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ICICI Securities – Retail Equity Research Result Update April 26, 2019 CMP: | 6900 Target: | 5815 ( -16%) Target Period: 12 months months Maruti Suzuki India (MARUTI) SELL Tapering growth to weigh on rich valuations… Maruti Suzuki (MSIL) reported a weak operational performance in Q4FY19, especially on the margin front, posting 10.5% EBITDA margins against our expectation of 12.0%. Total operating income was at | 21,459 crore, up 1.4% YoY, with the beat being led by higher-than-expected ASPs. Average discounts amounted to | 15,125/unit, down 37.8% QoQ. Consequent PAT for the quarter was down 4.6% YoY to | 1,796 crore. Volumes for Q4FY19 were at 4.6 lakh units, down 0.7% YoY. The company declared a dividend of | 80/share for FY19. Market leadership maintained, foremost in BS-VI model launch FY19 was a difficult year for the domestic automobile space with growth challenging, particularly in H2FY19. Demand sentiments were soured by a concurrent increase in fuel, insurance as well as finance costs during the seasonally important Dussehra-Diwali period. For FY19, total domestic sales growth in the automobile space were at 5.2% YoY wherein PV volumes were at 33.8 lakh units, up 2.7% YoY. MSIL in FY19 clocked domestic volumes of 17.3 lakh units, up 5.3% YoY and maintained its market leadership, ending the year at 51.2% market share, up 120 bps YoY. Separately, the company was at the forefront of PV OEMs in terms of BS-VI compliant vehicle launches, introducing new emission norms compliant Baleno and Alto models recently at a price increase of ~| 15,000-20,000/unit. Margin disappointment continues, limited expansion under way EBITA margins hit a recent low of 9.8% in Q3FY19 amid adverse currency movement, higher commodity price and one-offs in employee costs. These pressure points were expected to ease QoQ but MSIL posted EBITDA margins of 10.5% in Q4FY19 against our estimates of 12%. The reason for the same was attributed to higher commodity prices, adverse currency movement and initial ramp up costs associated with Suzuki’s new plant in Gujarat. Going forward, with commodity prices inching up, we foresee limited scope for margin improvement and build in a limited 20 bps expansion over FY19-21E. Valuation & Outlook Going forward, we expect sales and PAT to grow at a CAGR of 9.3% & 8.2%, respectively, in FY19-21E. We build in 5.7% volume CAGR and EBITDA margin trajectory of 12.5-13% over FY19-21E. We value MSIL at | 5815 i.e. 20x P/E (in line with long term averages) on FY21E EPS of | 290.7 and assign a SELL rating on the stock. We do not deny the underlying opportunity presented by underpenetrated 4-W market domestically. However, we will wait for valuations to correct amid muted growth prospects in the near term before any meaningful change in our stance. On the B/S front, MSIL remains a cash rich company with healthy ~15% return ratios. Key Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E) Net Sales 68,034.8 79,762.7 86,020.3 94,012.4 102,775.9 9.3% EBITDA 10,353.0 12,061.5 10,999.3 11,806.3 13,363.6 10.2% EBITDA Margins (%) 15.2 15.1 12.8 12.6 13.0 Net Profit 7,337.7 7,721.8 7,500.6 7,742.8 8,781.9 8.2% EPS (|) 242.9 255.6 248.3 256.3 290.7 P/E 28.4 27.0 27.8 26.9 23.7 RoNW (%) 20.3 18.5 16.3 15.2 15.6 RoCE (%) 20.3 21.1 16.3 15.9 16.5 Key Financial Summary Source: ICICI Direct Research, Company Particulars Particular Amount Market Capitalization | 208435.2 Crore Total Debt | 149.6 Crore Cash & Investment | 35235.8 Crore EV | 173349 Crore 52 week H/L (|) 9923 / 6325 Equity capital | 151 Crore Face value | 5 Key Highlights Expected margin recovery fails to come through, up merely 70 bps QoQ against expectation of 12.0%. Limited improvement foreseen over FY19-21E Management guidance of 4-8% as volume growth for FY20E Single digit volume growth and consequent single digit topline and bottomline growth to weigh on valuations Maintain SELL with a revised target price of | 5815 Research Analyst Shashank Kanodia, CFA [email protected] Jaimin Desai [email protected]

