SELL

Maruti Suzuki (MSIL)

https://ultraviewer.et/en/own Automobiles & Components SEPTEMBER 13, 2021
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UPDATE
Sector view: Cautious

Lagging behind the competition in SUV segment. Chip shortage is currently CMP (`): 6,802
holding back recovery in the domestic PV industry; however, we expect a strong Fair Value (`): 5,850
recovery in volumes from FY2023E, given strong underlying demand trends. MSIL has
BSE-30: 58,305
been losing market share over the past three years as the company has failed to react to
the rising competition in the SUV segment. With further increase in competitive
intensity, regaining lost market share will be challenging for MSIL. Retain SELL rating.
Maruti Suzuki
Stock data Forecasts/valuations 2021 2022E 2023E
CMP(Rs)/FV(Rs)/Rating 6,802/5,850/SELL EPS (Rs) 141.0 163.9 251.5
52-week range (Rs) (high-low) 8,329-6,270 EPS growth (%) (24.6) 16.2 53.5
Mcap (bn) (Rs/US$) 2,055/28 P/E (X) 48.2 41.5 27.0
ADTV-3M (mn) (Rs/US$) 4,863/66 P/B (X) 4.0 3.7 3.4
Shareholding pattern (%) EV/EBITDA (X) 30.1 25.2 15.7
Promoters 56.4 RoE (%) 8.5 9.3 13.1
FPIs/MFs/BFIs 22.9/7.5/8.1 Div. yield (%) 0.7 0.6 0.9
Price performance (%) 1M 3M 12M Sales (Rs bn) 703 879 1,032
Absolute (3.9) (6.0) (5.7) EBITDA (Rs bn) 53 63 98
Rel. to BSE-30 (11.1) (18.3) (58.4) Net profits (Rs bn) 43 49 76

Near-term headwinds due to chip shortage; underlying demand trends remain strong

Over the past few months, the domestic PV industry has been facing production headwinds due
to a semi-conductor shortage globally. MSIL had to cut down its production in August and will
further scale down its production by 60% in September. The semi-conductor shortage is mainly
due to shutdown of factories in Malaysia due to rising Covid-19 cases. Given the uncertainly,
we expect the supply scenario to improve gradually over the next two quarters and possibly
normalize from FY2023E. As a result, we expect MSIL’s total volumes to grow by 17% yoy
(versus earlier estimate of 30% yoy) in FY2022E, which implies flattish growth on a yoy basis
during 2HFY22E. However, we expect a sharp recovery in wholesale volumes from FY2023E
due to (1) strong pent-up demand due to consumer’s preference for personal mobility, (2)
lower channel inventory and (3) strong order book and high waiting period for select models.

Market share loss due to lack of product launches in SUV segment remains an area of concern

MSIL’s retail market share in the domestic PV segment declined to 41.8% in FY2021 from
46.6% in FY2019 (see Exhibit 1). This can be mainly attributed to market share loss in the
compact SUV segment due to (1) an increase in competitive intensity and (2) lack of product
launches by MSIL over the past two years. Given the increasing consumer preference for SUV
segment (compact SUV mix has increased to 26.5% in FY2021 from 4% in FY2014), we believe
MSIL will have to aggressively launch products in order to regain lost market share. Also,
competitors have a number of upcoming line-up of SUV launches, which will make it
challenging for MSIL to regain its lost market share (refer Exhibit-2).

Marginally cut our FY2023-24 EPS estimates; retain SELL rating

We have cut our FY2022 EPS estimates by 18% due to (1) 10% cut in volume assumptions and
(2) 100 bps cut in EBITDA margin assumptions. We have marginally cut our FY2023-24 EPS Rishi Vora
estimates as we expect strong recovery in volumes once the chip shortage issue resolves. We
maintain SELL rating and revise our FV to Rs5,850 (from Rs6,000 earlier). We value the core
business at 25X September 2023E EPS while cash per share is Rs1,484.

kspcg.research@kotak.com
Contact: +91 22 6218 6427

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Automobiles & Components Maruti Suzuki

Exhibit 1: MSIL has lost retail market share over the past few years due to increase in competitive intensity in SUV segment
Maruti Suzuki retail market share, March fiscal year-ends, 2019-22 (%)

