Maruti Suzuki India (MARUTI)

CMP: | 7,396 Target: | 6,420 (-13%) Period: 12 months REDUCE

months October 25, 2019

Muted quarter; volume trough seemingly in sight…

Maruti Suzuki (MSIL) reported a muted Q2FY20 performance. Total
operating income was at | 16,985 crore, down 24.3% YoY (ASP at | 4.76
Particulars
lakh/unit, up 2.4% QoQ). Q2FY20 volumes were at 3.4 lakh units, down

Result Update
30.2% YoY. EBITDA margins at 9.5% (down 93 bps QoQ) were at a multi- Particular Amount
Market Capitalization | 223418.4 Crore
year low, impacted by negative operating leverage. Consequent PAT was at
Total Debt | 149.6 Crore
| 1,359 crore (down 39.4% YoY), supported by higher other income and
Cash & Investment | 35226.7 Crore
adoption of lower corporate tax rate. MSIL’s working capital position EV | 188341.3 Crore
deteriorated significantly. It generated negative CFO in H1FY20. 52 week H/L (|) 7929 / 5447
Equity capital | 151 Crore
FY20E a write-off, BS-VI transition more palatable for PV space Face value |5

The PV segment has suffered heavily amid the overall auto space weakness
that has persisted since the 2018 festive period. Rise in ownership costs
(additional safety features, higher fuel prices), slowing consumption
demand and increasing preference for shared mobility in some pockets Key Highlights
posed volume challenges to players. YTDFY20 volume decline at MSIL was  Volumes in Q2FY20 dropped 30%
at ~25% YoY, which includes a steep decline of 30% in Q2FY20. We believe YoY to ~3.4 lakh units. Revenue
BS-VI transition would be relatively more palatable for the PV segment since decline at 24% YoY to | 16,985
crore lagged volume drop as ASPs
envisaged price hike is limited to <=5% of vehicle costs (passenger cars, improved on better mix (higher UV
largely petrol driven) vs. ~10% price hike in other segments (2-W & CV). For share) and BS-VI related price rise
MSIL, while BS-VI versions of eight products have already been introduced  Margins at 9.5% slipped 93 bps

ICICI Securities – Retail Equity Research

(Alto, Baleno, Wagon R, Swift, Dzire, Ertiga, XL6 & S-Presso), the customer QoQ amid negative operating
response to alternative fuel cars (petrol, CNG) vs. their erstwhile diesel leverage
variants (S-cross & Brezza) will be the key monitorable. This shift will dictate  Going forward, pace of volume
the volume trajectory at MSIL, going forward. Sensing the challenges at decline is seen slowing as BS-VI
changeover approaches, with
MSIL, we build in 9.6% volume growth in FY21E vs. ~15% decline
margins improving gradually
expectation for whole of FY20E. towards ~12% by FY21E
 Assign REDUCE rating with revised
Little respite on margin front target price of | 6,420

MSIL’s margin trajectory has taken a sharp dive from 15%+ in FY16-18 to Research Analyst
12.8% in FY19 and then further to 10.5% in Q1FY20 and 9.5% in Q2FY20. A
Shashank Kanodia, CFA
steep fall in volumes and highly competitive pricing environment have shashank.kanodia@icicisecurities.com
weighed heavily on margins. The recent global correction in commodity
prices, however, does provide some solace. Going forward, we build in Jaimin Desai
EBITDA margins of 10.7% in FY20E and 11.5% in FY21E. jaimin.desai@icicisecurities.com

Valuation & Outlook

Going forward, we expect sales and PAT to grow at a CAGR of 2.9% & 1.9%,
respectively, over FY19-21E. We believe BS-VI rollout would have a lower
cost impact on PV segment (especially petrol) and MSIL as the industry
bellwether would drive volume growth here. However, valuations remain
stretched compared to historical precedents for muted growth periods.
Thus, we retain our cautious stance with a REDUCE rating, valuing MSIL at
| 6,420 i.e. 25x P/E on FY21E EPS of | 258/share.

