Volume No. I Issue No. 22 May 23, 2014 FINANCIAL SUMMARY

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1 For private circulation only Volume No. I Issue No. 22 Maruti Suzuki India Smooth road ahead Price: Rs 2386 Target Price: Rs 2800 Sensex: 24,693 Nifty: 7,367 FINANCIAL SUMMARY SALES OPM (%) OP OTHER INC. PBIDT INTEREST PBDT DEP. PBT TAX PAT EPS (RS)* 1603 (12P) (12P) (12) (12) (12) (12) (12) * Paid up Equity capital of Rs crore, Face Value Rs 5. P: Projections. Figures in Rs crore. Source: Capitaline Databases STOCK DATA BSE Code : BSE Group : A NSE Code : MARUTI Bloomberg : MSIL IN Reuters : MRTI.BO Par Value : Rs 5 52-week High/Low : Rs 2401 / Rs 1217 Sector : Automobile SHAREHOLDING PATTERN* Category % of equity Foreign : Institutions : 13.6 Govt Holding : 0 Corporate Holding : 5.53 Promoters : Public & Others : 2.22 Totals : 100 * as on 31 st March 2014 Source: Capitaline Databases Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited) is a 56.2% subsidiary of Suzuki Motor Corporation of Japan. Maruti Suzuki is the largest manufacturer of passenger vehicles in India. suzuki It offers 16 brands and over 150 variants ranging from people s car Maruti 800 to the latest Life Utility Vehicle, Ertiga. Its portfolio includes Maruti 800, Alto, A-star, Estilo, WagonR, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Kizashi, Grand Vitara, Gypsy, Ertiga, Celerio, etc. March quarter results During the fourth quarter ended March 2014, net sales fell 9% to Rs crore. Pursuant to the scheme of amalgamation of Suzuki Powertrain India Limited (SPIL) with the Company with effect from April 1, 2012, on completion of all the formalities on March 17, 2013, the results of SPIL for the year April 1, 2012 to March 31, 2013 were included in the results of the Company for the quarter ended March 31, Therefore the figures for the quarter ended March 31, 2013 are not comparable. During the March 2014 quarter, the company sold 324,870 vehicles. Domestic sales were 298,596 units compared to 308,871 units in the same period of the previous year, a drop of 3.3%. Exports were at 26,274 units, a drop of 24.6%. The fall was despite an incremental contribution from the newly launched Celerio, which received an excellent response (16,000 units dispatched during the quarter). Total sales volume in Q4FY14 increased 12.5% qoq. Domestic sales volumes jumped 11% while exports shot up 31% on sequential basis. OPM stood at 10.3% (against 15%) and OP stood at Rs 1,248 crore for MSIL (including SPIL), a drop of 38%. PBIDT fell 31% at Rs 1654 crore. Other income rose 2% to Rs crore. Interest cost fell 40% to Rs crore. As depreciation decreased 31% to Rs crore, net profit fell 35% to Rs 800 crore after a 560 bps rise in effective tax rate (9% drop in tax provision to Rs crore). In February 2014, Maruti Suzuki cut vehicle prices by between Rs 8,500 and Rs 30,900 across models after the excise duty reduction was announced. The excise duty cut, announced in the interim budget in February, was not of much use because the company had to compensate dealers to the extent of Rs 143 crore in January-March quarter

2 Good FY show in a weak environment In FY 2014, net sales stagnated at Rs crore. The Company sold a total of 1,155,041 vehicles during the year FY 13-14, a drop of 1.4% over the previous year. Sales in the domestic market stood at 1,053,689 units, a growth of 0.3%. Exports were at 101,352 units, a drop of 15.8%. OPM improved 200 bps to 11.7% against 9.7% leading to a 20% rise in OP to Rs 5096 crore. Other income rose marginally to Rs 823 crore and interest cost fell 7% to Rs crore. As depreciation increased 12% to Rs 2,084.4 crore, PBT grew 22% to Rs crore. Tax provision jumped 46% to Rs crore after which PAT grew 16% to Rs crore. Gains market share In FY2014, the company managed to regain the lost share as well as gained some market share, thanks to a shift in demand in favour of petrol models. In FY2014, Maruti s market share in the domestic passenger car segment expanded by more than 400 bps to almost 50%. However, in the multiutility vehicle segment the company s market share fell as Ertiga s volumes declined. For the past two to three years, despite several launches by other companies, MSIL s key models such as Swift and D zire have been able to gain market share. This is commendable. Furthermore, the successful launch of Ertiga has helped MSIL gain market share in the UV segment, where it was not present earlier. Maruti plans to boost sales by expanding in overseas markets and focusing on domestic rural markets Maruti plans to boost sales by expanding in overseas markets and focusing on domestic rural customers. The company plans to enhance presence in various markets including Africa, Latin America and the Middle East. In the domestic rural markets, MSIL covers over 93,000 villages (vis a vis 44,000 a year ago) and there is scope to widen the segment as there are 6 lakh villages in the country. Capex The capex plans stand at Rs 4,000 crore for FY which will be spent on introduction of new models, marketing and R&D. In FY 13-14, capex stood at Rs 3500 crore. Better days ahead Car buying is a discretionary function and is greatly affected by economic and consumer sentiments, which were adverse for past couple of years. Before Lok Sabha election result announcement, sentiment was so bad that cut in excise duty also failed to ignite growth. However after the announcement of a stable and hopefully decisive government, sentiments are improving. Moreover economic growth is also likely to pick up. Hence we expect Maruti s sales to pick up speed in future. In FY2014, Maruti s market share in the domestic passenger car segment expanded by more than 400 bps to almost 50%. However, in the multiutility vehicle segment the company s market share fell as Ertiga s volumes declined For the past two to three years, despite several launches by other companies, MSIL s key models such as Swift and D zire have been able to gain market share. This is commendable. Furthermore, the successful launch of Ertiga has helped MSIL gain market share in the UV segment, where it was not present earlier 2