60

46.6
45.3
50

41.8
38 .0
40

30

20

10

0
Jul-19

Jul-21
Jun-18
Jul-18

Jun-20
Jul-20
Jun-19

Jun-21

2019

2021
2020
Mar-19

Mar-20

Mar-21
Apr-18

Jan-19

Apr-19

Apr-20

Apr-21
Sep-19

Jan-20

Jan-21
Sep-18

Sep-20
May-19
May-18

Nov-18

Nov-19

May-20

May-21
Nov-20
Oct-18

Oct-19

Oct-20

Feb-21
Feb-19

Feb-20

Aug-20
Aug-18

Aug-19

Aug-21

2022YTD
Dec-20
Dec-18

Dec-19

Note:
(1) We have included Maruti's sales to Toyota in calculating retail market share for the company

Source: Parivahan, Company, Kotak Institutional Equities estimates

Exhibit 2: Maruti Suzuki has been lagging in terms of product launches in SUV segment over the past few years
Historical and upcoming launches in SUV segment by OEMs, March fiscal year-ends, 2018-2022

Model Timeline Model Timeline

Marut Suzuki Mahindra
XL6 Launched in August 2019 XUV 300 Launched in February 2019
New Vitarra Brezza (Petrol) Launched in February 2020 TUV Facelift Launched in May 2019
New S-Cross Launched in August 2020 New Thar Launched in March 2020
Tata Motors XUV 700 Unveiled in August 2021
Harrier Launched in January 2019 New Bolero Neo Launched in August 2021
Nexon EV Launched in December 2019 New Scorpio To be launched in January 2022
Nexon facelift Launched in January 2020 Kia Motors
Safari Launched in February 2021 Seltos Launched in August 2019
Punch To be launched in October 2021 Grand Carnival Launched in February 2020
Sierra To be launched in January 2022 Sonet Launched in September 2020
Hyundai Motors Sportage To be launched in April 2022
Venue Launched in May 2019 Ceed To be launched in November 2022
e-Kona Launched in July 2019 MG Motors
New Creta Launched in March 2020 Hector Launched in June 2019
New Tucson Launched in July 2020 eZS Launched in December 2019
Alcazar Launched in April 2021 Hector plus Launched in July 2020
Staria To be launched in January 2022 Gloster Launched in October 2020
Santa Fe To be launched in January 2022 Astor To be launched in October 2021
Renault-Nissan G 10 To be launched in May 2022
Nissan Kicks Launched in January 2019 Other OEMs
Renault Triber Launched in August 2019 Skoda Karoq Launched in April 2020
Renault Kwid facelift Launched in October 2019 Honda WR-V Launched in July 2020
Renault Kiger Launched in February 2021 Ford EcoSport facelift Launched in January 2021
Nissan X-Trail To be launched in December 2021 Volkswagen T-Roc Launched in July 2020
Renault K-ZE To be launched in March 2022 Citroen C5 Aircross Launched in March 2021
Nissan Terra To be launched in May 2022 Volkswagen Taigun Launched in July 2020

Source: Carwale, Kotak Institutional Equities estimates

16 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Maruti Suzuki Automobiles & Components

Exhibit 3: We have cut our FY2022E EPS estimates by 18% due to lower volume and EBITDA margin assumptions due to chip shortage
Earnings revision table, March fiscal year-ends, 2022-24E (Rs mn, units, %)

New estimates Old estimates % change

2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E
Volumes (units) 1,708 ,053 1,98 0,78 8 2,137,08 8 1,8 91,050 2,031,448 2,18 8 ,134 (9.7) (2.5) (2.3)
Net ASPs (Rs) 514,374 521,214 528 ,126 504,919 519,064 528 ,212 1.9 0.4 (0.0)
Net sales 878,578 1,032,414 1,128,653 954,827 1,054,451 1,155,798 (8.0) (2.1) (2.3)
EBITDA 63,422 98,333 121,344 77,833 101,628 122,783 (18.5) (3.2) (1.2)
Margin (%) 7.2 9.5 10.8 8 .2 9.6 10.6
EBITDA/vehicle (Rs) 37,131 49,643 56,78 0 41,158 50,028 56,113 (9.8 ) (0.8 ) 1.2
Net Profit 49,496 75,968 93,130 60,692 77,68 6 93,334 (18 .4) (2.2) (0.2)
EPS (Rs) 163.9 251.5 308.3 200.9 257.2 309.0 (18.4) (2.2) (0.2)

Source: Company, Kotak Institutional Equities estimates

Exhibit 4: We value MSIL at Rs5,850 per share

MSIL valuation table, March fiscal year-ends, 2023-24E (Rs)

