Maruti Suzuki- Margins - on an uptrend from 1QFY12 :: Emkay

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Maruti Suzuki India Ltd.

Margins - on an uptrend from 1QFY12

ACCUMULATE

CMP: Rs 1,279                                       Target Price: Rs 1,520

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n     Demand outlook remains strong. Expect 12% to 15% industry volume growth in FY12. However, we are concerned with recent push demand (higher disc.) especially in March 2011

n     Targeting 12% EBIDTA margins over next two to three years through various cost reduction initiatives including  higher localization

n     RM cost pressures to continue despite price hike. Expect to lower the impact through various cost cutting measures. Operating leverage to also provide cushion to margins

n     Raise FY12E EPS by 6.1% to Rs 98.8 per share due to favorable currency assumption and product mix (higher share of domestic sales) and TP to Rs 1,520. Maintain ACCUMULATE