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ICIC

I S

ecurit

ies –

Retail E

quit

y R

esearch

Result

Update

April 26, 2019

CMP: | 6900 Target: | 5815 ( -16%) Target Period: 12 months

months

Maruti Suzuki India (MARUTI)

SELL

Tapering growth to weigh on rich valuations…

Maruti Suzuki (MSIL) reported a weak operational performance in Q4FY19,

especially on the margin front, posting 10.5% EBITDA margins against our

expectation of 12.0%. Total operating income was at | 21,459 crore, up 1.4%

YoY, with the beat being led by higher-than-expected ASPs. Average

discounts amounted to | 15,125/unit, down 37.8% QoQ. Consequent PAT

for the quarter was down 4.6% YoY to | 1,796 crore. Volumes for Q4FY19

were at 4.6 lakh units, down 0.7% YoY. The company declared a dividend

of | 80/share for FY19.

Market leadership maintained, foremost in BS-VI model launch

FY19 was a difficult year for the domestic automobile space with growth

challenging, particularly in H2FY19. Demand sentiments were soured by a

concurrent increase in fuel, insurance as well as finance costs during the

seasonally important Dussehra-Diwali period. For FY19, total domestic sales

growth in the automobile space were at 5.2% YoY wherein PV volumes were

at 33.8 lakh units, up 2.7% YoY. MSIL in FY19 clocked domestic volumes of

17.3 lakh units, up 5.3% YoY and maintained its market leadership, ending

the year at 51.2% market share, up 120 bps YoY. Separately, the company

was at the forefront of PV OEMs in terms of BS-VI compliant vehicle

launches, introducing new emission norms compliant Baleno and Alto

models recently at a price increase of ~| 15,000-20,000/unit.

Margin disappointment continues, limited expansion under way

EBITA margins hit a recent low of 9.8% in Q3FY19 amid adverse currency

movement, higher commodity price and one-offs in employee costs. These

pressure points were expected to ease QoQ but MSIL posted EBITDA

margins of 10.5% in Q4FY19 against our estimates of 12%. The reason for

the same was attributed to higher commodity prices, adverse currency

movement and initial ramp up costs associated with Suzuki’s new plant in

Gujarat. Going forward, with commodity prices inching up, we foresee

limited scope for margin improvement and build in a limited 20 bps

expansion over FY19-21E.

Valuation & Outlook

Going forward, we expect sales and PAT to grow at a CAGR of 9.3% & 8.2%,

respectively, in FY19-21E. We build in 5.7% volume CAGR and EBITDA

margin trajectory of 12.5-13% over FY19-21E. We value MSIL at | 5815 i.e.

20x P/E (in line with long term averages) on FY21E EPS of | 290.7 and assign

a SELL rating on the stock. We do not deny the underlying opportunity

presented by underpenetrated 4-W market domestically. However, we will

wait for valuations to correct amid muted growth prospects in the near term

before any meaningful change in our stance. On the B/S front, MSIL remains

a cash rich company with healthy ~15% return ratios.

Key Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)

Net Sales 68,034.8 79,762.7 86,020.3 94,012.4 102,775.9 9.3%

EBITDA 10,353.0 12,061.5 10,999.3 11,806.3 13,363.6 10.2%

EBITDA Margins (%) 15.2 15.1 12.8 12.6 13.0

Net Profit 7,337.7 7,721.8 7,500.6 7,742.8 8,781.9 8.2%

EPS (|) 242.9 255.6 248.3 256.3 290.7

P/E 28.4 27.0 27.8 26.9 23.7

RoNW (%) 20.3 18.5 16.3 15.2 15.6

RoCE (%) 20.3 21.1 16.3 15.9 16.5

Key Financial Summary

Source: ICICI Direct Research, Company

Particulars

Particular Amount

Market Capitalization | 208435.2 Crore

Total Debt | 149.6 Crore

Cash & Investment | 35235.8 Crore

EV | 173349 Crore

52 week H/L (|) 9923 / 6325

Equity capital | 151 Crore

Face value | 5

Key Highlights

Expected margin recovery fails to

come through, up merely 70 bps

QoQ against expectation of 12.0%.

