For 2QFY2019, Maruti Suzuki India (MSIL) posted slightly better numbers, in-line with expectation on EBITDA margin front (after adjusting for one time engineering service fee received from Suzuki of `2bn) as well as on the bottom-line front. MSIL reported ~3% yoy top-line growth to `22,433cr on the back of price hike (up ~4.5% yoy). The company’s operating margins contracted by 160bps yoy. On the bottom-line front, MSIL reported de growth of ~10% yoy to `2,240cr on the back of lower sales and poor operating performance.

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.

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