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Maruti Suzuki India
Dec ’10 volume: Sustains expected trend
In Dec ’10, Maruti Suzuki India (MSIL) registered good volume
growth of 17% yoy, albeit lower by 11.8% mom, at 99,225 units,
which was in line with expectations. The mom decline is on
account of seasonal impact in December as well as the planned
three-day plant shutdown.
Healthy domestic performance. Domestic volumes grew 26%
yoy (although lower 12.7% mom), boosted by the A2 segment that
saw +23.5% yoy growth (albeit lower 12.9% mom). The other key
segments – MPVs (+67.5% yoy and -7.8% mom) and A3 (+19.4%
yoy and -15.8% mom) also performed well. MPV sales were
boosted by launch of the MPV ‘Eeco’ in Jan ’10; the base effect in
this segment will come into play hereafter.
imply that MSIL’s exports are plateauing at the 9-13,000/month
band. In Dec ’10, MSIL’s exports were lower 29.3% yoy and 2.9%
mom at 9,756 units.
Valuation and risks. MSIL sustained a good yoy growth rate of
26.9% YTD FY11. We estimate residual growth at 16.1%. MSIL is
expanding 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. MSIL trades at 16.5x
FY11e and 13.9x FY12e EPS. We retain Sell. Risks: Better car
demand, lower competitor success rate, and sharp decline in
commodity costs.
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