Limited improvement foreseen

over FY19-21E

Management guidance of 4-8% as

volume growth for FY20E

Single digit volume growth and

consequent single digit topline and

bottomline growth to weigh on

valuations

Maintain SELL with a revised target

price of | 5815

Research Analyst

Shashank Kanodia, CFA

[email protected]

Jaimin Desai

[email protected]

ICICI Securities | Retail Research 2

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Exhibit 1: Variance analysis

Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates

Source: Company, ICICI Direct Research

Exhibit 3: Assumptions

Source: Company, ICICI Direct Research

Q4FY19 Q4FY19E Q4FY18 YoY (Chg %) Q3FY19 QoQ (Chg %) Comments

Total Operating Income 21,459 21,133 21,166 1.4 19,668 9.1Higher-than-expected ASPs help post marginal topline growth despite 0.7%

YoY drop in volumes

Raw Material Expenses 15,424 14,946 14,376 7.3 14,044 9.8 Gross margins contracted on both YoY as well as QoQ basis

Employee Expenses 817 813 828 -1.4 881 -7.3

Other expenses 2,956 2,845 2,946 0.3 2,812 5.1Other expenses came in higher due to adverse foreign currency

movements as well as initial costs associated with new plant ramp up

Operating Profit (EBITDA) 2,263 2,530 3,015 -24.9 1,931 17.2

EBITDA Margin (%) 10.5 12.0 14.2 -370 bps 9.8 73 bpsMargins for the quarter were substantially lower due to higher raw material

costs as well as higher other expenses

Other Income 868 546 595 45.8 917 -5.4 Other income came in substantially higher than our estimates

Depreciation 810 791 703 15.3 768 5.5

Interest 9 21 273 -96.8 21 -57.3

Total Tax 516.5 679.2 752.3 -31.3 570.8 -9.5Tax rate for the quarter came in lower at 22.3% vs. the usual run rate of 28-

30% due to tax reversals related to some previous years

PAT 1,796 1,585 1,882 -4.6 1,489 20.6

EPS 59.4 52.5 62.3 -4.6 49.3 20.6

Key Metrics

ASP (|) 452,311 443,218 445,983 1.4 441,542 2.4ASPs came in higher than our estimates primarily tracking a decline in

discounts in the marketplace and a change in product mix

Discounts (|) 15,125 25,000 13,880 9.0 24,300 -37.8 Blended discounts were lower than our estimates at | 15,125/unit

Q4FY19 Q4FY19E Q4FY18 YoY (bps) Q3FY19 QoQ (bps)

Rm to Sales 71.9% 70.7% 67.9% 115.1% 71.4% 47.1%

EMP to Sales 3.8% 3.8% 3.9% -3.9% 4.5% -67.3%

Other Exp to Sales 13.8% 13.5% 13.9% 31.1% 14.3% -52.7%

FY21E

(| Crore) Old New % Change Introduced Comments

Total Operating Income 93,113 94,012 1.0 102,776Increase in ASPs offset decline in volume estimates. Introduced FY21E

numbers. Expect a topline growth of 9.3% CAGR over FY19-21E

EBITDA 13,250 11,806 -10.9 13,364

EBITDA Margin (%) 14.2 12.6 -167 bps 13.0Reduce margins estimates tracking weak management commentary and

elevated costs structure amid depreciated rupee

PAT 8,593 7,743 -9.9 8,782

EPS (|) 284 256 -9.9 291Decline in margin estimates leads to decline in PAT estimates for FY20E.

Introduce FY21 numbers

FY20E

Current Earlier Introduced Comments

FY17 FY18 FY19 FY20E FY20E FY21E

Total Volumes (nos) 1,568,604 1,779,575 1,862,449 1,967,523 2,026,364 2,080,048

We build in 5.7% CAGR volume growth over FY19-21E.

