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MSIL 4Q FY 2013

MSIL 4Q FY 2013

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Published by Angel Broking
29th April, 2013
29th April, 2013

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Published by: Angel Broking on Apr 29, 2013
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Please refer to important disclosures at the end of this report
 1 
Y/E March (
`
cr) 4QFY13* 4QFY12
% chg (yoy)
3QFY13
% chg (qoq)
Net Sales 12,793 11,727
9.1
11,200
14.2
EBITDA 1,328 859
54.7
891
 49.0EBITDA Margin (%) 10.4 7.3 306bp 8.0 243bp
Adj. PAT 1,148 640
79.3
501
128.9
 Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger
Impressive performance driven by better product-mix and Yen depreciation:
For4QFY2013, Maruti Suzuki (MSIL) reported extremely strong results (pre SuzukiPowertrain 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 ofdiscounts. The volumes however, registered a decline of 4.6% yoy led by weakdemand for entry segment cars (down 13.7% yoy) and slowdown in exports (down10.5% yoy). Nevertheless, the bottom-line at
 ` 
1,148cr was substantially ahead ofour 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 taxrate (17.1% vs 25.8% in 3QFY2013). The EBITDA margin expansion was led by abetter 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 manufacturingsubsidiary 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 ofinterest rates in CY2013 is likely to boost consumer sentiments which may lead todemand revival in the passenger car segment. Further, the ongoing weakness inYen (down ~10% yoy against INR in YTDCY2013), which partially benefitedEBITDA margins in 4QFY2013, is expected to enhance profitability in FY2014 asthe favorable currency impact on indirect exposure is expected to reflectcompletely 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 aresult, we expect MSIL to register a strong earnings CAGR of ~25% overFY2013-15. At
 ` 
1,673, MSIL is trading at 13.6x FY2015E earnings (including theimpact of SPIL merger).
We recommend an Accumulate rating on the stock with atarget price of
`
1,847, valuing the stock at 15x FY2015 earnings.
Key financials (post SPIL merger)
Y/E March (
`
cr) FY2012 FY2013 FY2014E FY2015ENet Sales 35,587 43,588 48,455 55,723
% chg (2.8) 22.5 11.2 15.0
Net Profit 1,635 2,392 3,258 3,720
% chg (28.6) 46.3 36.2 14.2
EBITDA (%) 7.1 9.7 11.2 10.9
EPS (
`
) 54.1 79.2 107.8 123.1
P/E (x) 30.9 21.1 15.5 13.6P/BV (x) 3.3 2.7 2.3 2.0RoE (%) 11.3 14.2 16.2 16.0RoCE (%) 8.7 12.6 15.3 15.4EV/Sales (x) 1.1 1.0 0.9 0.7EV/EBITDA (x) 15.0 10.4 7.8 6.7
 Source: Company, Angel Research
 
ACCUMULATE
CMP
 ` 
1,673Target Price
 ` 
1,847
Investment Period 12 Months
Stock InfoSectorBloomberg CodeShareholding Pattern (%)PromotersMF / Banks / Indian FlsFII / NRIs / OCBsIndian Public / Others Abs. (%)3m1yr3yrSensex(4.1)12.68.7Maruti Suzuki4.621.225.456.218.922.52.4Face Value (
 ` 
)BSE SensexNifty Reuters CodeMSIL@IN519,2875,871MRTI.BO Automobile Avg. Daily VolumeMarket Cap (
 ` 
cr)Beta52 Week High / Low48,3490.91,690/1,05283,315Net Debt (
 ` 
cr)(5,744)
 
Yaresh Kothari
022-3935 7800 Ext: 6844yareshb.kothari@angelbroking.com
Maruti Suzuki
Performance Highlights
4QFY2013 Result Update | Automobile
 April 26, 2013
 
 
 
Maruti Suzuki |
4QFY2013 Result Update  April 26, 20132
Exhibit 1:
 
Quarterly financial performance (pre SPIL merger)
Y/E March (
`
cr) 4QFY13* 4QFY12
% chg (yoy)
3QFY13
% chg (qoq)
FY2013 FY2012
% chg (yoy)
Net Sales 12,793 11,727
9.1
11,200
14.2
43,077 35,587
21.0
Raw-material cost 9,789 9,333
 4.9
8,784
11.4
33,575 28,066
19.6(% of Sales) 76.5 79.6 78.4 77.9 78.9
Staff cost 251 246
 2.3
231
8.8
956 801
19.3(% of Sales) 2.0 2.1 2.1 2.2 2.3
Other Expenses 1,424 1,290
10.4
1,294
10.0
5,032 4,207
19.6(% of Sales) 11.1 11.0 11.6 11.7 11.8
Total Expenditure 11,465 10,869
5.5
10,309
11.2
39,562 33,074
19.6
Operating Profit 1,328 858
54.7
891
49.0
3,514 2,513
39.9
OPM (%) 10.4 7.3 8.0 8.2 7.1
Interest 19 21
(6.7)
46
(57.8)
136 55
147.2
Depreciation 339 331
 2.6
358
(5.3)
1,385 1,138
 21.6
Other Income 415 297
39.7
189
119.9
872 827
5.5
PBT (excl. Extr. Items) 1,384 804
72.2
676
104.9
2,865 2,146
33.5
Extr. Income/(Expense) - -
-
- - -
-
PBT (incl. Extr. Items) 1,384 804
72.2
676
104.9
2,865 2,146
33.5
(% of Sales) 10.8 6.9 6.0 6.7 6.0
Provision for Taxation 237 164
 44.2
174
35.8
565 511
10.6(% of PBT) 17.1 20.4 25.8 19.7 23.8
Reported PAT 1,148 640
79.3
501
128.9
2,300 1,635
40.7
Adj PAT 1,148 640
79.3
501
128.9
2,300 1,635
40.7
 Adj. PATM 9.0 5.5 4.5 5.3 4.6
Equity capital (cr) 151.0 144.5 144.5 151.0 144.5
Reported EPS (
`
) 38.0 22.1
71.5
17.4
118.9
76.1 56.6
34.5
 Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger
Exhibit 2:
 
