4QFY2013 Result Update | Automobile

April 26, 2013

Maruti Suzuki
Performance Highlights
Y/E March (` cr) Net Sales EBITDA EBITDA Margin (%) Adj. PAT 4QFY13* 12,793 1,328 10.4 1,148 4QFY12 11,727 859 7.3 640 % chg (yoy) 9.1 54.7 306bp 79.3 3QFY13 11,200 891 8.0 501 % chg (qoq) 14.2 49.0 243bp 128.9

ACCUMULATE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Automobile 48,349 (5,744) 0.9 1,690/1,052 83,315 5 19,287 5,871 MRTI.BO MSIL@IN

`1,673 `1,847
12 Months

Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger

Impressive performance driven by better product-mix and Yen depreciation: For 4QFY2013, Maruti Suzuki (MSIL) reported extremely strong results (pre Suzuki Powertrain India Ltd [SPIL] merger), beating our as well as consensus estimates by a significant margin. The top-line registered an in-line growth of 9.1% yoy (14.2% qoq) to `12,793cr, driven by a strong net average realization growth of 14.7% yoy (flat qoq) owing to better product-mix, price hikes and lower levels of discounts. The volumes however, registered a decline of 4.6% yoy led by weak demand for entry segment cars (down 13.7% yoy) and slowdown in exports (down 10.5% yoy). Nevertheless, the bottom-line at `1,148cr was substantially ahead of our expectations driven by strong expansion in EBITDA margins (up 306bp yoy and 243bp qoq to 10.4%), higher other income (up 120% qoq) and lower tax rate (17.1% vs 25.8% in 3QFY2013). The EBITDA margin expansion was led by a better product-mix, price hikes, lower average discounts (at `10,500/unit vs `12,100/unit in 3QFY2013) and favorable currency movement (+ve impact of ~120bp qoq). During the quarter, MSIL merged its engine manufacturing subsidiary SPIL with itself through a share swap ratio of 1:70 as announced earlier. Outlook and valuation: Going ahead, we expect MSIL to register a healthy volume growth of ~8% in FY2014 primarily due to the low base of 1HFY2013 (on account of the strike at the Manesar plant). Additionally, expected easing of interest rates in CY2013 is likely to boost consumer sentiments which may lead to demand revival in the passenger car segment. Further, the ongoing weakness in Yen (down ~10% yoy against INR in YTDCY2013), which partially benefited EBITDA margins in 4QFY2013, is expected to enhance profitability in FY2014 as the favorable currency impact on indirect exposure is expected to reflect completely in FY2014. We expect EBITDA margins to improve 150bp in FY2014, driven by favorable product-mix and currency movement, lower discounts, ongoing cost reduction initiatives and also on account of the SPIL merger. As a result, we expect MSIL to register a strong earnings CAGR of ~25% over FY2013-15. At `1,673, MSIL is trading at 13.6x FY2015E earnings (including the impact of SPIL merger). We recommend an Accumulate rating on the stock with a target price of `1,847, valuing the stock at 15x FY2015 earnings.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 56.2 18.9 22.5 2.4

Abs. (%) Sensex Maruti Suzuki

3m (4.1) 4.6

1yr 12.6 21.2

3yr 8.7 25.4

Key financials (post SPIL merger)

Y/E March (` cr) Net Sales % chg Net Profit % chg EBITDA (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2012 35,587 (2.8) 1,635 (28.6) 7.1 54.1 30.9 3.3 11.3 8.7 1.1 15.0

FY2013 43,588 22.5 2,392 46.3 9.7 79.2 21.1 2.7 14.2 12.6 1.0 10.4

FY2014E 48,455 11.2 3,258 36.2 11.2 107.8 15.5 2.3 16.2 15.3 0.9 7.8

FY2015E 55,723 15.0 3,720 14.2 10.9 123.1 13.6 2.0 16.0 15.4 0.7 6.7

Yaresh Kothari
022-3935 7800 Ext: 6844 yareshb.kothari@angelbroking.com

Please refer to important disclosures at the end of this report

Maruti Suzuki | 4QFY2013 Result Update

Exhibit 1: Quarterly financial performance (pre SPIL merger)