Key Financial Summary

Key Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)
Net Sales 68,034.8 79,762.7 86,020.3 80,801.9 90,051.4 2.3%
EBITDA 10,353.0 12,061.5 10,999.3 8,659.7 10,373.8 -2.9%
EBITDA Margins (%) 15.2 15.1 12.8 10.7 11.5
Net Profit 7,337.7 7,721.8 7,500.6 6,424.6 7,790.2 1.9%
EPS (|) 242.9 255.6 248.3 212.7 257.9
P/E 30.4 28.9 29.8 34.8 28.7
RoNW (%) 20.3 18.5 16.3 12.9 14.3
RoCE (%) 20.3 21.1 16.3 9.4 11.5
Source: ICICI Direct Research, Company
 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 1: Variance analysis

Q2FY20 Q2FY20E Q2FY19 YoY (Chg %) Q1FY20 QoQ (Chg %) Comments
Total Operating Income 16,985 16,944 22,433 -24.3 19,720 -13.9 Topline as well as ASPs in line with our estimates
Raw Material Expenses 12,099 11,901 15,285 -20.8 14,091 -14.1
Employee Expenses 838 807 792 5.9 859 -2.4
Other expenses 2,441 2,550 2,925 -16.5 2,722 -10.3
Operating Profit (EBITDA) 1,606 1,687 3,431 -53.2 2,048 -21.6
Margins came in lower than estimates primarily on
account of negative operating leverage, as both -
EBITDA Margin (%) 9.5 10.0 15.3 -584 bps 10.4 -93 bps
employee costs and other expenses, were higher than
anticipated on percentage of sales basis
Other income higher than estimates, continuing a recent
Other Income 920 650 527 74.7 836 10.0
trend in this regard
Depreciation expenses were higher-than-expected given
Depreciation 926 739 721 28.4 919 0.8 enhanced depreciation rates adopted on accelerated run
down of diesel powertrain plant & machinery
Interest expenses were higher on account of AS-116
Interest 28 5 26 9.7 55 -48.4
accounting
Tax rate for the quarter was at a mere 13.6% as MSIL
Total Tax 213.4 400.1 970.6 -78.0 475.4 -55.1
adopted new corporate tax rate benefit
Beat on profitability front on account of higher other
PAT 1,359 1,166 2,240 -39.4 1,436 -5.4
income and lower tax outgo than expected
EPS 45.0 38.6 74.2 -39.4 47.5 -5.4
Key Metrics
ASPs were higher on a QoQ basis due to betterment in
mix (higher UV share), cost control measures and pricing
ASP (|) 476,488 476,991 444,508 7.2 465,362 2.4
action necessitated by introduction of BS-VI models and
safety features
Discounts came in far higher than anticipated, symbolising
Discounts (|) 25,761 20,000 18,750 37.4 16,941 52.1
extent of competitive intensity in the marketplace
Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates

FY20E FY21E
(| Crore) Old New % Change Old New % Change Comments
Revise our revenue estimates downward on the back of
Total Operating further volume weakness experienced in Q2FY20. We build in
88,428 80,802 -8.6 95,073 90,051 -5.3
Income ~15% volume decline for FY20E and, thereafter, foresee a
~9.6% rise for FY21E
EBITDA 9,835 8,660 -12.0 11,202 10,374 -7.4
We slightly trim our margin estimates given elevated
EBITDA Margin
11.1 10.7 -40 bps 11.8 11.5 -26 bps discounting levels. However, softer commodity prices are
(%)
seen benefiting the company, going ahead
Lowering of sales and margin estimates leads to lowering of
PAT 6,854 6,425 -6.3 7,829 7,790 -0.5
PAT estimates
EPS (|) 227 213 -6.3 259 258 -0.5
Source: Company, ICICI Direct Research

Exhibit 3: Assumptions
Current Earlier Comments
FY17 FY18 FY19 FY20E FY21E FY20E FY21E
We factor in 2.4% volume decline CAGR over
Total Volumes (nos) 1,568,604 1,779,575 1,862,449 1,618,459 1,773,032 1,821,257 1,909,347
FY19-21E

Betterment of product mix and further regulatory

Average ASPs (|) 426,353 438,896 445,792 474,850 484,864 465,615 478,786
led price increases are seen helping ASPs

RMC/Unit (|) 297,336 308,922 323,521 354,931 363,424 348,418 357,442

We pare discount level estimates in FY21E as
Discount (|) 16,774 15,895 18,334 22,116 15,000 16,610 16,250 the landscape is seen stabilising post BS-VI
implementation
Source: Company, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Conference Call Highlights

Management guidance/outlook and demand
 Retail volumes for MSIL declined ~22% YoY in Q2FY20. Retail demand
continues to pick up sequentially, with ~100,000 units per month in July
and August increasing to ~116,000 units in September and improving
further in October as well

