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Maruti Suzuki India Ltd.
Q3 beats street, re-iterate Buy
„Maintain above consensus forecasts
Q3 results were higher than street expectations but close to our estimates.
Reported profit at Rs 5.65bn was restricted by (1) weaker vehicle realizations, and
(2) one-time staff related expenses. Adjusting for this, EBITDA at Rs9.53bn (incl.
op income) was largely in line. We therefore tweak our above consensus
forecasts. Re-iterate Buy as preferred pick in autos with same PO of Rs1,720.
Margins at trough, likely to expand
Adjusted for one-time expenses, EBITDA margins at 10.0% was in line with our
expectations, and well ahead of the street. We believe that most of the currency
related impact is behind us, and despite rising competition and commodity prices,
forecast 50bps cumulative increase in margins over FY11-13E, due to (1)
operating leverage on stronger volume growth, (2) favourable mix to domestic
sales, and (3) better price realizations.
Volume momentum likely to sustain
Maruti’s YTD domestic sale is up 31%, similar to industry. Despite no let up in
competitive intensity, we expect Maruti to hold market share due to (1) success of
recent launches (Eeco, Alto K10), popular franchise of Swift/Dzire, (2) foray into
CNG vehicles, and (3) entry into newer segments (premium, Utility vehicles). The
company has also advanced expansion plans to 1.4mn by April-11 (up 30% yoy),
and it now seems likely to surpass earlier target of 1.75mn (June 12). Our volume
forecast of 1.24mn/1.48mn/1.73mn over FY11E/12E/13E is ahead of consensus.
Preferred pick in autos
We believe Maruti is attractively valued, given (1) strong growth trajectory over
forecast period (24% profit CAGR), and (2) only listed pure play and proxy to
fastest growing auto segment in passenger vehicles.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Maruti Suzuki India Ltd.
Q3 beats street, re-iterate Buy
„Maintain above consensus forecasts
Q3 results were higher than street expectations but close to our estimates.
Reported profit at Rs 5.65bn was restricted by (1) weaker vehicle realizations, and
(2) one-time staff related expenses. Adjusting for this, EBITDA at Rs9.53bn (incl.
op income) was largely in line. We therefore tweak our above consensus
forecasts. Re-iterate Buy as preferred pick in autos with same PO of Rs1,720.
Margins at trough, likely to expand
Adjusted for one-time expenses, EBITDA margins at 10.0% was in line with our
expectations, and well ahead of the street. We believe that most of the currency
related impact is behind us, and despite rising competition and commodity prices,
forecast 50bps cumulative increase in margins over FY11-13E, due to (1)
operating leverage on stronger volume growth, (2) favourable mix to domestic
sales, and (3) better price realizations.
Volume momentum likely to sustain
Maruti’s YTD domestic sale is up 31%, similar to industry. Despite no let up in
competitive intensity, we expect Maruti to hold market share due to (1) success of
recent launches (Eeco, Alto K10), popular franchise of Swift/Dzire, (2) foray into
CNG vehicles, and (3) entry into newer segments (premium, Utility vehicles). The
company has also advanced expansion plans to 1.4mn by April-11 (up 30% yoy),
and it now seems likely to surpass earlier target of 1.75mn (June 12). Our volume
forecast of 1.24mn/1.48mn/1.73mn over FY11E/12E/13E is ahead of consensus.
Preferred pick in autos
We believe Maruti is attractively valued, given (1) strong growth trajectory over
forecast period (24% profit CAGR), and (2) only listed pure play and proxy to
fastest growing auto segment in passenger vehicles.
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