Y/E March (` cr) Net Sales Raw-material cost (% of Sales) Staff cost (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM (%) Interest Depreciation Other Income PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT Adj PAT Adj. PATM Equity capital (cr) Reported EPS (`) 4QFY13* 12,793 9,789 76.5 251 2.0 1,424 11.1 11,465 1,328 10.4 19 339 415 1,384 1,384 10.8 237 17.1 1,148 1,148 9.0 151.0 38.0 4QFY12 11,727 9,333 79.6 246 2.1 1,290 11.0 10,869 858 7.3 21 331 297 804 804 6.9 164 20.4 640 640 5.5 144.5 22.1 71.5 79.3 79.3 44.2 (6.7) 2.6 39.7 72.2 72.2 5.5 54.7 10.4 2.3 % chg (yoy) 9.1 4.9 3QFY13 11,200 8,784 78.4 231 2.1 1,294 11.6 10,309 891 8.0 46 358 189 676 676 6.0 174 25.8 501 501 4.5 144.5 17.4 118.9 128.9 128.9 35.8 104.9 (57.8) (5.3) 119.9 104.9 11.2 49.0 10.0 8.8 % chg (qoq) 14.2 11.4 FY2013 43,077 33,575 77.9 956 2.2 5,032 11.7 39,562 3,514 8.2 136 1,385 872 2,865 2,865 6.7 565 19.7 2,300 2,300 5.3 151.0 76.1 FY2012 35,587 28,066 78.9 801 2.3 4,207 11.8 33,074 2,513 7.1 55 1,138 827 2,146 2,146 6.0 511 23.8 1,635 1,635 4.6 144.5 56.6 34.5 40.7 40.7 10.6 147.2 21.6 5.5 33.5 33.5 19.6 39.9 19.6 19.3 % chg (yoy) 21.0 19.6

Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger

Exhibit 2: 4QFY2013 Actual vs Angel estimates

Y/E March (` cr) Net Sales EBITDA EBITDA margin (%) Adj. PAT Actual* 12,793 1,328 10.4 1,148 Estimates 12,930 1,112 8.6 722 Variation (%) (1.1) 19.4 178bp 58.9

Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger

April 26, 2013

Maruti Suzuki | 4QFY2013 Result Update

Exhibit 3: Quarterly volume performance

Volume (units) A: Mini: M800, Alto, A-Star, WagonR A: Compact: Swift, Estilo, Ritz A: Super Compact: Dzire A: Mid-Size: SX4 A: Executive: Kizashi Total Passenger cars B: Utility Vehicles: Gypsy, Grand Vitara C: Vans: Omni, Eeco Total Domestic Total Exports Total Volume
Source: Company, Angel Research

4QFY13 132,837 73,895 55,454 2,130 2 264,318 18,540 26,013 308,871 34,838 343,709

4QFY12 153,966 81,568 40,156 5,492 71 281,253 1,991 38,180 321,424 38,910 360,334

% chg (yoy) (13.7) (9.4) 38.1 (61.2) (6.0) 831.2 (31.9) (3.9) (10.5) (4.6)

3QFY13 111,709 68,790 40,967 1,716 151 223,333 20,286 25,338 268,957 32,496 301,453

% chg (qoq) 18.9 7.4 35.4 24.1 (98.7) 18.4 (8.6) 2.7 7.2

FY2013 429,569 255,302 169,571 6,707 188 861,337 79,192 110,517 120,388

FY2012 % chg (yoy) 491,389 235,754 110,132 17,997 458 855,730 6,525 144,061 127,379 (12.6) 8.3 54.0 (62.7) 0.7 1,113.7 (23.3) 4.4 (5.5) 3.3

14.8 1,051,046 1,006,316 14.0 1,171,434 1,133,695

Top-line growth in line with estimates: For 4QFY2013, net sales registered a healthy growth of 9.1% yoy (14.2% qoq) to `12,793cr, which was broadly in line with our estimates. The top-line performance was primarily driven by a strong 14.7% yoy (flat qoq) growth in net average realization, led by better product-mix (higher share of Swift, Dzire and Ertiga), price hikes and lower levels of discounts (at `10,500/unit vs `12,100/unit in 3QFY2013). The volumes however, registered a decline of 4.6% yoy led by the weak demand for entry segment cars (down 13.7% yoy) and slowdown in exports (down 10.5% yoy). The proportion of diesel cars during the quarter stood at 36.3% as against 39.8% in 3QFY2013. The export revenue for the quarter stood at `1,530cr (strong growth of 23% yoy and 15.9% qoq), driven by a robust net average realization growth of 37.4% yoy (8.2% qoq). The exports performance continues to benefit from the sales of Ertiga kits to Indonesia and favorable forex movement.