 Festive season demand is progressing well, with the Navratra period

recording flattish retail demand initially and then graduating to
moderately positive demand in later weeks. Positive momentum has
continued thereafter

 MSIL reiterated its broad desire to not be present in the diesel segment
after implementation of BS-VI norms

 Rural demand (down 18%) has declined slower than urban demand,
with rural sales forming ~39% of overall sales

 Petrol segment accounts for ~67% of volumes at the industry level and
~77% for MSIL (up from ~72% YoY)

 The company has nearly exhausted all BS-IV inventories of the eight
models where BS-VI variants have been introduced and production of
the older variants has also been curtailed

 S-Presso has garnered 16,500 bookings thus far. The company has
delivered ~ 6,000 units till date

Sales, costs and margins

 The company expects to realise greater commodity price related
benefits in H2FY20E

 ASP improved during Q2FY20 on account of the company passing on

cost incidence related to safety features and BS-VI introduction

 Discounting levels for the quarter were at | 25,761/unit vs. | 18,758/unit

in Q2FY19

 Export sales for the quarter were at | 1,229 crore

 Royalty expenses were at 5.2% of sales

Other
 Channel inventory was at ~30 days of average monthly Q2FY20 retail
sales. Of this, BS-IV: BS-VI split was at 50:50 (including diesel)

 MSIL guided for ~| 4,000 crore capex in FY20E

 Financing levels were largely unchanged at ~80%

 Gujarat plant volumes for Q2FY20 were at 82,251 units

 Depreciation cost increased substantially during H1FY20 on account of

accelerated depreciation being provided on certain diesel heavy plant &
machinery

 The company’s effective corporate tax rate, going forward, would be

~23%

ICICI Securities | Retail Research 3

 Result Update | Maruti Suzuki India ICICI Direct Research

Financial story in charts

Exhibit 4: Topline and bottomline trends
7790
100000 7501 9000
90000 6425 8000
7338
80000 7722
7000
70000 We expect sales to grow at a CAGR of 2.9% over
6000
60000 4571 FY19-21E and build in -2.4% volume CAGR
(| crore)

5000

(| crore)
50000 3711

90051
86020
4000

80802
79763
40000 2783
68035
3000
57746

30000
49874
43701

20000 2000
10000 1000
0 0
FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E
Topline Bottomline
Source: Company, ICICI Direct Research

Exhibit 5: EBITDA and margin profile

14,000 18
15.5 15.2 15.1
12,000 16
13.2 12.8 11.5 14
10,000 10.7 Going forward, we expect the company to clock
12
EBITDA of | 10,374 crore in FY21E. We build in
8,000
(| crore)

10 (%) EBITDA margin trajectory of 10.7% and 11.5% in

6,000 8
FY20E & FY21E, respectively
6
4,000
12,061.5
10,353.0

10,999.3

10,373.8

4
8,978.6
6,605.9

8,659.7

2,000 2
- -
FY15 FY16 FY17 FY18 FY19 FY20E FY21E

EBITDA Margins (%)

Source: Company, ICICI Direct Research

Exhibit 6: Domestic vs. export volume trend

2000
109
126

109

1800
107
124

1600
124

1400
122

We expect domestic volumes to grow at a CAGR of

101
120

1200
-2.6% over FY19-21E while export volumes are
('000s)

1000
expected to remain flattish in this time. Blended
1754

1664
1654

800
1512
1445

volume CAGR is expected at -2.4% CAGR in FY19-

1305
1171

600
1054
1051

21E
400
200
0
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E
Domestic Exports
Source: Company, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 7: Domestic market PV share

55.0 52.5 52.1 51.7
50.5 50.4 50.3 51.2 51.0
50.0 49.8
50.0 47.2 47.3 47.4

45.0

40.0 MSIL has largely maintained its market leadership

(%)

35.0 with market share at FY19 end at 51.2%, up 120 bps

on a YoY basis. Market share as of Q2FY20 end was
30.0
at 49.8%
25.0

20.0
Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Q1FY20

Q2FY20
Domestic Market Share
Source: Company, ICICI Direct Research

Exhibit 8: Annual discount trends and expectations

25000
22,116
19,529 18,898
20000 18,334
16951 16,774
15,895
15,000
15000
Discounts for Q2FY20 came in quite high at
(|)

| 25,761/unit vs. our expectation of | 20,000/unit

10000

5000

0
FY14 FY15 FY16 FY17E FY18 FY19 FY20E FY21E
Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 5

 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 9: Segment and model wise MSIL volumes

