2QFY2019 Result Update | Automobile
November 3, 2018
Maruti Suzuki India
BUY
CMP
`6,705
Performance Update
Target Price
`8,552
Y/E March (` cr)
2QFY19
2QFY18
% yoy
1QFY19
% qoq
Investment Period
12 months
Net sales
22,433
21,768
3.1
22,459
(0.1)
EBITDA
3,431
3,678
(6.7)
3,351
2.4
Stock Info
EBITDA margin (%)
Sector
Automobile
15.3
16.9
(160bp)
14.9
37bp
Market Cap (Rs cr)
2,03,299
Adjusted PAT
2,240
2,484
(9.8)
1,975
13.4
Net Debt
(35,713)
Source: Company, Angel Research
Beta
1.0
For 2QFY2019, Maruti Suzuki India (MSIL) posted slightly better numbers, in-line
52 Week High / Low
6,502/10,000
with expectation on EBITDA margin front (after adjusting for one time engineering
Avg. Daily Volume
68,329
Face Value (Rs)
5
service fee received from Suzuki of `2bn) as well as on the bottom-line front. MSIL
BSE Sensex
33,762
reported ~3% yoy top-line growth to `22,433cr on the back of price hike (up
Nifty
10,159
~4.5% yoy). The company’s operating margins contracted by 160bps yoy. On the
Reuters Code
MRTI.BO
bottom-line front, MSIL reported de-growth of ~10% yoy to `2,240cr on the back
Bloomberg Code
MSIL.IN
of lower sales and poor operating performance.
Shareholding Pattern (%)
Top-line remains flat: MSIL’s top-line grew by ~3% yoy to `22,433cr on the back
Promoters
56.2
of price hike (up ~4.5% yoy). Overall volume growth de-grew by ~1.5%, mainly
MF / Banks / Indian Fls
6.1
FII / NRIs / OCBs
22.8
affected by flood in several states, higher interest rates, rising fuel prices, and
Indian Public / Others
14.9
insurance cost, which impacted the overall demand during the quarter. However,
volumes increased 13% in 1H on back of 3rd consecutive good monsoon and
Abs. (%)
3m 1yr
3yr
Sensex
(9.8)
0.6
21.9
increase in MSP in rural area. As per management, MSIL expects strong volume
MSIL
(28.6)
17.0
52.8
growth in 2HFY2019 due to festive seasons and strong buying sentiment in rural
markets.
Historical share price chart
Subdued volume and poor operating performance impacted the overall
12,000
profitability: On the operating front, the company reported contraction in
margins, down 160bps yoy at 15.3%. Operating margin was impacted mainly
10,000
due to an increase in material prices, higher discounts and unfavorable currency
8,000
movement. On the bottom-line front, MSIL reported de-growth of ~10% yoy to
6,000
`2,240cr.
4,000
Outlook and Valuation: We expect MSIL to report net revenue CAGR of ~14% to
2,000
~`1,03,712cr over FY2018-20E mainly due to new launches and upcoming
0
facelift in various models. Further, on the bottom-line front, we expect CAGR of
~14% to `10,331cr over the same period on the back of healthy sales. Thus, we
maintain our Buy recommendation on MSIL with Target Price of `8,552.
Source: Company, Angel Research
Key Financials
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Net sales
68,085
79,809
90,185
103,712
Research Analyst
% chg
18.2
17.2
13.0
15.0
Amarjeet S Maurya
Adj. Net profit
7,511
7,881
8,714
10,331
022-40003600 Ext: 6831
% chg
36.6
4.9
10.6
18.6
EBITDA margin (%)
15.2
15.1
14.7
15.3
EPS (`)
248.7
261.0
288.5
342.1
P/E (x)
27.0
25.7
23.2
19.6
P/BV (x)
5.5
4.8
4.2
3.7
RoE (%)
20.3
18.5
18.1
18.8
RoCE (%)
20.6
21.6
21.2
23.0
EV/Sales (x)
2.6
2.1
1.8
1.5
EV/EBITDA (x)
16.8
13.8
12.0
9.6
PlSource: Company, Angel Research Noteat the end of this report
1
Maruti Suzuki India Ltd| 2QFY2019 Result Update
Exhibit 1: 2QFY2019 Performance
Y/E March (` cr)
2QFY19
2QFY18
% yoy
1QFY19
% qoq
1HFY19
1HFY18
% chg
Net Sales
22,433
21,768
3.1
22,459
(0.1)
44893
41546
8.1
Consumption of RM
15285
14,978
2.0
15502
(1.4)
