Maruti Suzuki shares surged 3% to a day high of Rs 11,389.75 on the BSE today, rebounding from a roughly 4% decline the day before following poor Q2 earnings.

The company recorded a 17% drop in standalone net profit for the September quarter, totaling Rs 3,069 crore. Brokerages have also expressed concern about the market for entry-level autos.

The profit was lower than the Street's expectation of Rs 3,525 crore.

The company's operating revenue for the quarter was Rs 37,203 crore, up 0.37% from Rs 37,062 crore in the same period last year. The income also fell short of the Street forecast of Rs 37,322 crore.

Should you buy, sell, or hold Maruti Suzuki stock? This is what analysts say:

UBS 

UBS maintains a 'Buy' rating on Maruti Suzuki, lowering the target price to Rs 14,800 from Rs 15,200. While the Q2 results were below forecasts, the outlook for demand and profits has improved. UBS observes that the scenario is not as difficult as initially expected, which supports the "Buy" recommendation based on excellent prices. In Q2 FY25, gross margin reduction reduced EBITDA, although adjusted PAT exceeded expectations.

Festive demand continues high, with inventory and discounting under control.

Investec

Investec has maintained a 'Hold' rating on Maruti Suzuki and reduced the target price to Rs 12,385 from Rs 14,030. The rating reflects an operational miss and a negative outlook, mostly owing to margin pressures. Maruti is forecast to see mid-single-digit volume growth in FY25, although demand in the entry-level car category remains poor as consumer tastes shift toward premium vehicles

Investec is cautious, expressing concerns about the negative outlook for entry-level vehicles and the potential risks linked with the EV transition, given Maruti's reliance on Toyota for technology.

Nuvama

The company reported Q2 FY25 sales and EBITDA in line with expectations. The festive season is predicted to climb by 14%, driven by high UV sales and improved rural demand. Retail growth is expected to be 3-4% in Fiscal Year 25.

Nuvama expects a revenue and EBITDA CAGR of 10% and 11% over FY24-27E, respectively, driven by strong growth in SUVs and moderate growth in vehicles. The introduction of the E-SUV (eVX model) and the steady revival of hatchback demand could boost volumes.