Exhibit 4: Volume growth remains under pressure...

(units) 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0
(0.6) (8.7) (19.6) (27.6) 343,350 281,526 19.5 252,307 239,528 4.9 5.1 (4.6)

Exhibit 5: ... net average realization surges 14.7% yoy

(%) (`) 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0
(0.4) 3.2 3.4 12.0 11.7

Total volume
360,334

yoy growth (RHS)

343,709 301,453 25.9

Net average realisation/unit

21.3

yoy growth (RHS)

18.9

(%) 25.0

30.0 20.0 10.0 0.0 (10.0) (20.0) (30.0) (40.0)

295,896

15.7

14.7

20.0 15.0 10.0 5.0 0.0 (5.0)

230,376

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

Source: Company, Angel Research

4QFY13

Source: Company, Angel Research

April 26, 2013

4QFY13

Maruti Suzuki | 4QFY2013 Result Update

Exhibit 6: ... leading to net-sales growth of 9.1% yoy

( ` cr) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
10,005 8,454

Exhibit 7: Domestic passenger car market share trend

(%) 60.0 50.0 40.0 30.0 20.0 10.0 0.0 48.0 44.7 43.6 40.9 38.7 44.1 37.6 47.3 51.5

Net sales

yoy change (RHS) 44.9 27.5 17.2 8.2 9.1

(%) 50.0 40.0 30.0 20.0 10.0 0.0 (10.0) (20.0) (30.0)

18.8 2.7 (16.1) (18.6)

7,674

7,732 11,727 10,778 8,305 11,200 12,793

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

Source: Company, Angel Research

4QFY13

Source: Company, SIAM, Angel Research

Exhibit 8: Quarterly revenue and realization performance

2QFY12 Domestic revenue (` cr) Change yoy (%) Domestic realization (`) Change yoy (%) Export revenue (` cr) Change yoy (%) Export realization (`) Change yoy (%) 6,547 (17.6) 294,367 3.0 889 (10.4) 297,314 7.1 3QFY12 6,589 (21.9) 311,096 10.4 938 11.8 338,323 25.7 4QFY12 10,242 14.7 318,656 11.5 1,244 43.0 319,712 13.7 1QFY13 9,429 27.6 358,165 21.5 1,100 26.9 337,092 19.9 2QFY13 6,612 1.0 314,921 7.0 824 (7.3) 403,486 35.7 3QFY13 9,637 46.3 358,310 15.2 1,320 40.7 406,204 20.1 4QFY13* 11,037 7.8 357,321 12.1 1,530 23.0 439,176 37.4

Source: Company, Angel Research; ; Note: * Derived and are pre SPIL merger

Favorable currency impact and better product-mix boosts margins: MSILs EBITDA margin registered a sharp expansion of 306bp yoy to 10.4%, which was significantly ahead of our estimates of 8.6%. The EBITDA margin expansion was led by better product-mix, price hikes, lower average discounts and favorable currency movement (+ve impact of ~120bp qoq). The raw-material cost as a percentage of sales declined 310bp yoy to 76.5%, led largely by superior productmix (towards Swift, Dzire and Ertiga), positive impact of Yen depreciation and ongoing cost reduction initiatives. Due to the favorable movement in exchange rate, the royalty outgo during the quarter stood at 4.8% (down 30bp yoy and 80bp qoq). On a sequential basis, EBITDA margin improved 243bp, led by the positive impact of the exchange rate (~120bp) and growth in net average realization (~100bp). Consequently, operating profit jumped 54.7% yoy (49% qoq) to `1,328cr.

