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Maruti Suzuki India Ltd Neutral
MRTI.BO, MSIL IN
Jul'11 Sales decline -26% yoy led by weak demand
environment and production realignment
Sales growth moderated sharply to 75,300 units (-25% yoy) : Unit sales
continue to be impacted by the inflationary environment, which is leading to
consumers pushing back on their car purchases. Sales were also impacted by
the phasing out of the old Swift amd the shifting of production of the Dzire
to the Gurgaon plant– which impacted sales by c.17,000 units.
All round decline in sales: The Mini segment (M800, A-Star, Alto,
Wagon R) declined -16% yoy on weak demand, the Compact segment
(Swift, Estilo, Ritz) declined -56% yoy due to the phasing out of the old
Swift, Super Compact segment (Dzire) declined -64% yoy due to shifting
the production of this model to the Gurgaon plant and the Vans segment
(Omni, Eeco) declined -2% yoy.
Export sales at 8,796 units declined -18% yoy as offtake from Europe
remains muted. While the OEM has broad based its markets (inlcuding
Middle East, etc.) - it has only been able to partially offset the slowdown in
Maruti's largest export market.
JPY continues to appreciate: The JPY has appreciated by c.9% vs the
USD and INR since Mar’11. Given that imports comprise c.25% of Maruti’s
sales, the strengthening of the Japanese Yen will likely impact margins over
2H.
Global OEMs announce capacity expansion: Ford Motors last week
announced it will spend Rs40Bn to set up its second plant in Gujarat with an
initial annual capacity of 240,000 units (which will come on-stream in 2014).
The OEM plans to launch 8 new products by 2015 and is also expanding its
capacity in Chennai. Toyota will spend Rs16.5Bn to enhance its
manufacturing capacity in India by 100k units by 2013 – to 310,000 units.
Our View: Over the month, the stock (+5% mom) has outperformed the
broader market (-2% mom) as the 1Q financial results surprised on the
upside. We re-iterate that industry growth will likely moderate in FY12E
and are Neutral on this stock.
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
Jul'11 Sales decline -26% yoy led by weak demand
environment and production realignment
Sales growth moderated sharply to 75,300 units (-25% yoy) : Unit sales
continue to be impacted by the inflationary environment, which is leading to
consumers pushing back on their car purchases. Sales were also impacted by
the phasing out of the old Swift amd the shifting of production of the Dzire
to the Gurgaon plant– which impacted sales by c.17,000 units.
All round decline in sales: The Mini segment (M800, A-Star, Alto,
Wagon R) declined -16% yoy on weak demand, the Compact segment
(Swift, Estilo, Ritz) declined -56% yoy due to the phasing out of the old
Swift, Super Compact segment (Dzire) declined -64% yoy due to shifting
the production of this model to the Gurgaon plant and the Vans segment
(Omni, Eeco) declined -2% yoy.
Export sales at 8,796 units declined -18% yoy as offtake from Europe
remains muted. While the OEM has broad based its markets (inlcuding
Middle East, etc.) - it has only been able to partially offset the slowdown in
Maruti's largest export market.
JPY continues to appreciate: The JPY has appreciated by c.9% vs the
USD and INR since Mar’11. Given that imports comprise c.25% of Maruti’s
sales, the strengthening of the Japanese Yen will likely impact margins over
2H.
Global OEMs announce capacity expansion: Ford Motors last week
announced it will spend Rs40Bn to set up its second plant in Gujarat with an
initial annual capacity of 240,000 units (which will come on-stream in 2014).
The OEM plans to launch 8 new products by 2015 and is also expanding its
capacity in Chennai. Toyota will spend Rs16.5Bn to enhance its
manufacturing capacity in India by 100k units by 2013 – to 310,000 units.
Our View: Over the month, the stock (+5% mom) has outperformed the
broader market (-2% mom) as the 1Q financial results surprised on the
upside. We re-iterate that industry growth will likely moderate in FY12E
and are Neutral on this stock.
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