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Maruti Suzuki India
Nov ’10 volume: Sustains expected trend
Good performance, but as expected. In Nov ’10, Maruti Suzuki
India (MSIL) posted a good volume growth of 28.2% yoy (5.3%
lower mom), entailing sales of 112,554 units (as estimated). The
mom decline is owing to impact of the post festival season.
Healthy domestic performance. Domestic volumes grew 34.2%
yoy, boosted by the A2 segment which saw 32.2% yoy growth
(lower 4.4% mom). MPVs (up 76.5% yoy) and A3 segment (up
27.2% yoy) also performed well. MPV sales were boosted by the
launch of Eeco in Jan ’10. In the A2 segment, the new BS-IV
compliant WagonR was launched in Apr ’10. August saw launch
of the new Alto K-10 and five CNG models across segments.
Exports decrease. Discontinuation of scrappage benefits in
Europe has led to MSIL’s exports plateauing in the 10,000-
13,000/month band in the near term. In November, MSIL’s
exports were lower 12.2% yoy and 11.5% mom, to 10,051 units.
Outlook & valuation. MSIL has sustained a good growth rate
YTDFY11, of 28.2% yoy. Residual growth estimate ahead is
16.3%. MSIL is expanding its capacity to capture incremental
demand ahead. New launches – Toyota’s Etios (in Dec ’10) and
Honda’s Brio (likely by Nov ’11) – would be added competitors to
MSIL ahead. The stock trades at 16.4x FY11e and 13.8x FY12e
EPS. We retain our Sell rating. Risks: Better car demand, lower
competitor success rate and sharp decline in commodity costs
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