EPS Multiple Value per share

(Rs) (X) (Rs) Comments
Core EPS 175.0 25 4,376 Based on September 2023 EPS
Cash & cash equivalents 1,48 4
Total value per share 5,859
Fair value 5,850

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 17

Automobiles & Components Maruti Suzuki

Exhibit 5: Compact SUV segment continues to outperform due to strong consumer preference and successful new launches
Domestic segment-wise PV volumes, segment-wise PV mix and market share of OEMs, March fiscal-year-ends, 2012-22 (units, %)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1QFY22 1QFY21
Segment-wise domestic volumes (units)
Sedan 494,600 48 6,8 39 504,393 596,717 607,603 543,78 6 550,469 579,8 48 379,160 279,18 1 65,151 14,525
Hatchback 1,498 ,796 1,38 4,968 1,28 5,698 1,28 4,670 1,422,198 1,564,226 1,628 ,335 1,615,549 1,309,113 1,255,096 270,992 64,963
Compact SUV 2,263 57,08 4 95,98 3 99,146 209,8 10 38 4,578 508 ,529 552,342 58 3,413 714,762 199,593 43,438
Large SUV 28 8 ,712 379,430 306,577 312,770 277,905 277,749 303,8 47 290,165 190,365 176,304 48 ,276 12,8 73
MPV 241,076 328 ,969 273,8 09 298 ,68 7 277,8 78 267,731 279,595 318 ,48 2 295,8 45 274,034 58 ,78 2 17,233
Total 2,525,447 2,637,290 2,466,460 2,591,990 2,795,394 3,038,070 3,270,775 3,356,386 2,757,896 2,699,377 642,794 153,032
Segment-wise mix (%)
Sedan 19.6 18 .5 20.5 23.0 21.7 17.9 16.8 17.3 13.7 10.3 10.1 9.5
Hatchback 59.3 52.5 52.1 49.6 50.9 51.5 49.8 48 .1 47.5 46.5 42.2 42.5
Compact SUV 0.1 2.2 3.9 3.8 7.5 12.7 15.5 16.5 21.2 26.5 31.1 28 .4
Large SUV 11.4 14.4 12.4 12.1 9.9 9.1 9.3 8 .6 6.9 6.5 7.5 8 .4
MPV 9.5 12.5 11.1 11.5 9.9 8 .8 8 .5 9.5 10.7 10.2 9.1 11.3
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Market share of OEMs (%)
Maruti 38 .5 39.4 42.1 45.0 46.8 47.4 50.0 51.2 51.0 47.7 45.3 42.3
Hyundai 14.8 14.4 15.2 16.2 17.4 16.7 16.3 16.1 17.5 17.4 17.7 18 .3
Mahindra & Mahindra 9.4 11.7 10.2 8 .6 8 .5 7.8 7.6 7.5 6.8 5.8 6.7 7.8
Honda 2.1 2.8 5.4 7.3 6.9 5.2 5.2 5.4 3.7 3.0 2.5 1.2
Tata Motors Ltd 14.2 11.8 7.9 6.2 5.4 5.7 6.4 6.9 5.0 8 .3 10.1 9.5
Toyota 6.1 6.2 5.1 5.4 4.6 4.7 4.3 4.4 4.1 3.4 3.0 3.6
Nissan-Renault 1.4 3.4 3.8 3.5 4.0 6.3 4.7 3.4 3.9 4.1 3.9 4.8
Ford 3.5 2.9 3.4 2.9 2.9 3.0 2.7 2.8 2.4 1.8 1.7 2.1
Volkswagen 3.1 2.5 2.1 1.7 1.5 1.6 1.3 1.0 0.9 0.7 0.7 1.9
General Motors 4.2 3.3 3.2 2.0 1.2 0.8 0.1 — — — — —
Skoda 1.3 1.1 0.8 0.6 0.6 0.5 0.5 0.5 0.5 0.4 0.4 0.8
Fiat 0.6 0.3 0.5 0.4 0.3 0.2 0.6 0.5 0.3 0.2 0.3 0.2
Kia Motors — — — — — — — — 3.0 5.7 6.5 5.8
MG India — — — — — — — — 0.8 1.3 1.1 1.8
Others 0.7 0.4 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Company, Kotak Institutional Equities estimates