4QFY2013 – Actual vs Angel estimates
Y/E March (
`
cr) Actual* Estimates
Variation (%)
Net Sales 12,793 12,930
(1.1)
EBITDA 1,328 1,112
19.4
EBITDA margin (%) 10.4 8.6 178bp
Adj. PAT 1,148 722
58.9
 Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger
 
 
Maruti Suzuki |
4QFY2013 Result Update  April 26, 20133
Exhibit 3:
 
Quarterly volume performance
Volume (units) 4QFY13 4QFY12
% chg (yoy)
3QFY13
% chg (qoq)
FY2013 FY2012
% chg (yoy)
 A: Mini:
 M800, Alto, A-Star, WagonR
132,837 153,966
(13.7)
111,709
18.9
429,569 491,389
(12.6)
 A: Compact:
 Swift, Estilo, Ritz
73,895 81,568
(9.4)
68,790
7.4
255,302 235,754
8.3
 A: Super Compact:
Dzire
55,454 40,156
38.1
40,967
35.4
169,571 110,132
54.0
 A: Mid-Size:
 SX4
2,130 5,492
(61.2)
1,716
 24.1
6,707 17,997
(62.7)
 A: Executive:
Kizashi
2 71
-
151
(98.7)
188 458
-
Total Passenger cars 264,318 281,253
(6.0)
223,333
18.4
861,337 855,730
0.7
B: Utility Vehicles:
Gypsy, Grand Vitara
18,540 1,991
831.2
20,286
(8.6)
79,192 6,525
1,113.7
C: Vans:
Omni, Eeco
26,013 38,180
(31.9)
25,338
 2.7
110,517 144,061
(23.3)
Total Domestic 308,871 321,424
(3.9)
268,957
14.8
1,051,046 1,006,316
4.4
Total Exports 34,838 38,910
(10.5)
32,496
7.2
120,388 127,379
(5.5)
Total Volume 343,709 360,334
(4.6)
301,453
14.0
1,171,434 1,133,695
3.3
 Source: Company, Angel Research
Top-line growth in line with estimates:
For 4QFY2013, net sales registered ahealthy growth of 9.1% yoy (14.2% qoq) to
 ` 
12,793cr, which was broadly in linewith our estimates. The top-line performance was primarily driven by a strong14.7% 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, registereda decline of 4.6% yoy led by the weak demand for entry segment cars (down13.7% yoy) and slowdown in exports (down 10.5% yoy). The proportion of dieselcars during the quarter stood at 36.3% as against 39.8% in 3QFY2013. The exportrevenue 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 toIndonesia and favorable forex movement.
Exhibit 4:
 
 Volume growth remains under pressure...
 Source: Company, Angel Research
Exhibit 5:
 
... net average realization surges 14.7% yoy 
 Source: Company, Angel Research
343,350281,526252,307239,528360,334295,896230,376301,453343,70919.5(0.6)(19.6)(27.6)4.95.1(8.7)25.9(4.6)
(40.0)(30.0)(20.0)(10.0)0.010.020.030.0050,000100,000150,000200,000250,000300,000350,000400,000
     4     Q     F     Y     1     1     1     Q     F     Y     1     2     2     Q     F     Y     1     2     3     Q     F     Y     1     2     4     Q     F     Y     1     2     1     Q     F     Y     1     3     2     Q     F     Y     1     3     3     Q     F     Y     1     3     4     Q     F     Y     1     3
(%)(units)Total volumeyoy growth (RHS)
(0.4)3.23.412.011.721.318.915.714.7
(5.0)0.05.010.015.020.025.0050,000100,000150,000200,000250,000300,000350,000400,000
     4     Q     F     Y     1     1     1     Q     F     Y     1     2     2     Q     F     Y     1     2     3     Q     F     Y     1     2     4     Q     F     Y     1     2     1     Q     F     Y     1     3     2     Q     F     Y     1     3     3     Q     F     Y     1     3     4     Q     F     Y     1     3
(%)
(`)
Net average realisation/unityoy growth (RHS)

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