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Maruti Suzuki India Limited
Investment Profile: Moderate Horizon: 1-1.5 Yrs
Business Summary Maruti Suzuki India Limited (MSIL) is India‟s largest passenger vehicle maker with a market share of 45%. Primarily known for its expertise in the manufacture of low cost and fuel-efficient cars, it has gradually expanded its portfolio across the 4-wheel automobile value chain with 14 brands and 150 variants.
Investment Rationale MSIL is perhaps one of the best proxies on the long-term outlook of the Indian automobile industry that is expected to double in size over the next 4-5 years. The company is the market leader in the manufacture of passenger vehicles, it has an unrivalled sales and service network across the country, has the support of its Japanese parent for R&D and is largely considered to be the preferred choice for car buyers as exemplified by the fact that it has won the JD Power Customer Satisfaction Survey for 11 successive years. MSIL is looking to address capacity additions by increasing its capacity by 2.5 lakh units in H2FY12 and a further 2.5 lakh units in FY13. Capex to the tune of Rs.4000 crore has been budgeted. What‟s most impressive about MSIL is its strong balance sheet with huge cash resources, income generating investments and miniscule debt component. At the end of FY11, the company had a cash balance of more than Rs.2500 crore. Valuations of the stock as well are quite conducive with the stock currently trading at 15-20% discount to its 5 year historical trailing PE of 17.5 and a discount to the industry trailing PE of 14. Forward valuations in the current year look good as well from an EPS perspective due to a low base. We continue to remain optimistic on MSIL, as we believe H2FY12 will be a better year for them. Market share will continue to be an issue and but MSIL enjoys strong brand equity as exemplified by the 100,000 bookings it has received for its new Swift. Besides interest rates could come off post 2011 and this will boost sales again. We continue to recommend a „BUY‟ on MSIL with a lower price target of Rs.1282.
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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Maruti Suzuki India Limited
Investment Profile: Moderate Horizon: 1-1.5 Yrs
Business Summary Maruti Suzuki India Limited (MSIL) is India‟s largest passenger vehicle maker with a market share of 45%. Primarily known for its expertise in the manufacture of low cost and fuel-efficient cars, it has gradually expanded its portfolio across the 4-wheel automobile value chain with 14 brands and 150 variants.
Investment Rationale MSIL is perhaps one of the best proxies on the long-term outlook of the Indian automobile industry that is expected to double in size over the next 4-5 years. The company is the market leader in the manufacture of passenger vehicles, it has an unrivalled sales and service network across the country, has the support of its Japanese parent for R&D and is largely considered to be the preferred choice for car buyers as exemplified by the fact that it has won the JD Power Customer Satisfaction Survey for 11 successive years. MSIL is looking to address capacity additions by increasing its capacity by 2.5 lakh units in H2FY12 and a further 2.5 lakh units in FY13. Capex to the tune of Rs.4000 crore has been budgeted. What‟s most impressive about MSIL is its strong balance sheet with huge cash resources, income generating investments and miniscule debt component. At the end of FY11, the company had a cash balance of more than Rs.2500 crore. Valuations of the stock as well are quite conducive with the stock currently trading at 15-20% discount to its 5 year historical trailing PE of 17.5 and a discount to the industry trailing PE of 14. Forward valuations in the current year look good as well from an EPS perspective due to a low base. We continue to remain optimistic on MSIL, as we believe H2FY12 will be a better year for them. Market share will continue to be an issue and but MSIL enjoys strong brand equity as exemplified by the 100,000 bookings it has received for its new Swift. Besides interest rates could come off post 2011 and this will boost sales again. We continue to recommend a „BUY‟ on MSIL with a lower price target of Rs.1282.
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