It includes domestic volume growth of 6% CAGR and

export volume growth of 1% CAGR

Average ASPs (|) 426,353 438,896 445,792 460,773 441,837 476,474

ASPs are expected to perk up following improving

product mix (in favour of Baleno, new Swift, Brezza)

and increase in costs due to regulatory changes

RMC/Unit (|) 297,336 308,922 323,521 341,023 320,018 351,715

Discount (|) 16,774 15,895 18,334 15,000 20,000 15,000 Tapering the discount expectation tracking Q4FY19

results and management commentary

ICICI Securities | Retail Research 3

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Conference Call Highlights

Management guidance/outlook and demand

The management guided for 4-8% YoY volume growth in FY20E, with

demand likely to remain particularly soft in Q1FY20E on the back of

general elections

Exports would remain flat YoY in FY20E but the company is hopeful

about Africa market prospects in later years

BS-VI regime would threaten viability of diesel engine products. MSIL

would undertake phased introduction of BS-VI compliant models

throughout the year leading up to Q4FY20E

For FY19, rural volumes grew 10% YoY while urban markets de-grew

2% YoY. In H2FY19, rural markets grew 8.5% YoY against 13% YoY

growth in H1FY19. MSIL’s urban: rural mix is now at 61:39

Sales, costs and margins

Conversion costs (100 bps), ramp-up of the Gujarat plant (70 bps), forex

movement (60 bps) and lower retail sales adversely impacted margins

on YoY basis

MSIL took a price hike in January 2019

The company undertook its periodic wage revision exercise in FY19,

with the next scheduled in FY22

Revenues from exports amounted to | 1,474 crore in Q4FY19 and

| 5,335 crore for full year FY19

Other

The company undertook ~| 4,500 crore of capex during the year, with

a similar outlay expected for FY20E

MSIL’s diesel portfolio was at (as percentage of total portfolio) 23% in

Q4FY19 and 25% for FY19

Average discount levels for the quarter were at | 15,125/unit

Channel inventory is comfortable at 25-28 days of sales

The company currently manufactures Swift and Baleno models in

Gujarat while Q4FY19 procurement from that plant was at ~96,000 units

Royalty rate for the quarter was at 5%, with 40% model slate moved to

the new system that negates forex movement

ICICI Securities | Retail Research 4

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Financial story in charts

Exhibit 4: Topline and bottomline trends

43701

49874

57746

68035

79763

86020

94012

102776

2783

3711

4571

73387722

7501

7743

8782

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

0

20000

40000

60000

80000

100000

120000

FY14 FY15 FY16 FY17 FY18 FY19P FY20E FY21E

(| crore)

(| crore)

Topline Bottomline

Source: Company, ICICI Direct Research

Exhibit 5: EBITDA and margin profile

6,605.9

8,978.6

10,353.0

12,061.5

10,999.3

11,806.3

13,363.6

13.2

15.5 15.2 15.1

12.8 12.6

13.0

-

2

4

6

8

10

12

14

16

18

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

FY15 FY16 FY17 FY18 FY19 FY20E FY21E

(%

)

(| crore)

EBITDA Margins (%)

Source: Company, ICICI Direct Research

Exhibit 6: Domestic vs. Export volumes trend

1051

1054

1171

1305

1445

1654

1754

1859

1969

120

101

122

124 124

126

109 1

09

111

0

500

1000

1500

2000

2500

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E

('0

00s)

Domestic Exports

Source: Company, ICICI Direct Research

We expect sales to grow at a CAGR of 9.3% over

FY19-21E. We build in 5.7% volume CAGR

Going forward, we expect EBITDA to grow at a

CAGR of 10.2% in FY19-21E. We build in EBITDA

margin trajectory of 12.5-13% in FY19-21E

We expect domestic volumes to grow at a CAGR of

6.0% over FY19-21E while export volumes are

expected to be largely flat. Blended volume CAGR is

expected at 5.7% CAGR in FY19-21E

ICICI Securities | Retail Research 5

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Exhibit 7: Domestic market PV share

