We value SMLI on 20x P/E on Sept-19E EPS. Maintain BUY with a TP of Rs 1225. SML Isuzu posted in-line revenue at Rs 2.27bn (-25% YoY) in 2Q. Volumes fell by 35% YoY (2.26k), owing to unsold BS3 inventory, insufficient supply of chassis frame components, shortage of BS4 components and a slowdown in Bus demand. EBITDA came in at Rs 45mn (-74% YoY), with margin at 2% (-338bps YoY), impacted by operating de-leverage and conversion cost (~Rs 8mn) of vehicles from BS3 to BS4.