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Maruti Suzuki India Ltd Neutral
MRTI.BO, MSIL IN
Jan '11 - Sales growth moderates +15% yoy (vs.+26% YTD) on base effect
• January sales at 109,743 units: Sales growth was driven by the
domestic segment (+24% yoy) while exports declined (-36% yoy).
While the sales have risen, growth rates +15% yoy (vs.+26% YTD)
have moderated, given a base effect.
• Domestic segment sales at 100,422 units (+24% yoy) : was driven by
healthy retail sales - the Eeco (+28% y/y), mass market A2 segment
(+24% y/y) and A3 segment (+33% y/y) reported strong growth, while
the entry level M800 sales declined -25% y/y. The dealer inventory
remains comfortable at c. two weeks of sales.
• Export sales moderate: Maruti’s export shipments at 9,321 units (-36%
yoy) declined, given weak demand in Europe. Non European exports
now account for 70% of the total sales.
• Post 3Q results, management highlighted the outlook going forward:
Volume Outlook: Though management was upbeat on industry growth
(15%+), they cautioned that rising interest rates, fuel prices, etc. could
impede demand over the medium term. Margin Outlook: While the
impact of the strengthening JPY has largely been factored over 3Q, the
company will have to contend with rising commodity prices as well as
increasing competitive intensity. Maruti has raised product prices by c.1-
2% in early January to partially offset the above. Hedging policy: The
company has an open (unhedged) import position as management
expects the JPY to weaken; however it has hedged its euro related
exports. Capacity expansion: Maruti has de bottlenecked capacity to
1.4m units (1m units in Gurgaon, 0.4m units in Manesar). Manesar B
(capacity of 250,000 units) will be on stream by Sep'11.
• Over the month, the stock (-12% mom) declined inline with broad BSE
Sensex (-12% mom), given rising macro headwinds. We re-iterate our
Neutral stance on the stock given that while industry growth will likely
aide Maruti’s volumes, competitive intensity is rising. Further, while
GDP growth is likely to sustain at c.8-8.5%, rising inflation, interest
rates and higher fuel prices could impact consumer sentiment.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Maruti Suzuki India Ltd Neutral
MRTI.BO, MSIL IN
Jan '11 - Sales growth moderates +15% yoy (vs.+26% YTD) on base effect
• January sales at 109,743 units: Sales growth was driven by the
domestic segment (+24% yoy) while exports declined (-36% yoy).
While the sales have risen, growth rates +15% yoy (vs.+26% YTD)
have moderated, given a base effect.
• Domestic segment sales at 100,422 units (+24% yoy) : was driven by
healthy retail sales - the Eeco (+28% y/y), mass market A2 segment
(+24% y/y) and A3 segment (+33% y/y) reported strong growth, while
the entry level M800 sales declined -25% y/y. The dealer inventory
remains comfortable at c. two weeks of sales.
• Export sales moderate: Maruti’s export shipments at 9,321 units (-36%
yoy) declined, given weak demand in Europe. Non European exports
now account for 70% of the total sales.
• Post 3Q results, management highlighted the outlook going forward:
Volume Outlook: Though management was upbeat on industry growth
(15%+), they cautioned that rising interest rates, fuel prices, etc. could
impede demand over the medium term. Margin Outlook: While the
impact of the strengthening JPY has largely been factored over 3Q, the
company will have to contend with rising commodity prices as well as
increasing competitive intensity. Maruti has raised product prices by c.1-
2% in early January to partially offset the above. Hedging policy: The
company has an open (unhedged) import position as management
expects the JPY to weaken; however it has hedged its euro related
exports. Capacity expansion: Maruti has de bottlenecked capacity to
1.4m units (1m units in Gurgaon, 0.4m units in Manesar). Manesar B
(capacity of 250,000 units) will be on stream by Sep'11.
• Over the month, the stock (-12% mom) declined inline with broad BSE
Sensex (-12% mom), given rising macro headwinds. We re-iterate our
Neutral stance on the stock given that while industry growth will likely
aide Maruti’s volumes, competitive intensity is rising. Further, while
GDP growth is likely to sustain at c.8-8.5%, rising inflation, interest
rates and higher fuel prices could impact consumer sentiment.
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