April 26, 2013

4QFY13

Maruti Suzuki | 4QFY2013 Result Update

Exhibit 9: EBITDA margin surges to 10.4%

(%) 100.0 80.0 60.0 40.0 20.0 0.0 10.1 9.6 5.7 5.2 7.3 7.3 6.1 8.0 10.4 5.1 4.8 EBITDA margin Royalty expenses/sales (RHS) 79.2 79.9 81.0 6.0 79.1 6.0 81.3 Raw material cost/sales (%) 7.0 76.5 6.0 5.0 4.8 4.0 3.0 2.0 1.0 0.0

Exhibit 10: Net profit zooms, up 79.3% yoy

( ` cr) 1,400 1,200 1,000 800 600 400 200 0
660 549 240

Net profit

Net profit margin (RHS) 8.6

(%) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

79.7 6.2

81.9

80.2 5.6

6.6

6.5 5.5 3.1 3.9 2.7 2.7 4.5

5.1

5.4

206

640

424

227

501

1,148

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

Source: Company, Angel Research

Source: Company, Angel Research

Net profit zooms, up 79.3% yoy: Led by strong operating performance, higher other income (up 120% qoq) and lower tax rate (17.1% vs 25.8% in 3QFY2013), net profit surged 79.3% yoy (128.9% qoq) to `1,148cr, which was significantly ahead of our as well consensus estimates.

Exhibit 11: Quarterly financial performance (post SPIL merger)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Purchases of TG (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM (%) Interest Depreciation Other Income PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT Adj PAT Adj. PATM Equity capital (cr) Reported EPS (`)
Source: Company, Angel Research

4QFY13 13,304 8,289 62.3 387 2.9 440 3.3 2,187 16.4 11,304 2,000 15.0 73 816 399 1,510 1,510 11.4 270 17.9 1,240 1,240 9.3 151.0 41.0

4QFY12 11,727 8,920 76.1 246 2.1 413 3.5 1,290 11.0 10,869 859 7.3 21 331 297 804 804 6.9 164 20.4 640 640 5.5 144.5 22.1

% chg (yoy) 13.4 (7.1) 57.6 6.7 69.6 4.0 132.9 249.4 146.8 34.4 87.8 87.8 64.8 93.7 93.7

3QFY13 11,200 8,217 73.4 231 2.1 567 5.1 1,294 11.6 10,309 891 8.0 46 358 189 676 676 6.0 174 25.8 501 501 4.5 144.5

% chg (qoq) 18.8 0.9 67.7 (22.3) 69.1 9.7 124.4 58.2 127.7 111.5 123.5 123.5 55.1 147.3 147.3

FY2013 43,588 30,554 70.1 1,070 2.5 1,961 4.5 5,774 13.2 39,358 4,230 9.7 190 1,861 812 2,991 2,991 6.9 599 20.0 2,392 2,392 5.5 151.0

FY2012 35,587 26,533 74.6 801 2.3 1,533 4.3 4,207 11.8 33,074 2,513 7.1 55 1,138 827 2,146 2,146 6.0 511 23.8 1,635 1,635 4.6 144.5 56.6

% chg (yoy) 22.5 15.2 33.5 28.0 37.2 19.0 68.3 243.8 63.5 (1.8) 39.4 39.4 17.2 46.3 46.3

85.3

17.4

136.5

79.2

4QFY13

39.9

April 26, 2013

Maruti Suzuki | 4QFY2013 Result Update

Exhibit 12: SPIL performance

Y/E March (` cr) Total volumes (units) Net average realization (`) Net sales EBITDA EBITDA margin (%) Net profit
Source: Company, Angel Research

FY2011 203,750 197,301 4,020 639 15.9 121

FY2012 244,500 186,151 4,551 550 12.1 115

FY2013 292,000 205,479 6,000 671 11.2 92

SPIL merger benefitted MSIL performance: MSIL merged SPIL with itself during the quarter through a share swap ratio of 1:70. MSIL made fresh issue of 13.17mn shares to Suzuki Motor Corporation, Japan, in lieu of its 70% holding in SPIL. For FY2013, SPIL reported net sales of `6,000cr, EBITDA of `671cr and net profit of `92cr. As a result of the merger, SPILs net fixed assets of `2,143cr were transferred to MSIL. The SPIL merger led to a 150bp improvement in MSILs EBITDA margin.

