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C o m i n g t o t h e e n d o f d o w n g r a d e s …
Maruti Suzuki India’s (MSIL) Q3FY12 numbers, which seem disappointing
on the face of it, was marred by currency. The bright view of the results
came in as net sales surprised us at | 7663.6 crore (I-direct estimate: |
7133.6 crore) as average realisations (ASP) jumped 7.1%QoQ and 14.1%
YoY as richer product mix and lower discounts helped (down ~10% QoQ
at | 12,200). Volumes, however, declined ~28% YoY at ~2.4 lakh units as
industrial strike, slow ramp-up led to ~40,000 unit’s loss. The realisation
jump is heartening as even in a weak quarter with “discount December”
the domestic ASPs rose 6.2% QoQ reflecting the strong pricing power of
MSIL’s diesel portfolio. EBITDA margins, however, shrunk to 5.4% with
forex impacting ~1% of net sales in net terms; also ~|39 crore of one-off
items came. However, healthy capital gains on FMPs helped PAT come in
line with our estimates at | 205.6 crore (I-direct estimate: | 208.8 crore).
Highlights of the quarter
MSIL’s Q3/Q2 were both similar ranging from labour issues to currency
challenges. The loss of 40,000 units coupled with steep INR depreciation
(~11%) led to a poor operating performance. MSIL had currency impact
on royalty, raw material, vendors and one time reinstatement of liabilities.
The MTM impact was the worst for the royalty, which was higher by ~|
75 crore. On the bright side, retail sales for December 2011 were 1.16 lakh
units, which reflected on the demand possibilities in case rates come
down or fuel prices ease. The reducing discount is an early indicator of
two things: the demand for diesel vehicles continues to remain strong
and MSIL’s diesel pricing power is second to none. Another fillip came
from additional 0.1 million diesel engines sourcing from FIAT
V a l u a t i o n
We believe the worst is behind for MSIL. The market is looking at the
extent of bounce back in FY13E. At the CMP of 1158, the stock is trading
at 13.7x FY13E EPS. We have upgraded our target multiple to 15x FY13E
EPS considering the strong earnings growth potential in FY13E. We have
a target price of | 1286/share and maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C o m i n g t o t h e e n d o f d o w n g r a d e s …
Maruti Suzuki India’s (MSIL) Q3FY12 numbers, which seem disappointing
on the face of it, was marred by currency. The bright view of the results
came in as net sales surprised us at | 7663.6 crore (I-direct estimate: |
7133.6 crore) as average realisations (ASP) jumped 7.1%QoQ and 14.1%
YoY as richer product mix and lower discounts helped (down ~10% QoQ
at | 12,200). Volumes, however, declined ~28% YoY at ~2.4 lakh units as
industrial strike, slow ramp-up led to ~40,000 unit’s loss. The realisation
jump is heartening as even in a weak quarter with “discount December”
the domestic ASPs rose 6.2% QoQ reflecting the strong pricing power of
MSIL’s diesel portfolio. EBITDA margins, however, shrunk to 5.4% with
forex impacting ~1% of net sales in net terms; also ~|39 crore of one-off
items came. However, healthy capital gains on FMPs helped PAT come in
line with our estimates at | 205.6 crore (I-direct estimate: | 208.8 crore).
Highlights of the quarter
MSIL’s Q3/Q2 were both similar ranging from labour issues to currency
challenges. The loss of 40,000 units coupled with steep INR depreciation
(~11%) led to a poor operating performance. MSIL had currency impact
on royalty, raw material, vendors and one time reinstatement of liabilities.
The MTM impact was the worst for the royalty, which was higher by ~|
75 crore. On the bright side, retail sales for December 2011 were 1.16 lakh
units, which reflected on the demand possibilities in case rates come
down or fuel prices ease. The reducing discount is an early indicator of
two things: the demand for diesel vehicles continues to remain strong
and MSIL’s diesel pricing power is second to none. Another fillip came
from additional 0.1 million diesel engines sourcing from FIAT
V a l u a t i o n
We believe the worst is behind for MSIL. The market is looking at the
extent of bounce back in FY13E. At the CMP of 1158, the stock is trading
at 13.7x FY13E EPS. We have upgraded our target multiple to 15x FY13E
EPS considering the strong earnings growth potential in FY13E. We have
a target price of | 1286/share and maintain our BUY rating on the stock.
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