Exhibit 6: MSIL’s market share in domestic sedan segment stood at 53.8% in 1QFY22 versus 50.9% in FY2021
OEM-wise sedan mix, March fiscal-year-ends, 2012-22 (%)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1QFY22 1QFY21
OEM-wise sedan mix (%)
Fiat India Ltd. 0.8 0.3 0.7 0.4 0.2 0.2 0.1 0.0 0.0 — — —
Ford India Ltd. 3.5 3.0 1.2 1.0 3.4 4.1 4.0 2.7 1.7 1.3 0.4 2.9
Honda SIEL Cars India Ltd. 8 .0 7.1 22.6 24.1 21.7 16.9 14.1 22.1 21.5 23.9 19.5 6.8
Hyundai Motors India Ltd. 11.8 13.5 10.3 16.2 11.5 11.9 14.4 13.6 13.0 19.3 21.7 19.2
Mahindra & Mahindra Ltd. 3.6 3.2 1.4 0.3 0.5 0.6 0.1 0.2 0.2 0.0 0.0 0.0
Maruti Suzuki India Ltd. 26.0 36.2 40.0 40.9 47.5 48 .6 54.3 51.7 53.9 50.9 53.8 60.5
Nissan-Renault 3.0 6.4 2.7 1.2 0.5 0.4 0.4 0.2 0.2 — — —
Skoda Auto India Pvt. Ltd 6.5 5.9 3.8 2.5 2.5 2.5 3.0 2.5 3.4 3.7 3.7 7.1
Tata Motors 15.7 8 .8 6.1 4.8 3.3 2.7 0.3 — — — — —
Toyota Kirloskar Motor Ltd. 12.0 9.1 6.9 6.1 6.5 6.7 5.1 4.2 3.6 0.1 0.1 0.3
Volkswagen 7.8 5.7 4.3 2.5 2.4 5.5 4.1 2.7 2.5 0.8 0.8 3.2
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: SIAM, Kotak Institutional Equities estimates

18 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Maruti Suzuki Automobiles & Components

Exhibit 7: MSIL’s market share in domestic hatchback segment stood at 65% in 1QFY22 versus 65.1% in FY2021
OEM-wise hatchback mix, March fiscal-year-ends, 2012-22 (%)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1QFY22 1QFY21
OEM-wise hatchback mix (%)
Fiat India Ltd. 0.8 0.4 0.7 0.5 0.3 0.2 0.1 0.0 0.0 — — —
Ford India Ltd. 4.7 4.4 2.5 1.3 1.3 0.9 0.7 0.2 0.6 0.1 0.0 0.3
General Motors India Ltd. 5.6 4.8 4.4 2.8 1.6 1.2 0.4 — — — — —
Honda SIEL Cars India Ltd. 1.0 2.8 1.5 1.1 3.6 2.5 2.0 1.0 0.4 0.5 0.5 —
Hyundai Motors India Ltd. 21.4 22.9 25.5 25.1 24.6 22.1 21.4 21.1 19.8 16.2 16.5 14.7
Maruti Suzuki India Ltd. 48 .5 49.5 53.6 56.8 54.8 53.2 57.5 61.1 65.4 65.1 65.0 57.5
Nissan-Renault 1.2 1.2 1.5 1.8 4.3 10.0 7.6 5.7 4.5 3.8 2.5 5.9
Tata Motors 12.0 9.5 5.9 6.3 6.2 7.7 8 .2 8 .1 5.5 10.8 12.2 15.5
Toyota Kirloskar Motor Ltd. 2.1 2.0 1.7 1.9 1.4 0.9 0.9 1.7 2.6 2.1 2.0 2.4
Volkswagen 2.6 2.5 2.4 2.3 1.9 1.3 1.3 1.1 1.2 1.3 1.3 3.6
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: SIAM, Kotak Institutional Equities estimates

Exhibit 8: Maruti Suzuki has lost 40 bps market share in 1QFY22 from FY2021 levels in compact SUV segment
OEM-wise compact SUV mix, March fiscal-year-ends, 2012-22 (%)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1QFY22 1QFY21
OEM-wise compact SUV mix (%)
Fiat India Ltd. — — — — 0.9 0.3 0.1 0.0 0.0 — — —
Ford India Ltd. — — 42.2 47.3 17.1 11.7 9.8 12.5 7.7 5.0 4.5 4.8
Honda SIEL Cars India Ltd. 13.1 0.5 0.4 0.4 0.2 6.3 11.8 7.1 2.5 1.4 0.9 1.8
Hyundai Motors India Ltd. 69.8 1.3 0.7 1.9 30.9 23.5 21.4 22.8 30.3 30.0 27.9 36.5
Kia Motors — — — — — — — — 14.0 21.4 20.7 20.1
Mahindra & Mahindra Ltd. — 28 .8 7.7 2.0 19.2 16.7 10.8 7.3 8 .7 5.1 4.5 7.2
Maruti Suzuki India Ltd. 0.9 0.0 0.0 — 14.1 33.8 35.3 35.4 21.0 15.7 15.3 11.8
MG India — — — — — — — — 3.8 4.6 3.2 6.3
Nissan-Renault 16.2 69.3 49.0 48 .5 17.6 7.7 5.4 4.1 2.4 3.1 7.0 1.2
PCA — — — — — — — — — — 0.2 —
Tata Motors — — — — — — 5.4 10.7 9.6 11.6 13.3 10.3
Toyota Kirloskar Motor Ltd. — — — — — — — — — 2.3 2.5 —
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Note:
(1) We have considered models with engine capacity less than 2,000 cc in this segment

