Maruti Suzuki India Ltd. share price target

Sales volume for the period fell by 16%yoy to 385025 vehicles with domestic sales down by 16%yoy to 360428 vehicles and exports down by 16.9% yoy to 24597 vehicles. The fall in domestic sales was largely due to drop in volumes in all segments barring mini segment, which posted a growth of 6.8% to 69372 vehicles. The fall in domestic volume was largely due to continuity of general slowdown in demand in first two months of the quarter and Covid 19...

MSIL Q4FY20 results were below our and consensus estimates at operating level. EBITDA margin declined to 8.5% vs our and consensus estimates of 9.7%. Margins were majorly impacted due to higher other expenses. Adj. PAT for the quarter stood at Rs12.9bn marginally above our estimates of Rs12.5bn. We believe lockdown and risk aversion has significantly impacted footfalls at dealerships. Being discretionary in nature, demand for 4W to be significantly impacted even post lockdown, given likely erosion of purchasing power with lay-offs, pay-cuts etc. We expect 4W industry to decline in double digit in FY21. The challenges for the industry and MSIL are likely to get...

Best case estimates peg lower double digit decline in FY20! Covid-19 is a black swan event, which has brought the entire economy to a standstill. It was a further blow to the automobile sector, which was already struggling with weak consumer sentiment with domestic sales volume down 18% YoY in FY20. With movement of people highly restricted as well as income levels taking a hit, car purchase as a discretionary spend is expected to take a backseat. A caveat, however, is the initial signs of people traversing from shared mobility/public transport to personal mobility. However, there...

operating leverage and higher discounts in the market. This has led to a subdued operational on account of a) lower effective tax rate of 17.8% in Q2FY20 vis--vis 31.0% in Q2FY19, b) better performance. Topline declined by 15.2% YoY to Rs 181bn in Q4FY20, while margin contracted by operational performance, c) higher other income and d) exceptional gains of Rs760mn. 2HFY20 205bps YoY to 8.5% for the quarter. Bottom line degrew by 28%YoY to Rs 12.9bn in Q4FY20 despite is expected to be better than 1HFY20 with reasonable growth in exports and presence of levers some support from lower tax rate. We believe change in the consumers approach towards...

MSIL's 4QFY20 results were operationally weak wherein the company reporting an EBITDA margin at 8.5% (PLe 9.1%). However, gross margin arrived six quarter high at 29.7% despite one time impact of BS4 conversion cost at Rs1.25bn (~60bp). While PBT came in-line at Rs15.8bn, lower tax rate at 18% (PLe 26%) boosted adj PAT at Rs12.9bn (PLe Rs10.9bn). We believe MSIL is not only beneficiery of likley trend of shift towards personal mobility...

Maruti Suzuki India Ltd (MSIL) posted a weak set of numbers in Q4FY20 on the back of 16% volume decline and weak sentiments. The company had to write-off a cost of 125 cr associated with BS4 discontinuation in Q4. Margins came in at 8.5%, lowest since last seven years. These were lower by 680 bps and 170 bps, yoy and qoq respectively. This was on the back of low capacity utilization, higher discounts and advertising expenses. Revenues de-grew by 15.2% yoy and 12.1% qoq in line with higher volume decline. EBITDA plunged by 32% yoy and 26.4% qoq as employee costs to sales (4.8% v/s 3.9% yoy) and other expenses to sales (17.7% v/s 14.3% yoy) all increased on negative operating leverage and higher advertising and marketing expenses. PAT came in at 12.97 bn down...

Maruti Suzuki India Limited's (MSIL) Q4FY2020 results were lower than our as well as consensus estimates. MSIL posted lower-than-expected margins on account of subdued capacity utilisation and higher discounts. Volumes are expected to remain under pressure in the near term due to weak consumer sentiment and subdued economic activity because of COVID-19. Demand normalisation would take time as pick-up in economic activity and consumer sentiments would be gradual. Hence,...

14 May 2020 MSILs 4QFY20 result is a mere reflection of the 10 days of lockdown in March, with the worst yet to come in 1HFY21. While the pain of the COVID- 19 crisis would result in a very weak FY21, we expect MSIL to come back stronger and recover faster than peers. Volume recovery in 2HFY21 is critical to the stocks performance. Maintain MSILs 4QFY20 revenues/EBITDA/PAT declined 15%/32%/28% YoY to ~INR182b/INR15.5b/INR12.9b. MSILs domestic PV market share recovered sharply by 450bp YoY (+250bp QoQ) to 54.4% in 4Q and expanded ~70bp to 51.9% in FY20. This was due to an adverse mix (lower diesel sales at 7% of volumes v/s 20% in 3Q). The gross margin improved ~60bp QoQ (+160bp YoY) owing to a lower discount by 300bp QoQ, partially offset by a weaker mix/Fx and one-off cost of INR1.

Maruti's (MSIL) Q4FY20 operating performance missed estimates due to a sequential dip in ASP and negative operating leverage.

While coronavirus outbreak continues to dampen near term PVs demand, we maintain our thesis that Maruti Suzuki (MSIL) is best positioned to tap the long term potential of the domestic PV market with (1) network strength, (2) strong rural presence and 3) product positioning (continued market dominance in the entry-level car...