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) 56482.19 12.5 7060.27 933.17 7993.44 142.44 7851 2476.27 5374.74 1451.18 3923.56 129.9 1503 (12P) 48944.71 12.2 5971.25 864.05 6835.3 158.27 6677.03 2292.84 4384.19 1096.05 3288.15 108.9 1403 (12) 43700.63 11.7 5095.91 822.9 5918.81 175.85 5742.96 2084.4 3658.56 875.51 2783.05 92.1 1303 (12) 43587.93 9.7 4229.48 813.37 5042.85 189.82 4853.03 1861.17 2991.86 598.93 2392.93 79.2 1203 (12) 35587.09 7.1 2512.9 826.85 3339.7 55.21 3284.53 1138.35 2146.18 511.05 1635.13 54.1 1103 (12) 36618.43 9.9 3638.5 508.77 4147.3 25 4122.27 1013.51 3108.76 820.11 2288.65 75.8 1003 (12) 29623.01 13.3 3950.91 500.14 4451.05 33.5 4417.55 825.02 3592.53 1094.91 2497.62 82.7 * Paid up Equity capital of Rs 151.04 crore, Face Value Rs 5. P: Projections. Figures in Rs crore. Source: Capitaline Databases STOCK DATA BSE Code : 532500 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 : 22.45 Institutions : 13.6 Govt Holding : 0 Corporate Holding : 5.53 Promoters : 56.21 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 12101.39 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, 2013. 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 406.6 crore. Interest cost fell 40% to Rs 43.43 crore. As depreciation decreased 31% to Rs 563.69 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 246.98 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
Good FY show in a weak environment In FY 2014, net sales stagnated at Rs 43700.63 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 175.85 crore. As depreciation increased 12% to Rs 2,084.4 crore, PBT grew 22% to Rs 3658.56 crore. Tax provision jumped 46% to Rs 875.51 crore after which PAT grew 16% to Rs 2783.05 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 14-15 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
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 48944.71 crore and Rs 3288.15 crore respectively. For FY 16, we expect the company to register net sales and PAT of Rs 56482.19 crore and Rs 3923.56 crore. This gives an EPS of Rs 108.9 for FY 15 and Rs 129.9 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 2016. We apply P/E of less than 22 to expected FY 2016 EPS to arrive at the target price of Rs 2800. 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 12101.39 13304.01-9 43700.63 43587.93 0 OPM(%) 10.3 15.0 11.7 9.7 OP 1247.53 1999.61-38 5095.91 4229.48 20 Other inc. 406.62 398.99 2 822.9 813.37 1 PBIDT 1654.15 2398.6-31 5918.81 5042.85 17 Interest 43.43 72.64-40 175.85 189.82-7 PBDT 1610.72 2325.96-31 5742.96 4853.03 18 Dep. 563.69 815.89-31 2084.4 1861.17 12 PBT 1047.03 1510.07-31 3658.56 2991.86 22 Tax 246.98 270.45-9 875.51 598.93 46 PAT 800.05 1239.62-35 2783.05 2392.93 16 EPS* 105.9 164.1 92.1 79.2 * On current equity of Rs 151.04 crore: Face Value: Rs 5.# Quarterly figures are not strictly comparable. Figures In Rs Crore Source: Capitaline Databases 3
FINANCIAL STATEMENT PROFIT & LOSS A/C- CONSOLIDATED - RS. CRS FY09 FY10 FY11 FY12 FY13 Net Sales 20662.2 29591.5 37155.8 36089.9 44304.4 Y-o-Y 30.2% 20.4% -3.0% 18.5% Total Expenditure 18742.7 26468.4 33620.3 33908.7 39982.3 Raw Materials 15937.4 22655.3 28820.7 28662.5 33031.6 Stock Adjustments -281 194.1 60 150.6-19.2 Power & Fuel Cost 193.6 216.6 210.2 229.5 495.1 Employee Cost 481.3 560.5 731.9 877.9 1120.2 Other Manufacturing Expenses 255.1 311.1 155 181.6 336.2 Selling and Administration Expenses 1544.5 2084.3 2964.8 2906.4 3781.3 Miscellaneous Expenses 611.8 446.5 677.7 