Segment, sub-segment Domestic market
Q2FY18 Q2FY19 YoY (%)
and model share (%)
Passenger Cars 341,620 216,458 (36.6) 59.9
Mini 108,576 41,785 (61.5)
Alto 67,327 36,779 (45.4)
S-Presso - 5,006 NA
Wagon-R (old) 41,249 - NA
Compact 219,748 168,965 (23.1)
Wagon-R (new) - 38,221 NA
Swift 61,336 38,055 (38.0)
Celerio 26,087 13,710 (47.4)
Dzire 68,933 41,859 (39.3)
Baleno 54,304 32,969 (39.3) Within segments, MSIL’s UV portfolio de-grew to a
Ignis 9,088 4,151 (54.3) lower degree when compared to the bread and
Mid Size 13,296 5,708 (57.1) butter passenger car segment. Shift in product mix
Ciaz 13,296 5,708 (57.1) helped support ASPs for the quarter. Van portfolio
reported decline courtesy discontinuance of Omni
Utility Vehicles 64,115 55,222 (13.9) 25.6
XL6 - 6,196 NA
Ertiga 12,205 23,893 95.8
Gypsy 806 - (100.0)
S-Cross 9,227 2,360 (74.4)
Vitara Brezza 41,877 22,773 (45.6)

Vans 44,099 28,421 (35.6) 85.7

Omni 22,621 - (100.0)
Eeco 21,478 28,421 32.3
-
Passenger Vehicles 449,834 300,101 (33.3) 49.8
-
LCV 5,566 5,333 (4.2)

Total domestic 455,400 305,434 (32.9)

-
Total exports 29,448 25,798 (12.4)
-
Grand total 484,848 331,232 (31.7)
Source: SIAM, ICICI Direct Research; Domestic market share as of September 2019 on YTD basis

ICICI Securities | Retail Research 6

 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 10: Valuation

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 68,035 55.7 243 163.7 30.4 19.0 20.3 20.3
FY18 79,763 17.2 256 5.2 28.9 15.7 18.5 21.1
FY19 86,020 7.8 248 (2.9) 29.8 17.1 16.3 16.3
FY20E 80,802 (6.1) 213 (14.3) 34.8 21.7 12.9 9.4
FY21E 90,051 11.4 258 21.3 28.7 17.6 14.3 11.5
Source: Company, ICICI Direct Research

Exhibit 11: MSIL currently trades at ~28.7x FY21E EPS of | 258

12000

10000

8000

6000
(|)

4000

2000

0
Jan-10

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18
Jan-11

Jan-12

Jan-13

Jan-19
Oct-13

Oct-14

Oct-15
Oct-09

Oct-10

Oct-11

Oct-12

Oct-16

Oct-17

Oct-18

Oct-19
Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Jul-19
Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18

Apr-19
Price 39x 34x 29x 25x 20x 16x 11x

Source: Bloomberg, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 12: Recommendation history vs. consensus

12,000 100.0

10,000 80.0
8,000
60.0
(|)

6,000

(%)
40.0
4,000

2,000 20.0

0 0.0
Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Reuters, ICICI Direct Research

Exhibit 13: Top 10 shareholders

Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 Suzuki Motor Corp 30-Jun-19 56.2 169.8 0.0
2 Life Insurance Corporation of India 30-Jun-19 6.8 20.5 0.4
3 The Vanguard Group, Inc. 30-Sep-19 1.4 4.3 0.0
4 Capital Research Global Investors 30-Jun-19 1.1 3.3 2.3
5 GIC Private Limited 30-Jun-19 1.1 3.3 3.3
6 SBI Funds Management Pvt. Ltd. 30-Sep-19 1.0 3.2 -0.1
7 BlackRock Institutional Trust Company, N.A. 30-Sep-19 1.0 3.0 0.0
8 UTI Asset Management Co. Ltd. 30-Sep-19 0.8 2.3 0.1
9 ICICI Prudential Asset Management Co. Ltd. 30-Sep-19 0.7 2.2 0.1
10 Nomura Asset Management Co., Ltd. 31-May-19 0.7 2.2 0.0
Source: Reuters, ICICI Direct Research

