Maruti Suzuki India Ltd. share price target

FY20E a write-off, BS-VI transition more palatable for PV space The PV segment has suffered heavily amid the overall auto space weakness that has persisted since the 2018 festive period. Rise in ownership costs (additional safety features, higher fuel prices), slowing consumption demand and increasing preference for shared mobility in some pockets posed volume challenges to players. YTDFY20 volume decline at MSIL was at ~25% YoY, which includes a steep decline of 30% in Q2FY20. We believe BS-VI transition would be relatively more palatable for the PV segment since...

We remain NEUTRAL as valuations are demanding at current stock levels (33.2/26x FY20/21E). We recommend buying the stock on corrections as Maruti enjoys a strong franchise with a dominant market share of ~50%. Also, Maruti will benefit from the transition to BSVI due to its gasoline led portfolio. 2QFY20 PAT at Rs 13.6bn was above estimates as improved realizations (+8% YoY), lower tax rates and higher other income partially offset the impact of the weak volumes. We are raising estimates by ~5% over FY21/22E to factor in the above. Maintain NEUTRAL with a revised TP of Rs 6,770 (22x Sep-21 EPS).

Maruti Suzuki's 2QFY20 results were operationally in-line with margins came in at 9.5%. However, higher other income and lower tax rate led to a beat in PAT at Rs13.6bn (PLe: Rs11bn). Going forward, the benefit of soft RM price, cost control benefits to be partially offset by higher spends in run up to BS6. With positive demand outlook and controlled inventory levels (even for BS4 vehicles) we believe MSIL is well placed amongst OEMs in light of, a)...

Maruti Suzuki India (MSIL) has delivered in line performance in 2QFY20. Its subdued performance was primarily impacted by low volume and pricing pressure amid competitive intensity. Company's volume fell by 30% YoY and 16% QoQ to 338,317 units. Its revenue fell by 24% YoY and 14% QoQ to Rs169.8bn, 3% higher than our estimates, EBIDTA margins of 9.5% (our estimate of 9.5%) contracted by 584bps YoY and 93bps QoQ. Such sharp contraction in margin happened for the third consecutive time. EBIDTA fell by 53% YoY and 22% QoQ to Rs16bn owing to higher discount, adverse exchange rate and lower volume. Its PAT declined by 39% YoY and 5% QoQ to Rs13.6bn, mainly benefited from lower tax rate. Its Other Exp/Sales rose by 133bps YoY and...

Maruti Suzuki Ltd (MSIL) Q2 FY20 results were ahead of our as well as consensus estimates on operating margins as well profitability front. MSIL posted better than expected operating margins due to cost control measures such as productivity improvement measures, controlling cost overheads and increased localisation. Further, a steep surge in other income on account of fair value gain on investments & lower tax due to adoption of new corporate tax structure led to profit beat. While the management has indicated a marginal positive growth in the festive...

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...

FY20 an unpredictable year, but expect normalcy in FY21 EV launch in 2020 | CNG & hybrids to compensate for diesel discontinuance Our analysis of MSIL FY19 annual report revealed the company's take on (a) the current demand environment and outlook, (b) its Toyota alliance, (c) its strategy on EVs and other alternate fuels, and (d) plans for cost reduction. Key insights highlighted below: FY20 is expected to be an unpredictable year due to three major regulations the mandatory ABS, second phase of safety regulations and BS6 implementation. Company sees normalcy returning in FY21 with expectations of MSIL garnering its...

Downgrade to NEUTRAL as (1) An expected demand recovery in 2H is delayed (2) Valuations are not adequately factoring in the current downturn (3) We would recommend buying on dips as Maruti enjoys a strong franchise with a dominant market share of ~50%. Also, Maruti is well prepared for the upcoming transition to BSVI due to its gasoline led portfolio. After weak 1Q operational performance, we downgrade the stock to NEUTRAL. The EBITDA margin declined 450/15bps YoY/QoQ to 10.4%. We are lowering our estimates by 6-7% for FY20-21E with a revised TP of Rs 5,820 at 20x FY21 EPS (22x earlier). An expected 2H demand recovery is delayed as the macros remain challenged and the restricted availability of finance (NBFC related) is impacting footfalls.

During Q1FY20, MSIL sales declined by 12.2% YoY to Rs197.2bn (above our estimates Rs188.3 bn). Its EBITDA margins declined by 454bps to 10.4% (below our estimates of 10.6%). PAT declined by 27.3% YoY to Rs 14.3bn (below our estimates of Rs15.3bn).

Volume to stay under pressure, grow at 1.3% CAGR (FY19-21E) MSIL has been the industry leader in the domestic PV space with market share on a consistent basis at > 50%. The industry, however, in last nine to 12 months has been seeing muted demand prospects amid a rise in cost of ownership of vehicles, increasing penetration of shared mobility and elevated fuel prices. With retail inventory still high at ~30 days and lower conversion at dealerships, we expect the industry to see demand pressure in the near term. Building in revival of demand around the festive season...