900.2 1237.1 EBIDTA 1638.5 3317.2 3595.5 2331.8 4302.9 Margin 9.3% 10.6% 9.5% 6.0% 9.8% Depreciation 716.5 841.4 1031.3 1162.5 1889.7 EBIT 922.0 2475.80 2564.2 1169.3 2413.2 Interest 54.5 37.4 29.4 61.6 197.8 Other Income 1114.8 1034.4 514.5 844.3 830.1 PBT 1701.3 3666.9 3135 2145.3 3070.1 Tax 475.4 1145.5 818.3 418.3 651.5 Fringe Benefit Tax 9.7 0 0 0 0 Deferred Tax -11.4-23.6 9.6 93.2-30 PAT 1227.6 2545 2307.1 1633.8 2448.6 Extraordinary Items 146.42 80.24 38.12 184.15 295.91 Adjusted PAT 1080.98 2544.46 2344.28 1497.05 2173.29 Margin 5.2% 8.6% 6.3% 4.1% 4.9% EPS (Rs.) 41.88 87.07 78.62 55.32 79.72 CASH FLOW (Rs in crore) FY09 FY10 FY11 FY12 FY13 Cash Flow Summary Cash and Cash Equivalents at Beginning of the year 330.5 1939 98.2 95.5 176.1 Net Cash from Operating Activities 1193.3 3031.8 2819.4 2559.9 4384.2 Net Cash Used in Investing Activities 951.4-4927.7 343-3095.8-3469 Net Cash Used in Financing Activities -536.2 55.1-752.1 616.5-966.3 Net Inc/(Dec) in Cash and Cash Equivalent 1608.5-1840.8 2410.3 80.6-51.1 Cash and Cash Equivalents at End of the year 1939 98.2 2508.5 176.1 125 Year 2009 2010 2011 2012 2013 4
BALANCE SHEET (Rs in crore) FY09 FY10 FY11 FY12 FY13 Share Capital 144.5 144.5 144.5 144.5 151 Reserves Total 9200.4 11690.6 13723 15042.9 18427.9 Total Shareholders Funds 9344.9 11835.1 13867.5 15187.4 18578.9 Secured Loans 0.1 26.5 0 0 0 Unsecured Loans 698.8 794.9 309.2 1236.9 1389.2 Total Debt 698.9 821.4 309.2 1236.9 1389.2 Other Liabilities 0 0 235.5 265.9 329.5 Total Liabilities 10043.8 12656.5 14412.2 16690.2 20297.6 APPLICATION OF FUNDS : Gross Block 8720.6 10406.7 11737.7 14734.7 19800.7 Less : Accumulated Depreciation 4649.8 5382 6208.3 7214 10001.5 Net Block 4070.8 5024.7 5529.4 7520.7 9799.2 Capital Work in Progress 861.3 387.6 862.5 941.9 1942.2 Investments 3173.3 7176.6 5106.8 6147.4 7078.3 Current Assets, Loans & Advances Inventories 902.3 1208.8 1415 1796.5 1840.7 Sundry Debtors 937.8 809.9 824.5 937.6 1423.7 Cash and Bank 1939 98.2 2508.5 2436.1 775 Loans and Advances 1730.9 1655.5 876.6 1154.7 1655.6 Total Current Assets 5510 3772.4 5624.6 6324.9 5695 Less : Current Liabilities and Provisions Current Liabilities 3035.8 2936.5 3462.3 4780.5 5333.5 Provisions 380.7 631.3 386.2 529.2 648.2 Total Current Liabilities 3416.5 3567.8 3848.5 5309.7 5981.7 Net Current Assets 2093.5 204.6 1776.1 1015.2-286.7 Deferred Tax Assets 78.9 83.6 86.8 82.5 78.3 Deferred Tax Liability 234 220.6 251.2 384.8 487 Net Deferred Tax -155.1-137 -164.4-302.3-408.7 Other Assets 0 0 1301.8 1367.3 2173.3 Total Assets 10043.8 12656.5 14412.2 16690.2 20297.6 Contingent Liabilities 1339.6 2696.5 4266.1 4145.9 5635.9 5
KEY FINANCIAL RATIOS FY09 FY10 FY11 FY12 FY13 Key Ratios Debt-Equity Ratio 0.09 0.07 0.04 0.05 0.08 Long Term Debt-Equity Ratio 0.06 0.05 0.02 0 0.01 Current Ratio 1.22 1.19 1.13 1.08 0.85 Turnover Ratios Fixed Assets 2.9 3.34 3.69 2.98 2.84 Inventory 23.89 30.27 31.15 24.6 26.99 Debtors 29.1 36.56 50.01 44.83 41.58 Total Asset Turnover Ratio 2.39 2.81 3.02 2.54 2.65 Interest Cover Ratio 29.91 108.24 125.35 35.74 14.77 PBIDTM (%) 9.63 13.93 10.15 7.88 9.5 PBITM (%) 6.58 11.35 7.67 5 5.71 PBDTM (%) 9.41 13.83 10.09 7.74 9.12 CPM (%) 7.68 10.4 8.08 6.58 8.08 APATM (%) 4.63 7.82 5.6 3.7 4.29 ROCE (%) 15.76 31.95 23.15 12.69 15.16 RONW (%) 12.08 23.58 17.81 10.06 12.48 Payout (%) 8.41 7.02 9.62 13.54 10.28 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 2013 - Capital Market Publishers India Pvt. Ltd and Latin Manharlal Securities Pvt. Ltd. 6