Exhibit 14: Recent activity

Buys Sells
Investor name Value ($ M) Shares(M) Investor name Value ($ M) Shares(M)
GIC Private Limited 311.8 3.3 Axis Asset Management Company Limited -116.4 -1.2
Capital Research Global Investors 216.3 2.3 DSP Investment Managers Pvt. Ltd. -25.1 -0.3
JPMorgan Asset Management U.K. Limited 82.3 1.0 Capital World Investors -22.9 -0.2
Life Insurance Corporation of India 33.8 0.4 Tata Asset Management Limited -22.6 -0.2
T. Rowe Price International (UK) Ltd. 25.7 0.3 Reliance Nippon Life Asset Management Limited -16.5 -0.2
Source: Reuters, ICICI Direct Research

Exhibit 15: Shareholding pattern

(in %) Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
Promoter 56.2 56.2 56.2 56.2 56.2
FII 23.0 22.7 22.3 25.3 23.4
DII 16.0 13.4 13.4 11.3 15.0
Others 4.9 7.7 8.1 7.2 5.3
Source: Company, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Financial Summary

Exhibit 16: Profit and loss statement | crore Exhibit 17: Cash flow statement | crore
(Year-end March) FY18 FY19 FY20E FY21E (Year-end March) FY18 FY19 FY20E FY21E
Total operating Income 79,763 86,020 80,802 90,051 Profit after Tax 7,722 7,501 6,425 7,790
Growth (%) 7.8 -6.1 11.4 Add: Depreciation 2,758 3,019 3,717 3,782
Raw Material Expenses 54,975 60,254 57,444 64,436 (Inc)/dec in Current Assets -50 -504 -875 -670
Employee Expenses 2,834 3,255 3,478 3,636 Inc/(dec) in CL and Provisions 2,584 -1,331 -1,527 1,428
Marketing Expenses 0 0 0 0 Others 346 76 139 113
Administrative Expenses 0 0 0 0 CF from operating activities 13359.1 8760.5 7878.4 12442.5
Other expenses 9,892 11,512 11,221 11,606 (Inc)/dec in Investments -6,527 -975 -700 -4,800
Total Operating Expenditure 67,701 75,021 72,142 79,678 (Inc)/dec in Fixed Assets -3,701 -4,542 -4,000 -4,000
EBITDA 12061.5 10999.3 8659.7 10373.8 Others -218 17 -310 -310
Growth (%) -9 -21 20 CF from investing activities -10447.0 -5499.2 -5010.0 -9110.0
Depreciation 2,758 3,019 3,717 3,782 Issue/(Buy back) of Equity 0 0 0 0
Interest 346 76 139 113 Inc/(dec) in loan funds -373 39 250 -100
Other Income 2,046 2,561 3,394 3,638 Dividend paid & dividend tax -2,900 -2,900 -2,900 -3,081
PBT 11,003 10,466 8,198 10,117 Inc/(dec) in Sec. premium 0 0 0 0
Others 0 1 2 3 Others 419 -301 -139 -113
Total Tax 3,282 2,965 1,773 2,327 CF from financing activities -2854.1 -3162.5 -2789.3 -3294.0
PAT 7721.8 7500.6 6424.6 7790.2 Net Cash flow 58 99 79 38
Growth (%) -3 -14 21 Opening Cash 13 71 170 249
EPS (|) 255.6 248.3 212.7 257.9 Closing Cash 71.1 169.9 249.1 287.6
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

