Please Share:: 
Operationally in line. We maintain a BUY rating, as we believe it is well positioned to improve its market share in the passenger-vehicle industry, led by new-model launches and muted competition. EBITDA margins should improve led by currency tailwind, a decrease in discounts and Maruti’s cost-reduction efforts. We have increased our target price to `4,200 (from `4,000) based on a roll over to December 2016. Our earnings estimates remain unchanged.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15: Higher other expenses and lower other income led to lower-than-expected net profit Maruti Suzuki’s net profit (`8.02 bn, +18% yoy) was 9% below our estimates led by lower other income and a one-time payment (`700 mn) related to excise-duty provisions. Net sales (`125 bn) were 2% above our estimates because of higher average selling price. Gross margin improved by 110 bps qoq primarily due to cost-reduction measures and favorable foreignexchange rate. Average export selling prices rose by 4.1% qoq. Other expenses were up 9%, reflecting excise-duty provision and higher advertising costs due to introduction of new models. Discount-per-vehicle remained high at ~`21,000. Maintain BUY rating on strong earnings growth outlook We believe its volume growth trajectory is likely to improve led by an increase in market share (expect market share to improve by 220 bps over FY2015-17) because of new-model launches. Our earnings estimates are unchanged. We roll forward to December 2016, resulting in a higher target price of `4,200 (`4,000 earlier) based on 18X our December 2016 EPS. Conference call takeaways Maruti remains confident of achieving its volume-growth guidance of 10% yoy in FY2015. However, it sees higher excise duty affecting demand for entry-level models. Other expenses rose sharply qoq led by: 1) `700 mn excise-duty provision, 2) `800 mn higher ad expenses (compared with a normal quarter) because of new-model introductions. The company indicated that the industry’s diesel-vehicle mix is going down as the petrol-diesel price spread has narrowed. In 3QFY15, diesel vehicles contributed to 46% of the industry’s volume versus 54% in FY14. In 3QFY15, the industry’s diesel volumes fell 12.7% yoy while Maruti’s diesel volumes fell 5% yoy. However, petrol volumes have gone up by 20% yoy for the industry and 17% yoy for Maruti. Discounts continue to remain high at ~`21,000/vehicle. Maruti doesn’t see discounts going down till 2HFY16 as volumes have not picked up as expected.
The company is seeing better-than-expected response to Automated-ManualTransmission (AMT) models. Its current AMT capacity is 4,000/month (plans to increase this). Export revenues were `12.2 bn in 3QFY15. Maruti is targeting exports volumes of 120,000 for FY2015. Algeria, Chile, Angola, Peru, Indonesia and Sri Lanka remain key export markets. Urban-market volumes outpaced growth in rural markets in 3QFY15. Urban volumes grew in double digits yoy in this quarter. The company also indicated that the proportion of first-time buyers has gone up to 44% of its volumes in this quarter versus 37% in FY2014, which is a positive for the company as it has more than 60% market share in below-`500,000 segment.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
Operationally in line. We maintain a BUY rating, as we believe it is well positioned to improve its market share in the passenger-vehicle industry, led by new-model launches and muted competition. EBITDA margins should improve led by currency tailwind, a decrease in discounts and Maruti’s cost-reduction efforts. We have increased our target price to `4,200 (from `4,000) based on a roll over to December 2016. Our earnings estimates remain unchanged.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15: Higher other expenses and lower other income led to lower-than-expected net profit Maruti Suzuki’s net profit (`8.02 bn, +18% yoy) was 9% below our estimates led by lower other income and a one-time payment (`700 mn) related to excise-duty provisions. Net sales (`125 bn) were 2% above our estimates because of higher average selling price. Gross margin improved by 110 bps qoq primarily due to cost-reduction measures and favorable foreignexchange rate. Average export selling prices rose by 4.1% qoq. Other expenses were up 9%, reflecting excise-duty provision and higher advertising costs due to introduction of new models. Discount-per-vehicle remained high at ~`21,000. Maintain BUY rating on strong earnings growth outlook We believe its volume growth trajectory is likely to improve led by an increase in market share (expect market share to improve by 220 bps over FY2015-17) because of new-model launches. Our earnings estimates are unchanged. We roll forward to December 2016, resulting in a higher target price of `4,200 (`4,000 earlier) based on 18X our December 2016 EPS. Conference call takeaways Maruti remains confident of achieving its volume-growth guidance of 10% yoy in FY2015. However, it sees higher excise duty affecting demand for entry-level models. Other expenses rose sharply qoq led by: 1) `700 mn excise-duty provision, 2) `800 mn higher ad expenses (compared with a normal quarter) because of new-model introductions. The company indicated that the industry’s diesel-vehicle mix is going down as the petrol-diesel price spread has narrowed. In 3QFY15, diesel vehicles contributed to 46% of the industry’s volume versus 54% in FY14. In 3QFY15, the industry’s diesel volumes fell 12.7% yoy while Maruti’s diesel volumes fell 5% yoy. However, petrol volumes have gone up by 20% yoy for the industry and 17% yoy for Maruti. Discounts continue to remain high at ~`21,000/vehicle. Maruti doesn’t see discounts going down till 2HFY16 as volumes have not picked up as expected.
The company is seeing better-than-expected response to Automated-ManualTransmission (AMT) models. Its current AMT capacity is 4,000/month (plans to increase this). Export revenues were `12.2 bn in 3QFY15. Maruti is targeting exports volumes of 120,000 for FY2015. Algeria, Chile, Angola, Peru, Indonesia and Sri Lanka remain key export markets. Urban-market volumes outpaced growth in rural markets in 3QFY15. Urban volumes grew in double digits yoy in this quarter. The company also indicated that the proportion of first-time buyers has gone up to 44% of its volumes in this quarter versus 37% in FY2014, which is a positive for the company as it has more than 60% market share in below-`500,000 segment.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
No comments:
Post a Comment