46.8 46.247.2 47.3 47.4

50.5 50.4 50.3 50.0

52.5 52.1 51.7 51.2

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

Q4FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

(%

)

Domestic Market Share

Source: Company, ICICI Direct Research

Exhibit 8: Annual discount trends and expectations

16951

19,529 18,898

16,774 15,895

18,334

15,000 15,000

0

5000

10000

15000

20000

25000

FY14 FY15 FY16 FY17E FY18 FY19 FY20E FY21E

(|)

Source: Company, ICICI Direct Research

MSIL has largely maintained its market leadership

with market share at FY19 end at 51.2%, up 120 bps

on a YoY basis

Discounts for Q4FY19 came in surprisingly low at

| 15,125/unit against our expectation of

| 25,000/unit. Reduced forward estimates

ICICI Securities | Retail Research 6

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Exhibit 9: Segment and model wise MSIL volumes

Segment, sub-segment

and model

FY18 FY19 YoY (%) Domestic market

share (%)

Passenger Cars 1,234,571 1,287,023 4.2 58.0

Mini 427,183 379,050 (11.3)

Alto 258,539 259,401 0.3

Wagon-R (old) 168,644 119,649 (29.1)

Compact 748,475 861,804 15.1

Wagon-R (new) - 31,813 -

Swift 175,928 223,924 27.3

Celerio 94,721 103,734 9.5

Dzire 240,124 253,859 5.7

Baleno 190,480 212,330 11.5

Ignis 47,222 36,144 (23.5)

Mid Size 58,913 46,169 (21.6)

Ciaz 58,913 46,169 (21.6)

Utility Vehicles 253,759 264,197 4.1 28.1

Ertiga 66,141 65,263 (1.3)

Gypsy 8,233 3,232 (60.7)

S-Cross 30,923 37,822 22.3

Vitara Brezza 148,462 157,880 6.3

Vans 155,137 178,606 15.1 82.2

Omni 80,583 86,837 7.8

Eeco 74,554 91,769 23.1

-

Passenger Vehicles 1,643,467 1,729,826 5.3 51.2

-

LCV 10,033 23,874 138.0

Total domestic 1,653,500 1,753,700 6.1

-

Total exports 126,074 108,743 (13.7)

-

Grand total 1,779,574 1,862,443 4.7

Source: SIAM, ICICI Direct Research; Domestic market share as of March 2019

Among models, the company realised main growth

across Baleno, Swift in the passenger car category

& Brezza and S-cross in the utility vehicle category

ICICI Securities | Retail Research 7

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Exhibit 10: Valuation

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| cr) (%) (|) (%) (x) (x) (%) (%)

FY17 68,035 55.7 243 163.7 28.4 17.5 20.3 20.3

FY18 79,763 17.2 256 5.2 27.0 14.5 18.5 21.1

FY19P 86,020 7.8 248 (2.9) 27.8 15.8 16.3 16.3

FY20E 94,012 9.3 256 3.2 26.9 14.4 15.2 15.9

FY21E 102,776 9.3 291 13.4 23.7 12.4 15.6 16.5

Source: Company, ICICI Direct Research

Exhibit 11: MSIL currently trades at ~23.7x FY21E EPS of |291

0

2000

4000

6000

8000

10000

12000

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

Oct-11

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

Jan-14

Apr-14

Jul-14

Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

Oct-17

Jan-18

Apr-18

Jul-18

Oct-18

Jan-19

Apr-19

(|)

Price 33x 30x 26x 23x 19x 15x 12x

Source: Bloomberg, ICICI Direct Research

ICICI Securities | Retail Research 8

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Exhibit 12: Recommendation history vs. consensus

0.0

20.0

40.0

60.0

80.0

100.0

0

2,000

4,000

6,000

8,000

10,000

12,000

Apr-19Jan-19Oct-18Jul-18May-18Feb-18Nov-17Aug-17May-17Feb-17Nov-16Aug-16May-16

(%

)(|)