Source: SIAM, Kotak Institutional Equities estimates

Exhibit 9: M&M and Toyota India continue to dominate large SUV segment in the domestic market
OEM-wise large SUV mix, March fiscal year-ends, 2012-22 (%)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1QFY22 1QFY21
OEM-wise large SUV mix (%)
Force Motors — 0.2 0.0 0.1 0.1 0.0 0.0 — — — — —
Ford India Ltd. — — 1.7 1.7 2.0 2.1 2.3 2.0 3.4 3.8 4.1 3.8
General Motors India Ltd. 7.3 5.5 3.3 4.3 3.9 2.9 0.5 — — — — —
Hindustan Motors 0.7 0.5 0.4 0.6 0.6 0.2 0.2 0.1 0.0 — — —
Mahindra & Mahindra Ltd. 54.2 57.5 62.0 60.0 62.2 54.6 56.5 57.0 59.7 65.8 68 .2 66.5
Tata Motors 15.3 11.7 9.2 7.6 6.5 6.7 8 .0 6.7 1.7 2.2 9.9 —
Toyota Kirloskar Motor Ltd. 22.5 24.6 23.5 25.7 24.8 33.3 32.5 34.2 35.1 28 .2 17.8 29.7
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Note:
(1) We have considered models with engine capacity more than 2,000 cc in this segment

Source: SIAM, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 19

Automobiles & Components Maruti Suzuki

Exhibit 10: Maruti remains dominant player with ~87% market share in the domestic MPV segment driven by Ertiga, Eeco and new XL6
OEM-wise MPV mix, March fiscal-year-ends, 2012-22 (%)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1QFY22 1QFY21
OEM-wise MPV mix (%)
Force Motors 3.2 2.5 0.5 0.9 1.2 1.0 1.1 0.7 0.5 0.3 — 0.0
Honda SIEL Cars India Ltd. — — 0.3 10.7 3.1 0.7 — — — — — —
Kia Motors — — — — — — — — 0.9 1.0 1.6 1.2
Mahindra & Mahindra Ltd. 18 .4 13.9 13.5 10.8 7.3 6.5 7.7 14.7 7.3 1.8 2.1 1.4
Maruti Suzuki India Ltd. 57.0 57.7 64.1 67.8 76.2 8 2.8 8 2.1 77.6 78 .2 8 1.2 8 7.2 79.9
Nissan-Renault — — — 0.0 3.7 1.7 0.9 0.3 10.7 15.0 8 .1 17.5
Tata Motors 21.4 25.9 21.7 9.8 8 .6 7.4 8 .2 6.7 2.4 0.8 1.0 —
Toyota — — — — — — — — 0.1 0.1 0.2 0.5
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Note:
(1) We have included vans in this segment

Source: SIAM, Kotak Institutional Equities estimates

Exhibit 11: We expect Maruti’s volumes to grow by ~14% CAGR over FY2021-24E
Volume assumptions, March fiscal year-ends, 2016-24E (units)

