Maruti Suzuki India-Buy Maruti Suzuki; target Rs 1216: Firstcall Research

Firstcall Research is bullish on Maruti Suzuki India Limited (MSIL) and has recommended buy rating on the stock with a target of Rs 1216 in its September 14, 2011 research report.

“Maruti Suzuki India Limited (MSIL), a subsidiary of Suzuki Motor Corp. of Japan, is India's largest passenger car company, accounting for over 50 per cent of the domestic car market. During the quarter ended, the robust growth of Net Profit is increased by 18.02% Rs. 5492.30 million. Maruti Suzuki India Limited and investors have invested over Rs. 550 Crore to make the new Swift more vibrant and sportier. Suzuki Motor plans to set up new passenger car factory for Rs 6,235 crore ($1.3 billion) in Gujarat. Maruti Suzuki India Limited sold a total of 75,300 vehicles in July 2011 where 91442 vehicles in August 2011. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 5% over 2010 to 2013E respectively.”

“Maruti Suzuki India Ltd. has reported net profit of Rs 5492.30 million for the quarter ended on June 30, 2011 as against Rs. 4653.6 million in the same quarter last year, an increase of 18.02%. It has reported net sales of Rs 85293.00 million for the quarter ended on June 30, 2011 as against Rs 82315.30 million in the same quarter last year, a rise of 3.62%. Total income grew by 4.53% to Rs 87093.70 million from Rs.83317.30 million in the same quarter last year. During the quarter, it reported earnings of Rs 19.01 a share.”

“At the current market price of Rs.1058.00, the stock is trading at 11.80 x FY12E and 10.61 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.89.64 and Rs.99.69 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 5% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 6.65 x for FY12E and 6.03 x for FY13E. Price to Book Value of the stock is expected to be at 1.86 x and 1.58 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1216 for Medium to Long term investment,” says Firstcall research report.