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Reuters, ICICI Direct Research

Exhibit 13: Top 10 shareholders

Rank Name Latest Filing Date % O/S Position (m) Change (m)

1 Suzuki Motor Corp 31-Dec-18 56.2 169.8 0.0

2 Life Insurance Corporation of India 31-Dec-18 6.7 20.2 0.4

3 The Vanguard Group, Inc. 31-Mar-19 1.4 4.3 0.0

4 BlackRock Institutional Trust Company, N.A. 31-Mar-19 1.1 3.3 0.0

5 SBI Funds Management Pvt. Ltd. 31-Dec-18 1.1 3.2 0.0

6 Axis Asset Management Company Limited 31-Mar-19 0.9 2.6 -0.2

7 ICICI Prudential Asset Management Co. Ltd. 31-Mar-19 0.7 2.2 0.3

8 UTI Asset Management Co. Ltd. 31-Mar-19 0.7 2.2 0.1

9 Nomura Asset Management Co., Ltd. 31-Oct-18 0.7 2.2 0.0

10 Fidelity Management & Research Company 28-Feb-19 0.6 1.9 -0.1

Source: Reuters, ICICI Direct Research

Exhibit 14: Recent activity

Investor name Value ($ M) Shares(M) Investor name Value ($ M) Shares(M)

T. Rowe Price International (UK) Ltd. 37.9 0.4 Baron Capital Management, Inc. -60.1 -0.6

Life Insurance Corporation of India 42.0 0.4 Causeway Capital Management LLC -26.2 -0.2

ICICI Prudential Asset Management Co. Ltd. 29.3 0.3 Axis Asset Management Company Limited -16.3 -0.2

Norges Bank Investment Management (NBIM) 21.9 0.2 Fidelity Management & Research Company -12.4 -0.1

Mirae Asset Global Investments (India) Pvt. Ltd. 18.9 0.2 FIL Investment Management (Singapore) Ltd. -10.0 -0.1