2016 2017 2018 2019 2020 2021 2022E 2023E 2024E

Models
Maruti 8 00 — — — — — — — — —
Omni 79,8 30 8 4,746 8 0,58 3 8 9,8 18 1,401 — — — —
Alto 263,422 241,635 258 ,539 259,491 190,8 14 158 ,992 174,8 91 201,125 217,215
Zen Estillo — — — — — — — — —
Wagon R 169,555 172,346 168 ,644 151,462 156,724 160,330 176,363 202,8 17 219,043
Ritz/Ignis petrol 12,252 24,08 9 29,222 31,144 18 ,773 33,940 37,334 37,334 39,201
Swift petrol 76,659 75,08 9 102,507 153,924 172,916 172,671 18 9,938 218 ,429 240,272
Dzire petrol 8 4,022 79,951 146,58 1 163,8 59 164,159 128 ,251 141,076 158 ,005 165,905
A star — — — — — — — — —
Eeco 63,641 67,263 74,554 8 8 ,78 8 117,003 105,08 1 120,8 43 135,344 148 ,8 79
Grand Vitara — — — — — — — — —
Gypsy 4,324 2,157 8 ,233 3,232 272 2,779 3,112 3,579 4,009
SX4 petrol — — — — — — — — —
Kizashi — — — — — — — — —
Ertiga petrol 20,451 22,234 33,107 37,263 8 8 ,543 8 8 ,571 110,714 143,928 158 ,321
Vitara Brezza petrol — — — — — 110,951 127,594 153,112 168 ,424
Celerio 8 6,350 97,361 94,721 103,734 62,625 61,010 64,061 73,670 77,353
Ciaz 26,233 38 ,669 38 ,290 31,169 20,258 13,8 52 16,622 17,454 18 ,326
Baleno petrol 29,697 96,658 144,568 172,330 190,419 18 5,455 204,001 244,8 01 257,041
XL6 — — — — 18 ,117 25,8 32 28 ,415 31,257 32,8 20
S Presso — — — — 56,962 67,167 77,242 8 6,511 90,8 37
S-Cross 17,28 4 24,000 26,400 27,720
Exports 123,8 97 124,062 126,074 108 ,749 102,171 96,139 177,8 57 204,536 224,98 9
Petrol domestic volumes 916,436 1,002,198 1,179,549 1,286,214 1,258,986 1,332,166 1,496,206 1,733,766 1,865,364
Ritz/Ignis diesel 7,8 49 8 ,447 18 ,000 5,000 2,000 — — — —
Swift diesel 120,071 91,776 73,421 70,000 15,000 — — — —
Dzire diesel 148 ,355 119,927 93,543 90,000 15,000 — — — —
SX4 diesel — — — — — — — — —
Ertiga diesel 40,000 41,293 33,034 28 ,000 2,000 — — — —
Ciaz diesel 28 ,000 25,779 20,623 15,000 5,000 — — — —
Vitara Brezza diesel 5,563 108 ,640 148 ,462 157,8 8 0 110,641 — — — —
S cross 24,077 21,417 30,923 37,8 22 11,721 — — — —
Baleno diesel 15,000 24,164 45,912 40,000 15,000 — — — —
XL6 diesel — — — — 4,000 — — — —
Light commercial vehicle — 900 10,033 23,8 74 21,778 29,556 33,98 9 42,48 7 46,735
Diesel domestic volumes 388,915 442,343 473,951 467,576 202,140 29,556 33,989 42,487 46,735
Total volumes 1,429,248 1,568,603 1,779,574 1,862,539 1,563,297 1,457,861 1,708,053 1,980,788 2,137,088
Diesel (includes LCV) 10.6 9.8 13.4 4.7 (16.1) (6.7) 17.2 16.0 7.9

Source: Company, Kotak Institutional Equities estimates

20 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Maruti Suzuki Automobiles & Components

Exhibit 12: We expect Maruti’s revenue to increase by ~17% CAGR over FY2021-24E led by 14% CAGR in volumes
Revenue assumptions, March fiscal year-ends, 2016-24E (Rs mn)