Conference call Key highlights

Petrol car sales for the industry declined 17% in FY2013 while those of diesel cars surged 23%. As a result the share of the diesel cars in the total volumes increased to 58% in FY2013 from 48% in FY2012. However, for MSIL, diesel car sales accounted for ~37% of the total domestic volumes. The import content for MSIL has come down to 19.6% from 26% in FY2012 on account of Yen depreciation and the ongoing localization initiatives. The Management expects to improve localization by 8-10% over the next 2-3 years. The average discounts for MSIL stood at `10,500/vehicle during the quarter as against `12,100/vehicle in 3QFY2013 and `13,500 in 4QFY2012. Going ahead, MSIL expects average discounts to remain stable at current levels. The royalty expenses as a percentage of sales declined 80bp qoq to 4.8% driven by Yen depreciation vs the INR. The company had hedged its entire Yen exposure (direct + indirect + royalty) at 90 Yen to the US$ in 4QFY2013. For FY2014, the company has hedged 30% of its Yen exposure at a rate of 95. The company indicated that rural sales grew by 15% in FY2013, accounting for 28% of total domestic sales. Other income during the quarter jumped significantly as the company booked gains on FMPs. The tax-rate was lower than expected as the company did not pay tax on the income booked on FMPs. MSIL expects the tax-rate to remain in the range of 20-22% going forward.

April 26, 2013

Maruti Suzuki | 4QFY2013 Result Update

Investment arguments
Per capita car penetration near inflexion point: In FY2009, car penetration in India was estimated at around 12 vehicles/1,000 people compared to around 21 vehicles/1,000 people in China. Moreover, Indias PPP-based per capita is estimated to approach US$5,000 over the next four to five years, which is expected to be the inflexion point for the countrys car demand. Further, MSIL has a sizeable competitive advantage over new foreign entrants due to its widespread distribution network (nearly 3,000 and 1,000 service and sales outlets, respectively), which is not easy to replicate. Suzuki focusing to make Maruti a small car manufacturing hub: Suzuki Japan is making Maruti a manufacturing hub to cater to the increasing global demand for small cars due to rising fuel prices and stricter emission standards. Thus, we believe there is a huge potential for the company to increase its market share in the export market. Moreover, R&D capabilities, so far largely housed at Suzuki Japan, are progressively moving to MSIL. The company is aiming to achieve full model change capabilities over the next couple of years, which will enable it to launch new models and variants at a much faster pace. This is expected to reduce its royalty payment in the medium-term (2-3 years). Merger with SPIL to be positive in the long run: MSIL has merged its associate company, SPIL with itself. SPIL, a 70:30 JV between Suzuki Motor Corporation (SMC), Japan, and MSIL, manufactures and supplies diesel engines and transmission components for vehicles. SPIL currently supplies ~90% of its production to MSIL. We believe the merger of SPIL with MSIL is positive for MSIL given that MSIL itself is setting up a new diesel engine facility (capacity of 300,000 units by FY2014) in Gurgaon. Further, with increasing trend of dieselization, the integration of SPIL will result in better control over diesel engine sourcing, flexibility in production planning, and managing fluctuations in market demand. Additionally, single management control of diesel engine operations will result in better sourcing, localization and cost-reduction.

April 26, 2013

Maruti Suzuki | 4QFY2013 Result Update

Outlook and valuation

We broadly retain our volume estimates for MSIL and expect the company to register a healthy volume growth of ~8% in FY2014 primarily due to the low base of 1HFY2013 (on account of the strike at the Manesar plant). Additionally, expected easing of interest rates in CY2013 is likely to boost consumer sentiments which may lead to demand revival in the passenger car segment. Further, the ongoing weakness in Yen (down ~10% yoy against INR in YTDCY2013), which partially benefited EBITDA margins in 4QFY2013, is expected to enhance profitability in FY2014 as the favorable currency impact on indirect exposure is expected to reflect completely in FY2014. We expect EBITDA margin to improve 150bp in FY2014, driven by favorable product-mix and currency movement, lower discounts, ongoing cost reduction initiatives and also on account of the SPIL merger. As a result, we expect MSIL to register a strong earnings CAGR of ~25% over FY2013-15. Our EPS estimates for MSIL (including the impact of SPIL merger) for FY2014/15 stand at `107.8/`123.1. We continue to remain positive on long-term volume growth in the passenger car industry, driven by economic growth and low penetration levels in the country. At `1,673, MSIL is trading at 13.6x FY2015E earnings (including the impact of SPIL merger). We recommend Accumulate rating on the stock with a target price of `1,847, valuing the stock at 15x FY2015 earnings.