30,787
29,498
4.4
(% of Sales)
68.1
68.8
69.0
68.6
71.0
Staff Costs
792
667
18.8
765
3.5
1,557
1,319
18.1
(% of Sales)
3.5
3.1
3.4
3.5
3.2
Other Expenses
2,925
2,446
19.6
2,841
3.0
5,766
4,720
22.2
(% of Sales)
13.0
11.2
12.6
12.8
11.4
Total Expenditure
19,002
18,091
5.0
19,108
(0.6)
38,110
35,537
7.2
Operating Profit
3,431
3,678
(6.7)
3,351
2.4
6,782
6,009
12.9
OPM
15.3
16.9
14.9
15.1
14.5
Interest
26
15
71.3
21
24.2
46
46
0.2
Depreciation
721
683
5.7
720
0.2
1441
1366
5.5
Other Income
527
523
0.7
272
93.7
798
1206
(33.8)
PBT (excl. Ext Items)
3,211
3,503
(8.3)
2,882
11.4
6,093
5,802
5.0
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
3,211
3,503
(8.3)
2,882
11.4
6,093
5,802
5.0
(% of Sales)
14.3
16.1
12.8
13.6
14.0
Provision for Taxation
971
1,019
(4.7)
907
7.0
1,878
1,761
6.6
(% of PBT)
30.2
29.1
31.5
30.8
30.4
Reported PAT
2,240
2,484
(9.8)
1,975
13.4
4,216
4,041
4.3
PATM
10.0
11.4
8.8
9.4
9.7
Minority Interest After NP
Reported PAT
2,240
2,484
(9.8)
1,975
13.4
4,216
4,041
4.3
FDEPS (`)
74.2
82.3
(9.8)
65.4
13.4
139.6
133.8
4.3
Source: Company, Angel Research
November 3, 2018
2
Maruti Suzuki India Ltd| 2QFY2019 Result Update
Outlook and Valuation
We expect MSIL to report net revenue CAGR of ~14% to ~`1,03,712cr over
FY2018-20E mainly due to new launches and upcoming facelift in various models.
Further, on the bottom-line front, we expect CAGR of ~14% to `10,331cr over the
same period on the back of healthy sales. Thus, we maintain our Buy
recommendation on MSIL with Target Price of `8,552.
Downside risks to our estimates
Strong launches and facelift of existing models from competitors like Hyundai
Motors, M&M, Ford, etc. can grab the market share from MSIL.
Slowdown of economy can impact the overall buying sentiment of automobile
segment.
Company Background
Maruti Suzuki, a subsidiary of Suzuki Motor Corporation of Japan, is India's largest
passenger car company, accounting for over 45% of the domestic car market. The
company offers 14 brands spanning across cars, UV and MPV segments. WagonR,
Swift, DZire, Baleno, Brezza and Ciaz are the most popular models and dominate
the market in their respective segments. It has three manufacturing facilities in
Gurgaon and Manesar with installed capacity of c.1.55mn units. It has the most
extensive distribution network among all PV companies in India.
November 3, 2018
3
Maruti Suzuki India Ltd| 2QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E
FY2020E
Net Sales
57,589
68,085
79,809
90,185
103,712
% chg
13.4
18.2
17.2
13.0
15.0
Total Expenditure
48,700
57,727
67,746
76,927
87,844
Raw Material
38,706
46,742
54,986
63,580
72,806
Personnel
2,000
2,360
2,863
3,247
3,734
Others Expenses
7,994
8,624
9,897
10,101
11,305
EBITDA
8,889
10,358
12,063
13,257
15,868
% chg
16.5
16.5
9.9
19.7
(% of Net Sales)
15.4
15.2
15.1
14.7
15.3
Depreciation& Amortisation
2,822
2,604
2,760
2,917
3,100
EBIT
6,067
7,754
9,304
10,340
12,768
% chg
27.8
20.0
11.1
23.5
(% of Net Sales)
10.5
11.4
11.7
11.5
12.3
Interest & other Charges
82
89
346
92
95
Other Income
1,600
2,462
2,209
2,200
2,300
(% of PBT)
21.1
24.3
19.8
17.7
15.4
Recurring PBT
7,585
10,127
11,167
12,448
14,973
% chg
33.5
10.3
11.5
20.3
Tax
2,088
2,616
3,286
3,734
4,642
(% of PBT)
27.5
25.8
29.4
30.0
31.0
PAT (reported)
5,497
7,511
7,881
8,714
10,331
Extraordinary Items
-
-
-
-
-
ADJ. PAT
5,497
7,511
7,881
8,714
10,331
% chg
36.6
4.9
10.6
18.6
(% of Net Sales)
9.5
11.0
9.9
9.7
10.0
Basic EPS (`)
182.0
248.7
261.0
288.5
342.1
Fully Diluted EPS (`)
182.0
248.7
261.0
288.5
342.1
% chg
44.4
36.6
4.9
10.6
18.6
November 3, 2018