2016 2017 2018 2019 2020 2021 2022E 2023E 2024E

Revenue mix (Rs mn)
Maruti 8 00 — — — — — — — — —
Omni 16,419 17,430 15,08 2 16,978 265 — — — —
Alto 60,455 55,455 53,995 52,568 40,945 34,116 39,029 45,78 1 49,444
Zen Estillo — — — — — — — — —
Wagonr 55,790 56,708 50,496 45,351 49,278 50,412 57,671 67,648 73,060
Ritz petrol 4,544 8 ,934 9,8 63 9,98 6 6,207 11,222 12,8 38 12,8 38 13,48 0
Swift petrol 32,918 32,244 40,055 59,545 67,238 67,8 14 8 0,564 94,501 103,951
Dzire petrol 41,518 39,507 65,912 73,68 1 73,8 16 57,98 7 68 ,8 8 8 78 ,698 8 2,633
A star — — — — — — — — —
Eeco 18 ,8 93 19,969 20,141 24,226 33,095 29,723 36,232 40,58 0 44,638
Grand Vitara — — — — — — — — —
Gypsy 2,199 1,097 3,434 1,348 136 1,390 1,603 1,8 43 2,065
SX4 petrol — — — — — — — — —
Kizashi — — — — — — — — —
Ertiga petrol 11,28 7 12,271 14,98 3 16,527 40,055 40,068 53,090 70,397 78 ,98 6
Vitara Brezza petrol — — — — — 66,571 8 1,150 99,327 111,445
Celerio 32,68 6 36,8 54 32,627 35,017 21,140 19,8 63 21,8 99 25,939 27,236
Ciaz 17,051 25,637 20,8 17 16,606 10,48 9 7,172 9,037 9,679 10,264
Baleno petrol 14,8 49 50,262 70,665 8 4,235 93,077 90,650 106,696 130,595 139,8 68
XL6 petrol — — — — 14,494 21,079 24,114 27,056 28 ,693
S Presso — — — — 22,78 5 27,270 32,928 37,617 40,28 8
S-Cross — — — — — 11,926 17,222 18 ,945 19,8 92
Exports 47,353 60,000 60,973 53,350 48 ,329 45,475 8 8 ,336 103,618 116,259
Petrol revenues 355,962 416,368 459,042 489,419 521,348 582,738 731,297 865,063 942,201
Ritz diesel 3,8 08 4,098 7,68 5 2,028 751 — — — —
Swift diesel 59,336 45,353 31,929 29,528 5,952 — — — —
Dzire diesel 8 4,153 68 ,027 46,694 43,578 6,8 8 8 — — — —
SX4 diesel — — — — — — — — —
Ertiga diesel 26,793 27,659 18 ,144 14,610 1,024 — — — —
Ciaz 21,700 19,979 13,106 9,533 3,078 — — — —
Vitara Brezza diesel — 76,048 95,610 99,641 67,062 — — — —
SX4 Cross 22,8 73 21,160 25,053 30,335 9,167 — — — —
Baleno diesel 9,375 15,48 0 27,354 23,18 8 8 ,395 — — — —
XL6 diesel — — — — 3,260 — — — —
Light commercial vehicle — 248 2,511 5,8 55 5,341 7,321 8 ,8 40 11,050 12,277
Diesel revenues 228,038 278,052 268,085 258,296 110,917 7,321 8,840 11,050 12,277
Gross vehicle revenues 584,000 694,420 727,127 747,715 632,266 590,059 740,137 876,113 954,478
YoY chg (%) 19.0 18 .9 4.7 2.8 (15.4) (6.7) 25.4 18 .4 8 .9
Revenue mix (%)
Petrol 61.0 60.0 63.1 65.5 8 2.5 98 .8 98 .8 98 .7 98 .7

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 21

Automobiles & Components Maruti Suzuki

Exhibit 13: We expect ASPs to increase by ~3% CAGR over FY2021-24E

Net average selling prices per vehicle, March fiscal year-ends, 2014-24E (Rs, %)

Net ASPs (Rs, LHS) Yoy increase (%, RHS)

600,000 9.0
8.0
500,000
7.0
6.0
400,000
5.0
300,000 4.0
3.0
200,000
2.0
1.0
100,000
-
- (1.0)
2015