Exhibit 13: Volume assumptions

Y/E March A: Mini: M800, A-Star, Alto, WagonR A: Compact: Swift, Estilo, Ritz A: Super Compact: Dzire A: Midsize: SX4 A: Executive: Kizashi Total passenger cars B: UV - Gypsy, Vitara, Ertiga C: Vans - Omni, Versa, Eeco Total passenger vehicles - domestic Total passenger vehicles - exports Total sales (domestic + exports) % chg
Source: Company, Angel Research

FY2010 33,028 633,190 99,315 765,533 3,932 101,325 870,790 147,575 1,018,365 28.6

FY2011 573,238 261,799 107,955 23,317 138 966,447 5,666 160,626 1,132,739 138,266 1,271,005 24.8

FY2012 491,389 235,754 110,132 17,997 458 855,730 6,525 144,061 1,006,316 127,379 1,133,695 (10.8)

FY2013 429,569 255,302 169,571 6,707 188 861,337 79,192 110,517 1,051,046 120,388 1,171,434 3.3

FY2014E 446,752 280,832 193,311 7,378 207 928,479 88,695 119,358 1,136,533 127,611 1,264,144 7.9

FY2015E 491,427 317,340 220,374 8,115 227 1,037,485 101,112 131,294 1,269,891 140,372 1,410,264 11.6

Exhibit 14: Angel vs consensus forecast

Angel estimates FY14E Total op. income (` cr) EPS (`) 48,455 107.8 FY15E 55,723 123.1 Consensus FY14E 48,538 100.6 FY15E 56,692 124.3 Variation (%) FY14E (0.2) 7.2 FY15E (1.7) (0.9)

Source: Bloomberg, Angel Research

April 26, 2013

Maruti Suzuki | 4QFY2013 Result Update

Exhibit 15: One-year forward P/E band

( `) 2,500 2,000 1,500 1,000 500 0 Share price (`) 5x 10x 15x 20x

Exhibit 16: One-year forward P/E chart

(x) 30 25 20 15 10 5 0 Absolute P/E Five-yr average P/E

Dec-09

Jan-05

Aug-11

Jun-12

Nov-05

Mar-09

Apr-04

Sep-06

May-08

Oct-10

Apr-13

Jul-07

Dec-09

Jan-05

Mar-09

Aug-11

Apr-04

Jun-12 Jun-12

Nov-05

Sep-06

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 17: One-year forward EV/EBITDA band

( ` cr) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 EV (` cr) 6x 8x 10x 12x

Exhibit 18: Premium/Discount to Sensex P/E

(%) 60 40 20 0 (20) (40) (60) Absolute premium Five-yr average premium

Sep-06

Jul-07

May-08

May-08

Dec-09

Jan-05

Oct-10

Mar-09

Aug-11

Apr-04

Dec-09

Jan-05

Mar-09

Aug-11

Apr-04

Jun-12

Nov-05

Sep-06

Source: Company, Angel Research

May-08

Oct-10

Apr-13

Source: Company, Angel Research

Exhibit 19: Automobile - Recommendation summary

Company Ashok Leyland Bajaj Auto Maruti Suzuki Mahi. & Mahi. Tata Motors TVS Motor Reco. Buy Accumulate Accumulate Accumulate Accumulate Accumulate CMP (`) 22 1,893 1,597 1,673 891 296 38 Tgt. price (`) 27 2,014 1,767 1,847 1,006 324 40 Upside (%) 18.4 6.4 10.6 10.4 12.9 9.2 7.3 P/E (x) FY14E 11.4 16.1 15.4 15.5 15.0 9.2 7.8 FY15E 8.4 14.1 11.8 13.6 13.1 7.6 6.5 EV/EBITDA (x) FY14E 5.2 10.8 7.6 7.8 8.1 4.2 2.7 FY15E 4.4 9.1 6.8 6.7 6.6 3.5 2.0 RoE (%) FY14E 12.1 40.2 38.8 16.2 22.3 23.1 16.5 FY15E 15.2 36.6 42.7 16.0 21.6 23.1 17.5 FY13E-15E EPS CAGR (%) 43.9 13.8 13.2 24.7 11.5 16.9 16.0

