Maruti Suzuki India Ltd. share price target

Maruti's (MSIL) Q3FY20 operating performance missed estimates, largely due to the exaggerated impact of discounts and higher fixed cost appropriation.

MSIL Q3FY20 results were below our and consensus estimates at operating level. EBITDA margin declined to 10.2% vs our and consensus estimates of 11.2%. Margins were majorly impacted due to higher RM cost, higher discounts and increase in sales promotion expenses. Adj. PAT for the quarter stood at Rs15.6bn below our estimates of Rs18.4bn. We expect increase in vehicles prices due BSVI and higher discounting would remain challenge till H1FY21 however lower inventory levels, improving liquidity conditions and consumer sentiment, recently launched products and upcoming refreshes, lower base would MSIL to register mid-single digit growth in...

Early BS-VI adoption to place MSIL in good stead! MSIL has been at the forefront of BS-VI transition in the PV space, with recent additions (Celerio, Eeco, Ciaz) taking the BS-VI model count to 11 (only Brezza, S-Cross, Ignis to go). Sales volumes of new emission norms compliant variants has crossed the 5 lakh unit mark, forming ~75% of total petrol vehicles sold YTD. Given its fast-tracked BS-VI adoption and no signs of any adverse market impact to the new vehicles (MSIL Q3FY20 domestic volumes up 0.3% YoY vs. 0.5% YoY decline for industry), the company is...

While we are NEUTRAL, we recommend buying the stock on corrections as Maruti is benefiting from the BS-VI transition due to its gasoline led portfolio. Further, the industry demand environment is expected to improve from here on. Key Risks: Rising competition from new entrants, particularly in the SUV segment, a delayed recovery. Maruti reported PAT growth of 5% YoY at Rs 15.6bn, reversing the declining profit trend of the past several quarters. On the margin, demand is improving driven by the rural segment. We are revising our TP to Rs 7,280 based on 23x Dec-21 EPS, as we value the stock at 5% premium to its average historic 10 year trading multiple (to factor in a pickup in demand).

28 January 2020 MSILs 3QFY20 results are a reflection of the companys efforts to revive demand through discounts during the festive season and ahead of year change/BS6 transition. We believe MSILs operating performance has bottomed out and recovery is expected from 1QFY21. Maintain MSILs 3QFY20 revenues/EBITDA/PAT grew 5%/9%/5% YoY to ~INR207b/INR21b/INR15.6b respectively. Domestic PV market share recovered 130bp YoY (+240bp QoQ) to 52%. Net realization increased 3% YoY (-6% QoQ) to ~INR473k (v/s est. QoQ decline was due to higher discounts and adverse mix. Discounts inched up to ~INR33k/unit (v/s ~INR24k in 3QFY19 v/s INR25.8k in 2QFY20). Gross margin declined ~150bp QoQ due to (a) higher sourcing from Gujarat (accounting impact), (b) higher discounts (~190bp QoQ), (c) lower production (v/s wholesales; ~100bp QoQ impact), and (d) ~60bp benefit of lower cost. EBIT margins improved 10bp YoY (+200bp QoQ) to 6% (v/s est.

After four consecutive quarters of de-growth, Maruti Suzuki Ltd (MSIL) witnessed marginal growth with the onset of festivities in October 2019. MSIL posted 1% growth between October and November 2019 and also corrected excess inventory (current channel stock is less than one month). MSIL raised production (4% increase) in the month of November 2019 after a gap of 9 months. While the worst is over for MSIL, we believe that sustained recovery would still take time. Weak economic growth along with price increases on account of transition...

Maruti Suzuki India Limited (MSIL) is an automobile manufacturer with a 56.2% ownership in Japanese car and motorcycle manufacturer Suzuki Motor Corporation. It is one of the largest passenger car companies and...

Maruti Suzukis Profit Beats Estimates On Higher Income, Lower Tax Maruti Suzuki India registered 34% fall in standalone net profit to Rs 1358.6 crore for the quarter ended Sep 2019. Sharp fall at bottomline came on the back of weak operating...

Expensive Valuations Retain SELL:During Q2FY20, MSIL sales declined by 24.3% YoY to Rs169.9 bn (above our estimates Rs159.7 bn).