Quarterly result- Revenues in line with our Expectations, Profits Disappoint.

Recommendation HOLD Snapshot CMP (09/06/2010) Rs. 1295 Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation Sector Auto of Japan, is the leader in the Indian car market with 54% market Stock Details share. The company has State-of-the-art Manufacturing Facilities at BSE Code 532500 Gurgaon located some 25 km south of New Delhi. Maruti Suzuki has a sales network of 802 state-of -the-art showrooms across 555cities, NSE Code MARUTI with a workforce of over 15000 trained sales personnel. Bloomberg Code Market Cap (Rs. Crs) Free Float (%) 52- wk HI/Lo Avg. volume BSE (Quarterly) Face Value Dividend payout Shares o/s (Crs) MSIL IN 34,350 50 1740/946 7092650 Relative Performance 1Mth 3Mth 1Yr Rs.5 190% 28.89 Maruti 1.5% -12.4% 22.8% Sensex -0.9% -2.8% 13.3% Quarterly result- Revenues in line with our Expectations, Profits Disappoint. Revenues for Q4 FY10 were in line with our expectations growing 12.3% on a QoQ basis to Rs 8,234.9 Crores. EBIDTA declinedby 2.9% on a QoQ Basis to Rs 1,190 Crores in Q4 FY10 due to an increase in raw material costs, increased derpriciation charges due to tooling & increased spend on Advertising & the cost of upgradation to BHARAT IV Emission norms. PAT declined 4.5% QoQ to Rs 656.6 crores, however on a YoY basis it grew 170% from Rs 243.1 crores in Q409. The company crossed the 1 million sales mark for FY10 selling 1.018 million vehicles, the highest in its history. Maruti registered highest sales for the quarter at 2,87,422 units in Q4 FY10 as compared to 2,58,026 in Q3 FY10. Shareholding Pattern as of 31/03/2010 Promoters Holding 54.2% Institutional (Incl. FII) 37.8% Corporate Bodies 5.6% Public & others 2.4% Ashish Khetan Research Analyst (+91 22 3027-2259) ashish.khetan@nirmalbang.com Aditya Powani - Research Associate (+91 22 3027-2241) aditya.powani@nirmalbang.com Valuation & Recommendation At the current price of Rs. 1199 per share, Maruti is currently available at 15.65x FY11E and 14.14x FY12E. We expect the company to earn a ROCE of 23.4% in FY11E and 22.18% in FY12E. The company is expanding its production capacity at Manesar by FY12 after which the company will be producing additional 250000 cars per annum in lieu of increasing demand in the Indian as well as overseas markets for the products of the company. At Rs. 1295 per share the stock is trading at a discount of 7.9% from our intrinsic price of Rs. 1397 per share. Therefore, we maintain HOLD with a target price of Rs. 1397 per share indicating potential upside of 8%. Year Net Sales Growth % EBITDA Margin % PAT EPS PE P/BV ROE % FY 2009 20557.9 13.83% 1867.5 9.08% 1227.4 42.62 30.36 3.91 18.78% FY 2010 29302.8 42.54% 4043.3 13.80% 2624.6 88.06 14.69 3.10 34.96% FY 2011E 34174.3 16.62% 4268.8 12.49% 2390.3 82.71 15.65 2.63 23.40% FY 2012E 39155.1 14.57% 4800.1 12.26% 2643.9 91.49 14.14 2.23 22.18%

