Prabhudas Lilladher is bullish on Maruti Suzuki India and has recommended accumulate rating on the stock with a target price of Rs 1200 in its October 31, 2011 research report.
“Maruti Suzuki India, Q2FY12 top-line declined by 14.4% YoY to Rs 78.3bn (our estimate Rs 77.1bn) on account of 19.6% YoY decline in volumes. Adverse impact of Yen appreciation was to the extent of Rs 1bn (impact of ~120bps on EBITDA margins). Selling and promotion expenses increased by 100bps YoY, leading to a 160bps increase in SGA expenses. Royalty for the quarter was higher by Rs 500m pertaining to Q1FY12, whereas MTM on commodity hedges stood at Rs 260m. Adjusted for the same, EBITDA declined by 40.6% to Rs 5.7bn on account on lower volumes, increased discounts on vehicles and adverse currency impact. As a result, EBITDA margins declined by 320bps YoY to 7.3%. On account of higher depreciation and lower other income, the adj. PAT de-grew by 47% YoY to Rs 3.2bn (our estimate Rs 3.9bn).”
“Diesel engine capacity will been enhanced to 25k/month by January 2012 compared to 20k/month to cater to the increasing demand for diesel cars. The new ‘Swift’ has received a good response and MSIL already has an order backlog of ~1 lac units, out of which ~88% is diesel. Average discount has been increased to Rs 13,500/vehicle in the quarter compared to Rs 9,500/vehicle. However, with diesel vehicles accounting for ~26% of overall volumes in FY13E compared to ~21% currently, discounts are likely to come down. MSIL has hedged its direct imports at ¥79/$. However, its indirect imports remain unhedged.”
“We estimate 11% decline in volumes for FY12E at 1.1m and a strong 14.8% volume growth for FY13E at 1.3m units. Taking into account the strike at Manesar in October 2011 and the lower operating profit for the quarter, we revise our earnings estimate downwards by 13% and 7% for FY12E and FY13E, respectively. As a result, our target price is revised downwards to Rs 1,200 (Rs1,265 earlier),” says Prabhudas Lilladher research report.
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“Maruti Suzuki India, Q2FY12 top-line declined by 14.4% YoY to Rs 78.3bn (our estimate Rs 77.1bn) on account of 19.6% YoY decline in volumes. Adverse impact of Yen appreciation was to the extent of Rs 1bn (impact of ~120bps on EBITDA margins). Selling and promotion expenses increased by 100bps YoY, leading to a 160bps increase in SGA expenses. Royalty for the quarter was higher by Rs 500m pertaining to Q1FY12, whereas MTM on commodity hedges stood at Rs 260m. Adjusted for the same, EBITDA declined by 40.6% to Rs 5.7bn on account on lower volumes, increased discounts on vehicles and adverse currency impact. As a result, EBITDA margins declined by 320bps YoY to 7.3%. On account of higher depreciation and lower other income, the adj. PAT de-grew by 47% YoY to Rs 3.2bn (our estimate Rs 3.9bn).”
“Diesel engine capacity will been enhanced to 25k/month by January 2012 compared to 20k/month to cater to the increasing demand for diesel cars. The new ‘Swift’ has received a good response and MSIL already has an order backlog of ~1 lac units, out of which ~88% is diesel. Average discount has been increased to Rs 13,500/vehicle in the quarter compared to Rs 9,500/vehicle. However, with diesel vehicles accounting for ~26% of overall volumes in FY13E compared to ~21% currently, discounts are likely to come down. MSIL has hedged its direct imports at ¥79/$. However, its indirect imports remain unhedged.”
“We estimate 11% decline in volumes for FY12E at 1.1m and a strong 14.8% volume growth for FY13E at 1.3m units. Taking into account the strike at Manesar in October 2011 and the lower operating profit for the quarter, we revise our earnings estimate downwards by 13% and 7% for FY12E and FY13E, respectively. As a result, our target price is revised downwards to Rs 1,200 (Rs1,265 earlier),” says Prabhudas Lilladher research report.
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