Buys Sells

Source: Reuters, ICICI Direct Research

Exhibit 15: Shareholding pattern

(in %) Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

Promoter 56.2 56.2 56.2 56.2 56.2

FII 25.4 23.9 23.0 22.7 22.3

DII 14.3 15.7 16.0 13.4 13.4

Others 4.1 4.3 4.9 7.7 8.1

Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 9

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Financial Summary

Exhibit 16: Profit and loss statement | crore

(Year-end March) FY18 FY19P FY20E FY21E

Total operating Income 79,763 86,020 94,012 102,776

Growth (%) 7.8 9.3 9.3

Raw Material Expenses 54,975 60,254 67,097 73,158

Employee Expenses 2,834 3,255 3,522 3,812

Marketing Expenses 0 0 0 0

Administrative Expenses 0 0 0 0

Other expenses 9,892 11,512 11,587 12,442

Total Operating Expenditure 67,701 75,021 82,206 89,412

EBITDA 12,062 10,999 11,806 13,364

Growth (%) -9 7 13

Depreciation 2,758 3,019 3,290 3,597

Interest 346 76 50 25

Other Income 2,046 2,561 2,596 2,804

PBT 11,003 10,466 11,061 12,546

Others 0 1 2 3

Total Tax 3,282 2,965 3,318 3,764

PAT 7,722 7,501 7,743 8,782

Growth (%) -3 3 13

EPS (|) 256 248 256 291

Source: Company, ICICI Direct Research

Exhibit 17: Cash flow statement | crore

(Year-end March) FY18 FY19P FY20E FY21E

Profit after Tax 7,722 7,501 7,743 8,782

Add: Depreciation 2,758 3,019 3,290 3,597

(Inc)/dec in Current Assets -50 -504 -875 -747

Inc/(dec) in CL and Provisions 2,584 -1,331 784 1,173

Others 346 76 50 25

CF from operating activities 13,359 8,760 10,993 12,830

(Inc)/dec in Investments -6,527 -975 -3,000 -4,700

(Inc)/dec in Fixed Assets -3,701 -4,542 -4,500 -4,500

Others -218 17 -219 -211

CF from investing activities -10,447 -5,499 -7,719 -9,411

Issue/(Buy back) of Equity 0 0 0 0

Inc/(dec) in loan funds -373 39 -50 -50

Dividend paid & dividend tax -2,900 -2,900 -3,081 -3,262

Inc/(dec) in Sec. premium 0 0 0 0

Others 419 -292 -50 -25

CF from financing activities -2,854 -3,153 -3,182 -3,338

Net Cash flow 58 108 92 81

Opening Cash 13 71 179 271

Closing Cash 71 179 271 352

Source: Company, ICICI Direct Research

Exhibit 18: Balance Sheet | crore

(Year-end March) FY18 FY19P FY20E FY21E

Liabilities

Equity Capital 151 151 151 151

Reserve and Surplus 41,606 45,990 50,652 56,172

Total Shareholders funds 41,757 46,141 50,803 56,323

Total Debt 111 150 100 50

Deferred Tax Liability 559 564 564 564

Others Liabilties 1,612 2,076 2,116 2,156

Total Liabilities 44,039 48,931 53,583 59,092

Assets

Gross Block 21,424 26,492 32,092 36,592

Less: Acc Depreciation 8,065 11,084 14,374 17,971

Net Block 13,359 15,408 17,717 18,620

Capital WIP 2,126 1,600 500 500

Total Fixed Assets 15,485 17,008 18,217 19,120

Investments 35,290 36,515 39,665 44,515

Inventory 3,161 3,326 3,735 4,083

Debtors 1,462 2,310 2,576 2,816

Loans and Advances 3 16 9 10

Other Current Assets 2,007 1,485 1,692 1,850

Cash 71 179 271 352

Total Current Assets 6,704 7,316 8,283 9,111

Creditors 10,497 9,633 10,303 11,263

Provisions 560 624 721 788

Other current Liabilities 4,274 3,743 3,760 3,905

Total Current Liabilities 15,331 14,001 14,784 15,957

Net Current Assets -8,627 -6,685 -6,502 -6,846

Other Assets 1,891 2,093 2,202 2,303

Application of Funds 44,039 48,931 53,583 59,092

Source: Company, ICICI Direct Research

Exhibit 19: Key ratios

(Year-end March) FY18 FY19P FY20E FY21E

Per share data (|)

EPS 255.6 248.3 256.3 290.7

Cash EPS 346.9 348.2 365.2 409.8

BV 1,382.3 1,527.5 1,681.8 1,864.5

DPS 80.0 80.0 85.0 90.0

Cash Per Share 2.4 5.9 9.0 11.7

Operating Ratios

EBITDA Margin (%) 15.1 12.8 12.6 13.0

PBIT / Net sales (%) 11.7 9.3 9.1 9.5

PAT Margin (%) 9.7 8.7 8.2 8.5

Inventory days 14.5 14.1 14.5 14.5

Debtor days 6.7 9.8 10.0 10.0

Creditor days 48.0 40.9 40.0 40.0

Return Ratios (%)

RoE 18.5 16.3 15.2 15.6

RoCE 21.1 16.3 15.9 16.5

RoIC 91.7 58.1 52.2 57.2

Valuation Ratios (x)

P/E 27.0 27.8 26.9 23.7

EV / EBITDA 14.5 15.8 14.4 12.4

EV / Net Sales 2.2 2.0 1.8 1.6

Market Cap / Sales 2.6 2.4 2.2 2.0

Price to Book Value 5.0 4.5 4.1 3.7

Solvency Ratios

Debt/EBITDA 0.0 0.0 0.0 0.0

Debt / Equity 0.0 0.0 0.0 0.0

Current Ratio 0.6 0.7 0.7 0.7

Quick Ratio 0.3 0.4 0.4 0.4

Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 10

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

Exhibit 20: ICICI Direct Research coverage universe (Auto & Auto Ancillary)

