs. The company, currently trading at $47, maintains a strong financial position with an InvestingPro Financial Health Score of 3.4 (GREAT) and an impressive Altman Z-Score of 8.19.

The research firm revised down its estimates but noted they remain higher than Suzuki’s guidance, which Citi believes is based on conservative material price and cost assumptions. Citi indicated that profit impact from reduced electric vehicle production in India due to rare earth shortages would likely be negligible. With revenue growth of 8.39% and a 34-year track record of consistent dividend payments, InvestingPro analysis suggests the company remains fundamentally strong despite near-term challenges.

The firm warned of potential earnings risk if rare earth supply problems extend beyond EVs. Despite near-term challenges, Citi expects Suzuki’s operating profit margin to return to double-digits from fiscal year 2028, driven by growth in India and Africa, along with profitability-focused policies in Japan and other markets.

Citi’s price target reduction reflects both lowered earnings estimates and a reduced fair value multiple. The firm now considers Suzuki shares fairly valued at a price-to-earnings ratio of 10 times, down from its previous 11 times multiple. According to InvestingPro data, the stock currently trades at an attractive P/E ratio of 7.8x, suggesting potential undervaluation based on the platform’s Fair Value calculations.

The adjustment accounts for supply chain uncertainties, particularly regarding sales performance in India and rare earth availability, according to the research firm’s analysis.

In other recent news, UBS analyst Kohei Takahashi has adjusted the price target for Suzuki Motor Corp shares to ¥2,200, down from the previous ¥2,300, while maintaining a Buy rating on the stock. This revision reflects a cautious stance on the near-term sales outlook in India, currency fluctuations, and increased investment expectations. Takahashi has also reduced the earnings per share forecast by 8% for the fiscal year ending in March 2026 and by 7% for the following year. These adjustments are in response to anticipated softer demand in India and the impact of yen appreciation. Despite these factors, the analyst believes the current share price already accounts for the potential slowdown in the Indian market. Suzuki Motor’s strategic focus on small vehicles in emerging markets, including India and Africa, remains significant. The company’s emphasis on volume growth provides good visibility and makes its stock attractive to investors, according to Takahashi. The maintained Buy rating indicates a positive long-term outlook for the company, despite near-term headwinds.

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