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Result Reviews
Maruti Suzuki
For 2QFY2012, Maruti Suzuki (MSIL) reported an extremely poor performance,
which was significantly lower than our as well as consensus estimates. The
company’s net sales reported in-line 14.4% yoy (8.2% qoq) decline to `7,832cr.
The top-line performance was negatively affected by labor problems at the
Manesar plant during the quarter, resulting in loss of 28,539 units. Led by labor
problems at the Manesar plant and weak demand for passenger cars, total
volumes witnessed a decline of 19.6% yoy (10.4% qoq). Average net realization,
however, witnessed a 4.8% yoy (1.1% qoq) improvement, led by price increases
and better product mix (higher share of diesel cars).
MSIL’s EBITDA margin declined substantially by 419bp yoy (324bp qoq) to 6.3%
on account of negative effect of operating leverage, higher discounts, appreciating
Yen and high promotional expenses. While Yen appreciation resulted in higher
royalty outgo, thereby affecting the margin by 50bp yoy (120bp qoq), higher
advertising expenses led to a 90bp yoy (100bp qoq) contraction in margin. Other
manufacturing expenses coupled with higher discounts accounted for the balance
decline in operating margin. As a result, operating profit dipped by 48.5% yoy
(39.3% qoq) to `494cr. Led by poor operating performance and lower-thanexpected
other income, net profit witnessed a sharp 59.8% yoy (56.2% qoq)
decline to `240cr.
At the CMP of `1,128, MSIL is trading at 13.1x FY2013E earnings. Our rating is
currently under review and we shall come up with a detailed update post the
conference call with management.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Reviews
Maruti Suzuki
For 2QFY2012, Maruti Suzuki (MSIL) reported an extremely poor performance,
which was significantly lower than our as well as consensus estimates. The
company’s net sales reported in-line 14.4% yoy (8.2% qoq) decline to `7,832cr.
The top-line performance was negatively affected by labor problems at the
Manesar plant during the quarter, resulting in loss of 28,539 units. Led by labor
problems at the Manesar plant and weak demand for passenger cars, total
volumes witnessed a decline of 19.6% yoy (10.4% qoq). Average net realization,
however, witnessed a 4.8% yoy (1.1% qoq) improvement, led by price increases
and better product mix (higher share of diesel cars).
MSIL’s EBITDA margin declined substantially by 419bp yoy (324bp qoq) to 6.3%
on account of negative effect of operating leverage, higher discounts, appreciating
Yen and high promotional expenses. While Yen appreciation resulted in higher
royalty outgo, thereby affecting the margin by 50bp yoy (120bp qoq), higher
advertising expenses led to a 90bp yoy (100bp qoq) contraction in margin. Other
manufacturing expenses coupled with higher discounts accounted for the balance
decline in operating margin. As a result, operating profit dipped by 48.5% yoy
(39.3% qoq) to `494cr. Led by poor operating performance and lower-thanexpected
other income, net profit witnessed a sharp 59.8% yoy (56.2% qoq)
decline to `240cr.
At the CMP of `1,128, MSIL is trading at 13.1x FY2013E earnings. Our rating is
currently under review and we shall come up with a detailed update post the
conference call with management.
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