3 Strong network keeps it well placed to capitalize on increasing rural penetration With ~560 e-outlets and ~6,500 rural sales executive (RDSEs) MSIL is best placed to capitalize on increasing rural penetration no other car manufacturer has a physical infrastructure for rural sales, anywhere comparable to MSIL The success of the new Swift & Dzire and especially that of the Ertiga have repositioned Maruti Suzuki in the larger car segments (priced between Rs 5-10 Lakh) improving brand perception from that of a low-cost car manufacturer. Valuation For FY 15, we expect the company to register net sales and PAT of Rs crore and Rs crore respectively. For FY 16, we expect the company to register net sales and PAT of Rs crore and Rs crore. This gives an EPS of Rs for FY 15 and Rs for FY 16. At current market price of Rs 2386, the share trades at 18.3 times its expected FY 16 earnings. Earnings growth in FY 2014 is largely due to recovery in OPM, FY 2015 should see revival in sales growth which should gather steam in FY We apply P/E of less than 22 to expected FY 2016 EPS to arrive at the target price of Rs The key risks are volatility in rupee, which can lead to earning fluctuations due to sharp forex gains/losses, near term pains in domestic market and delays in domestic recovery. The success of the new Swift & Dzire and especially that of the Ertiga have repositioned Maruti Suzuki in the larger car segments (priced between Rs 5-10 Lakh) improving brand perception from that of a low-cost car manufacturer MARUTI SUZUKI INDIA: RESULTS 1403 (3) 1303 (3) VAR.(%)# 1403 (12) 1303 (12) VAR.(%) Sales OPM(%) OP Other inc PBIDT Interest PBDT Dep PBT Tax PAT EPS* * On current equity of Rs crore: Face Value: Rs 5.# Quarterly figures are not strictly comparable. Figures In Rs Crore Source: Capitaline Databases 3

4 FINANCIAL STATEMENT PROFIT & LOSS A/C- CONSOLIDATED - RS. CRS FY09 FY10 FY11 FY12 FY13 Net Sales Y-o-Y 30.2% 20.4% -3.0% 18.5% Total Expenditure Raw Materials Stock Adjustments Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses EBIDTA Margin 9.3% 10.6% 9.5% 6.0% 9.8% Depreciation EBIT Interest Other Income PBT Tax Fringe Benefit Tax Deferred Tax PAT Extraordinary Items Adjusted PAT Margin 5.2% 8.6% 6.3% 4.1% 4.9% EPS (Rs.) CASH FLOW (Rs in crore) FY09 FY10 FY11 FY12 FY13 Cash Flow Summary Cash and Cash Equivalents at Beginning of the year Net Cash from Operating Activities Net Cash Used in Investing Activities Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year Year

5 BALANCE SHEET (Rs in crore) FY09 FY10 FY11 FY12 FY13 Share Capital Reserves Total Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Other Liabilities Total Liabilities APPLICATION OF FUNDS : Gross Block Less : Accumulated Depreciation Net Block Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Other Assets Total Assets Contingent Liabilities

6 KEY FINANCIAL RATIOS FY09 FY10 FY11 FY12 FY13 Key Ratios Debt-Equity Ratio Long Term Debt-Equity Ratio Current Ratio Turnover Ratios Fixed Assets Inventory Debtors Total Asset Turnover Ratio Interest Cover Ratio PBIDTM (%) PBITM (%) PBDTM (%) CPM (%) APATM (%) ROCE (%) RONW (%) Payout (%) Disclaimer : This document has been prepared by M/s Latin Manharlal Securities Pvt. Ltd. and Capital Market Publishers India Pvt. Ltd. (the company) and is being distributed in India by Latin Manharlal Securities Pvt. Ltd. The information in the document has been compiled by the research department. Due care has been taken in preparing the above document. However, this document is not, and should not be construed, as an offer to sell or solicitation to buy any securities. Any act of buying, selling or otherwise dealing in any securities referred to in this document shall be at investor s sole risk and responsibility. This document may not be reproduced, distributed or published, in whole or in part, without prior permission from the Company. Copyright Capital Market Publishers India Pvt. Ltd and Latin Manharlal Securities Pvt. Ltd. 6