4
Maruti Suzuki India Ltd| 2QFY2019 Result Update
Balance Sheet
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
SOURCES OF FUNDS
Equity Share Capital
151
151
151
151
151
Reserves& Surplus
30,465
36,924
42,389
48,082
54,790
Shareholders Funds
30,616
37,075
42,540
48,233
54,941
Total Loans
231
484
484
484
484
Deferred Tax Liability
861
1,110
1,110
1,110
1,110
Total Liabilities
31,722
38,684
44,148
49,842
56,549
APPLICATION OF FUNDS
Gross Block
15,343
18,680
22,086
24,586
27,086
Less: Acc. Depreciation
2,813
5,370
8,129
11,046
14,147
Net Block
12,530
13,311
13,957
13,540
12,940
Capital Work-in-Progress
1,007
1,252
1,252
1,252
1,252
Investments
20,676
29,151
36,123
43,123
50,123
Current Assets
8,513
8,247
7,148
8,123
10,946
Inventories
3,133
3,264
3,160
3,706
4,262
Sundry Debtors
1,323
1,203
1,465
1,730
2,273
Cash
51
24
74
162
262
Loans & Advances
2,303
2,129
439
451
1,556
Other Assets
1,703
1,628
2,010
2,074
2,593
Current liabilities
11,636
13,881
14,936
16,800
19,315
Net Current Assets
(3,122)
(5,634)
(7,788)
(8,677)
(8,370)
Deferred Tax Asset
632
604
604
604
604
Mis. Exp. not written off
-
-
-
-
-
Total Assets
31,722
38,684
44,148
49,842
56,549
November 3, 2018
5
Maruti Suzuki India Ltd| 2QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Profit before tax
7585
10127
11167
12448
14973
Depreciation
2822
2604
2760
2917
3100
Change in Working Capital
1460
2192
2204
978
(207)
Interest / Dividend (Net)
(70)
52
346
92
95
Direct taxes paid
(1912)
(2323)
(3286)
(3734)
(4642)
Others
(1402)
(2370)
0
0
0
Cash Flow from Operations
8483
10282
13191
12700
13319
(Inc.)/ Dec. in Fixed Assets
(2456)
(3236)
(3406)
(2500)
(2500)
(Inc.)/ Dec. in Investments
(4774)
(5937)
(6973)
(7000)
(7000)
Cash Flow from Investing
(7230)
(9173)
(10379)
(9500)
(9500)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
(235)
253
0
0
0
Dividend Paid (Incl. Tax)
(755)
(1057)
(2416)
(3020)
(3624)
Interest / Dividend (Net)
(239)
(331)
(346)
(92)
(95)
Cash Flow from Financing
(1229)
(1136)
(2762)
(3112)
(3719)
Inc./(Dec.) in Cash
23
(27)
50
88
100
Opening Cash balances
28
51
24
74
162
Closing Cash balances
51
24
74
162
262
November 3, 2018
6
Maruti Suzuki India Ltd| 2QFY2019 Result Update
Key Ratio
Y/E March
FY2016
FY2017
FY2018
FY2019E FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
36.8
27.0
25.7
23.2
19.6
P/CEPS
24.3
20.0
19.0
17.4
15.1
P/BV
6.6
5.5
4.8
4.2
3.7
Dividend yield (%)
0.5
1.1
1.2
1.5
1.8
EV/Sales
3.2
2.6
2.1
1.8
1.5
EV/EBITDA
20.5
16.8
13.8
12.0
9.6
EV / Total Assets
5.7
4.5
3.8
3.2
2.7
Per Share Data (`)
EPS (Basic)
182.0
248.7
261.0
288.5
342.1
EPS (fully diluted)
182.0
248.7
261.0
288.5
342.1
Cash EPS
275.5
334.9
352.3
385.1
444.8
DPS
35.0
75.0
80.0
100.0
120.0
Book Value
1,013.8
1,227.7
1,408.6
1,597.1
1,819.2
Returns (%)
ROCE
19.7
20.6
21.6
21.2
23.0
Angel ROIC (Pre-tax)
59.9
92.5
136.3
190.4
253.4
ROE
18.0
20.3
18.5
18.1
18.8
Turnover ratios (x)
Asset Turnover (Gross Block)
3.8
3.6
3.6
3.7
3.8
Inventory / Sales (days)
20
17
14
15
15
Receivables (days)
8
6
7
7
8
Payables (days)
51
49
45
45
45
Working capital cycle (ex-cash) (days)
(23)
(25)
(24)
(23)
(22)
Source: Company, Angel Research
November 3, 2018
7
Maruti Suzuki India Ltd| 2QFY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking
Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration
number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for
accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Disclosure of Interest Statement
Maruti Suzuki India
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to -15%)
Sell (< -15%)
November 3, 2018
8