Hero MotoCorp Accumulate

Source: Company, Angel Research

April 26, 2013

Nov-05

Jul-07

Oct-10

Apr-13

Apr-13

Jul-07

Maruti Suzuki | 4QFY2013 Result Update

Company background
Maruti Suzuki (MSIL), a subsidiary of Suzuki Motor Corporation, Japan (with a 54.2% stake), is the largest passenger car (PC) company in India, accounting for 42.4% of the domestic passenger car market. MSIL derives ~75% of its overall sales from the small car segment and has a dominant position in the segment with a market share of ~50%, led by popular models like Alto, Wagon R and Swift. The company operates from two facilities in India (Gurgaon and Manesar) and is in the process of expanding its manufacturing capacity to 1.9mn units (currently 1.65mn units) by FY2014. Also, MSIL has steadily increased its presence internationally and exports now account for ~11% of its overall sales volume.

April 26, 2013

10

Maruti Suzuki | 4QFY2013 Result Update

Profit and loss statement (post SPIL merger)

Y/E March (` cr) Total operating income % chg Total expenditure Net raw material costs Other mfg costs Employee expenses Other EBITDA % chg (% of total op. income) Depreciation & amortization EBIT % chg (% of total op. income) Interest and other charges Other income Recurring PBT % chg Extraordinary income/ (expense) PBT Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of total op. income) Basic EPS (`) Adj. EPS (`) % chg FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 29,623 36,618 35,587 42.1 23.6 (2.8) 25,672 32,980 33,074 22,170 28,364 28,108 526 538 2,439 3,951 115.7 13.3 825 3,126 177.7 10.6 34 500 3,593 114.4 3,593 1,095 30.5 2,498 2,498 104.9 8.4 82.7 82.7 104.9 365 704 3,547 3,639 (7.9) 9.9 1,014 2,625 (16.0) 7.2 25 509 3,109 (13.5) 3,109 820 26.4 2,289 2,289 (8.4) 6.2 75.8 75.8 (8.4) 411 844 3,711 2,513 (30.9) 7.1 1,138 1,375 (47.6) 3.9 55 827 2,146 (31.0) 2,146 511 23.8 1,635 1,635 (28.6) 4.6 54.1 54.1 (28.6) 43,588 22.5 39,358 32,515 570 1,070 5,204 4,230 68.3 9.7 1,861 2,368 72.3 5.4 190 812 2,991 39.4 2,991 599 20.0 2,392 2,392 46.3 5.5 79.2 79.2 46.3 48,455 11.2 43,032 35,697 664 1,233 5,439 5,423 28.2 11.2 2,041 3,382 42.8 7.0 152 894 4,124 37.9 4,124 866 21.0 3,258 3,258 36.2 6.7 107.8 107.8 36.2 55,723 15.0 49,655 41,188 737 1,419 6,311 6,068 11.9 10.9 2,203 3,865 14.3 6.9 122 965 4,709 14.2 4,709 989 21.0 3,720 3,720 14.2 6.7 123.1 123.1 14.2

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Maruti Suzuki | 4QFY2013 Result Update

Balance sheet statement (post SPIL merger)