2016

2017

2020

2021
2014

2018

2019

2022E

2023E

2024E
Source: Company, Kotak Institutional Equities estimates

Exhibit 14: We expect earnings to grow at 30% CAGR over FY2021-24E

Maruti Suzuki profit and loss, balance sheet and cash flow statement, March fiscal year-ends, 2014-24E (Rs mn)
2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E
Profit model (Rs mn)
Net sales 437,918 499,706 575,38 1 68 0,348 797,627 8 60,203 756,106 703,325 8 78 ,578 1,032,414 1,128 ,653
EBITDA 51,911 67,129 88,844 103,517 120,615 109,993 73,026 53,453 63,422 98,333 121,344
Other income 7,317 8 ,316 14,610 23,001 20,455 25,610 34,208 29,753 32,8 04 35,8 57 38 ,68 1
Interest (1,759) (2,060) (8 15) (8 94) (3,457) (758 ) (1,329) (1,008 ) (750) (500) (200)
Depreciation (20,8 8 4) (24,703) (28 ,202) (26,021) (27,579) (30,18 9) (35,257) (30,315) (32,020) (36,295) (40,428 )
Profit before tax 36,585 48,682 74,437 99,603 110,034 104,656 70,648 51,883 63,456 97,395 119,398
Tax expense 8 ,755 11,570 20,794 26,101 32,8 16 29,650 14,142 9,297 13,960 21,427 26,268
Adj. net profit 27,830 37,112 53,643 73,502 77,218 75,006 56,506 42,586 49,496 75,968 93,130
Earnings per share (Rs) 92.1 122.9 177.6 243.3 255.6 248.3 187.1 141.0 163.9 251.5 308.3
Balance sheet (Rs mn)
Equity 209,78 0 237,042 298 ,8 42 364,311 417,573 461,415 48 4,370 513,668 550,790 607,766 677,614
Deferred tax liability 5,8 66 4,8 10 1,943 4,662 5,58 9 5,640 5,98 4 3,8 47 3,8 47 3,8 47 3,8 47
Total Borrowings 16,8 51 8 ,521 774 4,8 36 1,108 1,496 1,063 4,8 8 8 4,8 8 8 4,8 8 8 4,8 8 8
Current liabilities 72,8 60 8 5,137 117,067 138 ,697 169,431 160,767 134,104 178 ,271 199,145 221,338 237,117
Total liabilities 305,357 335,510 418,626 512,506 593,701 629,318 625,521 700,674 758,671 837,839 923,467
Net fixed assets 134,118 141,421 135,169 145,450 154,8 49 170,079 171,18 6 164,469 177,449 18 6,154 18 7,726
Investments 101,179 128 ,140 199,322 28 4,8 10 352,902 365,150 364,676 417,8 67 467,8 67 517,8 67 567,8 67
Cash 6,297 18 3 391 138 711 1,78 9 211 30,364 (3,8 21) (2,129) 19,951
Other current assets 63,763 65,766 8 3,744 8 2,108 8 5,239 92,300 8 9,448 8 7,974 117,175 135,947 147,922
Total assets 305,357 335,510 418,626 512,506 593,701 629,318 625,521 700,674 758,671 837,839 923,467
Free cash flow (Rs mn)
Operating cash flow excl. working capital 41,474 55,750 70,398 8 1,270 8 9,792 79,128 59,710 45,036 49,462 76,906 95,076
Working capital changes 7,561 7,457 14,631 21,940 28 ,058 (13,196) (25,659) 43,352 (8 ,327) 3,421 3,8 05
Net finance income 5,557 6,256 13,795 21,8 34 16,998 24,8 52 31,457 27,977 32,054 35,357 38 ,48 1
Cash flow from operations 54,592 69,463 98,824 125,044 134,848 90,784 65,508 116,365 73,189 115,684 137,363
Capital expenditure (34,927) (31,48 7) (26,327) (33,723) (38 ,653) (47,000) (33,990) (23,279) (45,000) (45,000) (42,000)
Free cash flow 19,665 37,976 72,497 91,321 96,195 43,784 31,518 93,086 28,189 70,684 95,363
Ratios
Gross margin (%) 28 .4 29.9 32.7 31.3 31.1 30.8 29.7 27.7 25.2 26.6 27.3
EBITDA margin (%) 11.9 13.4 15.4 15.2 15.1 12.8 9.7 7.6 7.2 9.5 10.8
PAT margin (%) 8 .4 9.7 12.9 14.6 13.8 12.2 9.3 7.4 7.2 9.4 10.6
ASPs per vehicle (Rs/vehicle) 379,136 38 6,647 402,576 433,729 448 ,212 461,8 44 48 3,661 48 2,436 514,374 521,214 528 ,126
Gross profit per vehicle (Rs/vehicle) 107,728 115,773 131,8 22 135,8 10 139,290 142,127 143,632 133,8 63 129,454 138 ,704 144,237
EBITDA per vehicle (Rs/vehicle) 44,943 51,941 62,161 65,993 67,777 59,055 46,713 36,665 37,131 49,643 56,78 0
Net debt/equity (X) (0.4) (0.5) (0.7) (0.8 ) (0.8 ) (0.8 ) (0.7) (0.9) (0.8 ) (0.8 ) (0.9)
Book value (Rs/share) 713.9 8 00.6 995.7 1,221.4 1,400.8 1,546.1 1,623.3 1,713.2 1,8 36.1 2,024.7 2,255.9
RoAE (%) 13.7 16.2 19.8 21.9 19.5 16.9 11.8 8 .5 9.2 13.0 14.4
RoACE (%) 17.4 24.0 37.9 56.9 81.7 64.9 23.2 16.1 25.9 44.3 56.8

Source: Company, Kotak Institutional Equities estimates

22 KOTAK INSTITUTIONAL EQUITIES RESEARCH