Exhibit 18: Balance Sheet | crore Exhibit 19: Key ratios

(Year-end March) FY18 FY19 FY20E FY21E (Year-end March) FY18 FY19 FY20E FY21E
Liabilities Per share data (|)
Equity Capital 151 151 151 151 EPS 255.6 248.3 212.7 257.9
Reserve and Surplus 41,606 45,981 49,506 54,215 Cash EPS 346.9 348.2 335.7 383.1
Total Shareholders funds 41757.3 46132.4 49657.0 54365.9 BV 1,382.3 1,527.2 1,643.8 1,799.7
Total Debt 111 150 400 300 DPS 80.0 80.0 80.0 85.0
Deferred Tax Liability 559 564 564 564 Cash Per Share 2.4 5.6 8.2 9.5
Others Liabilties 1,612 2,076 2,116 2,156 Operating Ratios
Total Liabilities 44038.8 48922.0 52736.6 57385.5 EBITDA Margin (%) 15.1 12.8 10.7 11.5
Assets PBIT / Net sales (%) 11.7 9.3 6.1 7.3
Gross Block 21,424 26,492 31,592 35,592 PAT Margin (%) 9.7 8.7 8.0 8.7
Less: Acc Depreciation 8,065 11,084 14,801 18,583 Inventory days 14.5 14.1 16.0 15.0
Net Block 13359.0 15407.8 16790.9 17008.8 Debtor days 6.7 9.8 12.0 12.0
Capital WIP 2,126 1,600 500 500 Creditor days 48.0 40.9 38.0 38.0
Total Fixed Assets 15,485 17,008 17,291 17,509 Return Ratios (%)
Investments 35290.2 36515.0 37465.0 42515.0 RoE 18.5 16.3 12.9 14.3
Inventory 3,161 3,326 3,542 3,701 RoCE 21.1 16.3 9.4 11.5
Debtors 1,462 2,310 2,657 2,961 RoIC 91.7 58.1 28.2 37.3
Loans and Advances 3 16 15 17 Valuation Ratios (x)
Other Current Assets 2,007 1,485 1,799 2,005 P/E 28.9 29.8 34.8 28.7
Cash 71.1 169.9 249.1 287.6 EV / EBITDA 15.7 17.1 21.7 17.6
Total Current Assets 6,704 7,307 8,262 8,971 EV / Net Sales 2.4 2.2 2.3 2.0
Creditors 10,497 9,633 8,412 9,375 Market Cap / Sales 2.8 2.6 2.8 2.5
Provisions 560 624 545 608 Price to Book Value 5.4 4.8 4.5 4.1
Other current Liabilities 4,274 3,743 3,516 3,919 Solvency Ratios
Total Current Liabilities 15,331 14,001 12,474 13,902 Debt/EBITDA 0.0 0.0 0.0 0.0
Net Current Assets -8627.2 -6693.6 -4212.1 -4931.0 Debt / Equity 0.0 0.0 0.0 0.0
Other Assets 1,891 2,093 2,193 2,293 Current Ratio 0.6 0.7 0.9 0.9
Application of Funds 44038.8 48922.0 52736.6 57385.5 Quick Ratio 0.3 0.4 0.5 0.5
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 20: ICICI Direct coverage universe (Auto & Auto Ancillary)
Sector / Company CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%)
(|) TP(|) Rating (| Cr) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E
Apollo Tyre (APOTYR) 181 200 Hold 10360 11.9 14.8 16.6 15.2 12.2 10.9 7.9 7.9 7.4 8.0 7.7 8.2 8.3 7.9 8.4
Ashok Leyland (ASHLEY) 75 75 Hold 21987 6.8 5.8 6.2 11.1 12.9 12.1 5.8 6.3 5.8 26.9 22.7 22.2 24.3 18.8 18.1
Bajaj Auto (BAAUTO) 3160 3300 Hold 91454 161.6 175.0 189.0 19.6 18.1 16.7 14.9 13.9 11.9 21.0 19.5 25.9 19.9 20.6 19.8
Bharat Forge (BHAFOR) 453 515 Buy 21081 22.2 23.5 24.9 20.4 19.2 18.2 11.5 11.5 10.8 17.9 16.0 16.3 19.1 17.6 16.9
Eicher Motors (EICMOT) 21128 18175 Hold 57594 808.1 907.0 1029.4 26.1 23.3 20.5 13.4 12.6 10.9 32.5 27.3 25.2 24.8 22.5 21.1
Exide Industries (EXIIND) 176 230 Buy 14947 9.9 12.3 14.1 17.7 14.3 12.4 10.6 8.5 7.5 18.4 20.8 20.5 12.9 15.5 15.7
Hero Moto (HERHON) 2700 3110 Buy 53919 169.5 195.0 182.9 15.9 13.8 14.8 10.0 10.5 9.7 37.1 30.1 29.8 26.3 23.9 23.0
Mahindra & Mahindra (MAHMAH) 520 660 Buy 64646 38.6 44.0 34.2 13.5 11.8 15.2 10.0 9.4 9.4 17.3 14.7 13.2 14.1 11.6 10.3
Maruti Suzuki (MARUTI) 7396 6420 Reduce 223418 248.3 212.7 257.9 29.8 34.8 28.7 17.1 21.7 17.6 16.3 9.4 11.5 16.3 12.9 14.3
Tata Motors (TELCO) 133 125 Hold 50934 -84.6 9.3 21.4 -1.6 14.2 6.2 3.9 3.6 3.1 5.4 9.1 11.3 7.1 9.8 15.4
Source: Reuters, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock

Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

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 Result Update | Maruti Suzuki India ICICI Direct Research

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ICICI Securities | Retail Research 12