Y/E March (` cr) SOURCES OF FUNDS Equity share capital Reserves & surplus Shareholders Funds Total loans Deferred tax liability Other long term liabilities Long term provisions Total Liabilities APPLICATION OF FUNDS Gross block Less: Acc. depreciation Net Block Capital work-in-progress Investments Long term loans and advances Other noncurrent assets Current assets Cash Loans & advances Other Current liabilities Net current assets Total Assets 10,407 11,738 14,735 5,382 5,025 388 7,177 3,772 98 1,656 2,019 3,568 205 6,208 5,529 863 5,107 1,255 47 5,625 2,509 684 2,433 3,849 1,776 7,214 7,521 611 6,147 1,672 26 6,325 2,436 778 3,111 5,311 1,014 19,600 9,075 10,525 1,216 7,078 1,279 895 5,695 775 1,115 3,805 5,982 (287) 20,706 23,373 11,116 12,257 943 7,967 1,279 895 6,502 1,690 990 3,822 6,409 92 23,433 26,688 13,319 13,369 829 9,052 1,279 895 8,456 1,806 1,453 5,197 7,256 1,200 26,622 145 145 145 151 18,428 18,579 1,389 409 104 226 20,706 151 21,405 21,556 1,139 409 104 226 23,433 151 24,844 24,995 889 409 104 226 26,622 11,691 13,723 15,043 11,835 13,868 15,187 821 137 309 164 96 140 1,237 302 97 168 FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E

12,794 14,577 16,992

12,794 14,577 16,992

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Maruti Suzuki | 4QFY2013 Result Update

Cash flow statement (post SPIL merger)

Y/E March (` cr) Profit before tax Depreciation Change in working capital Direct taxes paid Others Cash Flow from Operations (Inc.)/Dec. in fixed assets (Inc.)/Dec. in investments Others Cash Flow from Investing Issue of equity Inc./(Dec.) in loans Dividend paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in cash Opening Cash balances Closing Cash balances FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 3,593 825 133 (1,028) (491) 3,032 (1,459) (3,879) 410 (4,928) 188 (101) (32) 55 (1,841) 1,939 98 3,109 1,014 150 (989) (464) 2,819 (2,143) 2,127 359 343 (512) (173) (67) (752) 2,410 98 2,509 2,146 1,138 (104) (251) (700) 2,229 (2,633) (782) 496 (2,918) 911 (217) (78) 617 (72) 2,509 2,436 2,991 1,861 (360) (599) (305) 3,588 (5,470) (931) (6,401) 1,280 152 (281) 1,152 (1,661) 2,436 775 4,124 2,041 536 (866) 5,835 (3,500) (889) (4,389) (250) (281) (531) 915 775 1,690 4,709 2,203 (991) (989) 4,931 (3,200) (1,084) (4,284) (250) (281) (531) 116 1,690 1,806

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Maruti Suzuki | 4QFY2013 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Int.) (0.5) (1.6) 93.3 (0.5) (2.0) 105.0 (0.5) (2.9) 24.9 (0.3) (1.5) 12.5 (0.4) (1.6) 22.3 (0.4) (1.6) 31.8 3.1 13 11 35 2 3.3 13 8 29 (3) 2.7 16 9 37 (11) 2.5 15 10 36 (10) 2.3 15 10 36 (10) 2.2 16 10 36 (7) 27.2 61.8 23.6 19.2 41.3 17.8 8.7 17.7 11.3 12.6 17.5 14.2 15.3 17.1 16.2 15.4 17.3 16.0 10.6 69.5 2.8 20.7 3.1 (0.5) 11.1 7.2 73.6 3.0 15.6 3.3 (0.5) 9.1 3.9 76.2 2.7 7.9 5.4 (0.5) 6.7 5.4 80.0 2.5 11.0 11.6 (0.3) 11.2 7.0 79.0 2.3 12.8 9.5 (0.4) 11.5 6.9 79.0 2.4 13.1 9.5 (0.4) 11.7 82.7 82.7 110.0 6.0 391.8 75.8 75.8 109.3 7.5 459.1 54.1 54.1 91.8 7.5 502.8 79.2 79.2 140.8 8.0 615.0 107.8 107.8 175.4 8.0 713.6 123.1 123.1 196.1 8.0 827.4 20.2 15.2 4.3 0.4 1.3 9.4 2.9 22.1 15.3 3.6 0.4 1.1 10.8 2.7 30.9 18.2 3.3 0.4 1.1 15.0 2.2 21.1 11.9 2.7 0.5 1.0 10.4 2.1 15.5 9.5 2.3 0.5 0.9 7.8 1.8 13.6 8.5 2.0 0.5 0.7 6.7 1.5 FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E

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Maruti Suzuki | 4QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
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. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. 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. 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 endeavours 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. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. 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. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Maruti Suzuki No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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