Maruti Suzuki India Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Maruti Suzuki (MSIL) reported its Q2FY17 numbers, which came in above our estimates on the operational front. Revenues at | 17,843 crore, up 29% YoY, 19.5% QoQ came in below our estimate of | 18,194 crore. The topline growth was driven by 18% YoY volume growth & 9.4% ASP growth. Revenues came in below our estimates...

grew by 28.8% yoy at 178bn. Volumes in the quarter having grown by 18.4% yoy, net realizations improved by 9.3% yoy on the back of strong sales of high margin vehicles such as Baleno and Vitarra Brezza. EBITDA margins grew to 17.3% the highest ever reported, 220 bps above 15.1% qoq, and 80 bps yoy. RM to sales ratio saw a reduction to 68.5% from 69.1% qoq...

We recently interacted with Maruti Suzuki (MSIL) management. Company is well on track to start operations at its new Gujarat plant by FY17-end. At present company's running close to 100% utilization and during peak period plant utilization is beyond 100% with help of de-bottle necking to meet festive demand. At present, company's Baleno and Vitara Brezza has a waiting period of 6-8 months, despite production ramp up.

Maruti Suzuki India (MSIL) is currently in a sweet spot as it has multiple triggers in its favour-1) positive impact of Seventh Pay Commission is expected to lead to incremental growth of ~16% YoY for the PV segment in the next two years 2) implementation of GST will result in lower ASPs of <4 million (mn) cars thus benefiting MSIL (market share of ~56% in <4 mn cars), 3) its focus on adding more content per vehicle (CNG, automatic, smart hybrid, etc) with aggressive pricing is creating a pull-strategy favouring MSIL 4) Stronger product portfolio with presence in the fast growing segments like UV, premium hatchback, etc. 5) normal monsoon in 2016 is likely to drive rural sales. Further, MSIL’s capacity expansion plans, which we believe will take the company closer to its goal of manufacturing 2 million vehicles by 2020. We raise our target to | 6150 (from | 5095 earlier) based on 22x FY18E EPS.They value at 22x FY18E EPS of | 279/share, to arrive at TP of | 6150 with BUY on MSIL.

 

Maruti Suzuki (MSIL) controls 50% market share car segment and continues to grow healthily both operationally and financially. It is amongst the best auto stock to hold for long-term investment.

Q1FY17 Results: Revenues grew 12% (vol. growth of 2% due to production disruptions), with impressive realization growth of 10% YoY (2% QoQ). Domestic/Export volumes were at 5%/(27%) respectively. Pricing was driven by a favourable mix - higher share of UVs such as Brezza and S-Cross) and a 25% rise in export prices (currency movements). Rising commodity prices and Yen appreciation resulted in gross margins contracting 188bps/45bps QoQ/YoY. This along with higher royalty outgo impacted margins (fell 136bps to 14.8%). Royalty rose 33% to Rs9.6bn, as amounts were translated at a rate of 0.65 JPY/INR, as compared to the average quarterly market rate of ~0.62. Profitability was boosted by other income (doubled to Rs4.8bn ) and depreciation method change (saved Rs833 mn) with reported PAT up 21% (Adjusted PAT rose 16% to...

Maruti Suzuki&rsquo;s (MSIL) 1QFY17 top-line at Rs 149bn (+12% YoY) met estimates, driven by net ASP improvement to Rs 431k. Gross margins slipped 100bps YoY owing to adverse forex impact. EBITDA margin contraction (-195bps YoY) to 14.8% was impacted by negative operating leverage. APAT came in stronger at Rs 14.9bn (+23% YoY, +1% QoQ) led by higher other income and lower depreciation (change in accounting method). With flat 1Q rural sales, the management now has its hoped pinned on a normal monsoon. Further impetus from the 7th Pay Commission could drive MSIL&rsquo;s volume growth (12% CAGR over FY16-18E vs. 5% over FY13-15). Also, the net Yen exposure has come down, with Yen-denominated Baleno exports improving, thus reducing volatility in profits. We revise earnings ~4-8% for FY17-18E to factor in higher other income (adoption of Ind AS).HDFC Securities Maintain BUY with a revised TP of Rs 4,912 based on 20x FY18E EPS

Trendlyne has 26 reports on MARUTI updated in the last year from 8 brokers with an average target of Rs 4863.1. Brokers have a rating for MARUTI with 2 downgrades,7 price downgrades,1 upgrade,4 price upgrades in past 6 months and 11 price upgrades in past 1 Year.

Maruti Suzuki India (MSIL) reported its Q1FY17 numbers, which were below our estimates on the topline and margin front. Revenues at | 14,927 crore, up 11.6% YoY, came in below our estimate of | 15,521 crore. Revenues came in below our estimates mainly on account of lower than estimated ASPs (1.5% QoQ growth against our estimate of 4.8%) .&nbsp;Reported EBITDA margins came in at 14.8%, down 146 bps YoY, marginally below our estimates of 14.9%. EBITDA margins came in lower QoQ because material cost to net sales was higher by 170 bps mainly on account of increased raw material prices &amp; adverse foreign exchange movement.ICICI Securities Limited ascribe a multiple of 21x to its FY18E EPS of | 243 and have a BUY recommendation on the stock with a target price of | 5095.

Trendlyne has 26 reports on MARUTI updated in the last year from 8 brokers with an average target of Rs 4863.1. Brokers have a rating for MARUTI with 2 downgrades,7 price downgrades,1 upgrade,4 price upgrades in past 6 months and 11 price upgrades in past 1 Year.

Revenue up 11%, but marginally below expected, as realisations missed estimates by 1% 8 Gross margins fell 1.9% qoq led by adverse&nbsp;&nbsp;currency and higher RM prices &bull; EBITDA margin at 14.8% was down 50bps qoq; in line with estimates&nbsp;&nbsp; 9 PAT at Rs 14.8bn was 33% ahead of estimates on higher other?income recognition changes under the new Ind?AS accounting norms Key highlights: Largely in line quarter with the company facing margin pressures due to adverse currency and lower production volumes. The stock has seen a stupendous run of 38% since its lows in March 2016. Relooking at our estimates, we believe it lacks near?term triggers &ndash; constrained capacity would mean volume growth of 10% in FY17. With little scope of surprise Phillip Capital downgrade their stance to NEUTRAL from BUY. They marginally tweak our estimates (FY18 EPS up 3%) and revise our target price to Rs 4,600 (Rs 4,500 earlier).

Trendlyne has 26 reports on MARUTI updated in the last year from 8 brokers with an average target of Rs 4863.1. Brokers have a rating for MARUTI with 2 downgrades,7 price downgrades,1 upgrade,4 price upgrades in past 6 months and 11 price upgrades in past 1 Year.

Background: Maruti is a subsidiary of Suzuki Motor. Maruti pays ~6.4% on sales as royalty to parent. Maruti is India's largest passenger car company, which primarily sells compact hatchbacks (75% of volumes), Utility vehicles and sedans. Its key models are Alto, Wagon R, Swift and Dzire, Baleno and Brezza. With its early-mover advantage in the Indian market, Maruti is a dominant player in the domestic passenger car market with a ~ 46.8% market share. Maruti has over 1200...