Motilal Oswal is bullish on Maruti Suzuki India and has recommended buy rating on the stock with a target of Rs 2220 in its January 25, 2013 research report.
“Maruti Suzuki, volumes grew by 26% QoQ (31% YoY) to 301,453 units, driven by delayed festive season and production ramp-up at Manesar plant. Better product mix led to lower discounts and 1% price increase taken from Oct-12 drove 15.7% QoQ (+4% YoY) realization uptick to INR363,471/unit (v/s est INR359,355/unit). Revenues grew by 45% YoY to INR112b (v/s est INR111b). EBITDA margins improved by 190bp QoQ (+280bp YoY) to 8% (v/s est 7.2%), driven by higher volumes and product mix improvement. EBITDA was at INR8.9b (v/s est INR8b). However, higher interest and tax restricted adj PAT growth to 120% QoQ (144% YoY) to INR5b (v/s est INR4.8b). 3QFY13 performance had an adverse lag impact of weak JPY/INR on vendor imports. However, benefit of favorable JPY/INR would reflect from 4QFY13. MSIL is hedged for direct JPY/USD exposure (incl royalty) for 4Q at ~83 JPY/ USD and 1QFY14 at ~86. However, it is unhedged for USD/INR and the entire vendor imports.”
“We are upgrading our consolidated EPS estimate by 4%/4.5%/6.6% for FY13E/ 14E/15E to INR73.6/INR110.2/INR139.4 respectively, driven by an improvement in our margin assumption on favorable currency movement (assumed JPY/ INR at 0.61 for FY14E/15E) and lower discounts on petrol cars. The stock trades at 11.5x FY15E consol EPS of INR139.4 and 7.2x cash EPS of INR222. Maintain Buy with a target price of INR 2220 (~10x FY15E CEPS/15.9x FY15E consol EPS),” says Motilal Oswal research report.
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