Sector / Company CMP M Cap

(|) TP(|) Rating (| Cr) FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E

Amara Raja (AMARAJ) 670 630 Hold 11448 27.6 29.8 34.8 24.3 22.5 19.2 12.8 11.5 10.0 23.3 22.1 22.4 16.0 15.2 15.5

Apollo Tyre (APOTYR) 208 225 Buy 11921 12.7 14.2 22.5 15.8 14.1 8.9 6.7 6.7 5.7 7.8 9.1 11.0 7.4 9.1 11.1

Ashok Leyland (ASHLEY) 89 85 Hold 26007 5.3 6.4 7.8 16.6 13.9 11.4 7.3 6.6 5.0 28.1 28.2 31.9 21.9 23.2 24.3

Bajaj Auto (BAAUTO) 3068 2380 Hold 88764 140.6 149.7 167.2 17.8 16.7 14.9 11.9 11.3 9.3 22.9 21.1 21.7 21.5 20.3 20.2

Balkrishna Ind. (BALIND) 929 820 Hold 17968 38.2 42.5 49.8 21.1 18.9 16.2 14.2 11.6 9.5 22.4 21.0 22.4 18.1 21.0 22.4

Bharat Forge (BHAFOR) 700 535 Buy 32590 16.2 23.5 27.6 29.0 20.0 17.0 13.9 11.5 9.9 18.2 21.1 23.3 17.3 20.8 21.4

Bosch (MICO) 17987 17565 Hold 54898 449.1 545.6 622.9 40.4 33.2 29.1 25.1 22.4 18.9 14.4 14.9 15.2 21.4 22.2 22.6

Eicher Motors (EICMOT) 30000 21250 Hold 55589 718.9 848.4 1112.9 27.2 24.6 18.9 19.0 16.7 12.3 39.1 34.6 35.3 29.9 26.0 26.4

Escorts (ESCORT) 734 700 Hold 9002 28.1 40.7 44.1 23.8 16.5 15.2 14.2 10.6 9.3 18.8 20.9 20.8 13.5 16.5 15.3

Exide Industries (EXIIND) 214 235 Hold 18207 8.2 8.5 9.6 28.4 24.0 23.4 15.2 13.8 12.3 19.1 18.0 18.7 13.0 12.4 12.9

Hero Moto (HERHON) 2610 3000 Buy 52112 185.1 171.5 196.1 14.2 15.3 13.4 8.7 9.2 7.9 42.4 37.5 38.6 31.4 26.5 27.1

JK Tyre & Ind (JKIND) 89 82 Hold 2017 2.9 10.0 22.0 3.9 8.6 3.9 9.2 5.8 4.1 7.7 12.2 16.1 3.6 12.9 19.2

Mahindra CIE (MAHAUT) 229 275 Buy 8674 14.5 17.0 19.1 16.6 14.1 12.6 9.4 7.5 6.5 12.8 13.2 13.0 13.2 15.5 16.2

Maruti Suzuki (MARUTI) 6900 5815 Sell 204813 255.6 248.3 256.3 27.0 27.8 26.9 14.5 15.8 14.4 21.1 16.3 15.9 18.5 16.3 15.2

Motherson (MOTSUM) 145 125 Hold 45711 5.1 5.3 7.0 25.7 24.5 18.6 9.3 8.5 6.8 16.3 15.2 18.0 17.4 15.7 18.0

Tata Motors (TELCO) 217 145 Hold 64510 26.8 -83.4 16.6 5.6 NA 9.1 2.4 3.3 2.6 9.1 5.1 9.9 10.3 5.9 12.6

Wabco India (WABTVS) 6304 7000 Hold 11956 143.8 172.2 212.3 46.9 39.2 31.8 30.4 26.2 20.8 17.9 17.8 18.2 25.1 25.7 26.0

RoE (%)EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)

Source: Reuters, ICICI Direct Research

ICICI Securities | Retail Research 11

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

RATING RATIONALE

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]

ICICI Securities | Retail Research 12

ICICI Direct Research

Result Update | Maruti Suzuki India (MARUTI)

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