SML Isuzu (SML) reported weak set of numbers in Q2FY19, which were lower than our estimates. While net revenue grew by 30.1% YoY led by volume growth of 27.7% YoY, the loss widened on a YoY basis to Rs. 7.7 cr on account of weak operational performance and higher depreciation. The operating margins declined by 151bps YoY to 0.5% due to higher raw material cost and other expense. Despite headwinds in the near term, with depreciating currency and increased cost pressures.