MSIL’s 1QFY18 earnings and margins were below the cons. estimates. Net sales were at Rs17,546cr while PAT was at Rs2,331cr. Net sales, EBITDA and PAT grew by 17.4% / 5.3% 4.4% on yoy basis and were 0.3%/-6.8%/-7.9% against the consensus estimates. While PAT has grown by 4.4% to `1,556 in the quarter, there is Rs85cr component on one-off write backs. Adjusted for the one off item PAT could have been higher. MSIL continues to report double digit numbers due to the strong performance of utility vehicles. Company expects to launch one model each year which is likely to sustain its growth momentum in the near term. The order book for the new vehicles remains strong and company has indicated of increasing its NEXA outlets to 300 from current 266. We believe that 1QFY18 results are one-off in nature and will not recur. We expect 22%/ 21% CAGR in revenue and PAT over next two years. At CMP, MSIL is trading at P/E of 21.5x of its FY2019E earnings. We value MSIL on 24x of its FY2019E EPS of Rs354 with a target price of Rs8,501 with Accumulate rating on the stock.

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