Q4 FY10 Result Analysis The company reported net sales of Rs. 8,234.9 crores as against Rs. 6,308.4 crores in Q4FY09 i.e. a rise of 30.5% on a YoY basis. Maruti total sales grew 21.5% YoY and 11.4% QoQ to 287,422 units in Q4 FY10. EBIDTA for Q4FY10 were Rs. 1,190 crores as compared to Rs. 554.7 crores in Q4FY09. While on a QoQ basis it declined 2.9% on due to an increase in raw material costs, increased derpriciation charges due to tooling & increased spend on advertisement for the Auto expo. PAT was up by 170% at Rs. 656.6 crores from Rs. 243.1 crores on a YoY basis, however on a Q-Q basis we saw a decline of 4.5%. We saw the PAT Margins increasing from 3.9% to 8.0% on a Y-Y Basis, however declined 141b ps on a QoQ Basis. QUARTERLY RESULTS (Curr: Rs in Cr.) Q4 FY10 Q4 FY09 YoY Q3FY10 QoQ Gross Sales 9072.9 6972.9 30.1% 8046.5 12.8% Excise Duty 838.1 664.5 26.1% 712.7 17.6% Net Sales 8234.9 6308.4 30.5% 7333.8 12.3% Other Operating income 189.7 124.6 52.3% 169.1 12.2% Total Operating Income 8424.6 6432.9 31.0% 7502.9 12.3% Other Income 79.0 105.4-25.1% 91.3-13.5% Total Income 8503.5 6538.3 30.1% 7594.1 12.0% Decrease/ (Increase) in stock in trade 12.9 162.1-131.2 Raw Material Consumed 6127.6 4738.5 29.3% 5491.9 11.6% Purchase of traded goods 272.2 180.3 51.0% 229.4 18.7% Employees Cost 153.4 133.1 15.2% 132.5 15.8% Other Expenditure 747.4 769.6-2.9% 646.4 15.6% Total Expenditure 7313.5 5983.6 22.2% 6368.9 14.8% PBIDT 1190.0 554.7 114.5% 1225.2-2.9% Operating Profit 1111.1 449.3 147.3% 1133.9-2.0% Interest 12.9 8.9 44.9% 8.4 53.5% PBDT 1177.2 545.9 115.7% 1216.8-3.3% Depreciation 223.0 197.1 13.1% 202.8 10.0% Tax 297.6 105.6 181.8% 326.2-8.8% Reported Profit After Tax 656.6 243.1 170.0% 687.8-4.5% EPS (Unit Curr.) 22.7 8.4 170.0% 23.8-4.5% PBIDTM(%) 14.5% 8.8% 566 bps 16.7% (225) bps PBDTM(%) 14.3% 8.7% 564 bps 16.6% (230) bps PATM(%) 8.0% 3.9% 412 bps 9.4% (141) bps OPM(%) 13.5% 7.1% 637 bps 15.5% (197) bps

Model wise Break up of Sales In the A1 category comprising of Maruti 800, the downward journey continued with a 30.2% slide in the sales numbers on a YoY Basis. The C segment comprising of Omni,Versa & Eeco witnessed the highest growth on YoY basis at 51.6% on back of stong demand for Eeco. The A3 segment comprising of SX4 & Swift Dzire grew by 27.9% on a Y-Y basis.the company has almost doubled the production of the Swift Dzire from 5,000 units to 12,000 units per month. The A2 segment comprising of Alto, Wagon R, Zen, Swift, A-Star and Ritz showed a modest growth of 13.8% YoY, however on a QoQ basis it grew at 8.77% Exports grew 7.48% on a QoQ basis and 67.1% on a YoY basis recording the highest ever sales of 42,040 units for Q4 FY10 primarily driven by the export of A- star and Ritz which comprise more than 90% of the total export sales. Particulars Q4 10 Q4 09 Y-o-Y Q3 10 Q-o-Q Domestic Sales A1 (Maruti 800) 8,434 12,076-30.2% 8,738-3.48% A2 (Alto,Wagon R, Ritz, Swift) 173,683 152,645 13.8% 159,678 8.77% A3 (SX4, Swift Dzire) 29,702 23,228 27.9% 25,388 16.99% C (Omni, Versa, Eeco 32,466 21,421 51.6% 24,426 32.92% MUV (Gypsey, Vitara) 1,097 2,115-48.1% 680 61.32% Total Domestic Sales 245,382 211,485 16.0% 218,910 12.09% Export Sales 42,040 25,153 67.1% 39,116 7.48% Total Sales 287,422 236,638 21.5% 258,026 11.39% Source :Company, Nirmal Bang Research Going Forward: Maruti s new lauch Eeco (C segment) has been received well by the market and the company has doubled the production for the car. We expect this segment to continue to grow around 30% YoY Production of Swift Dzire (A3 Segment) increased from 5000 units to 12000 units per month. Waiting period reduced to 3 Months. We continue to see increased efforts to increase the share of the higher margin products to the overall sales of the company. Debottlenecking at Gurgaon to add around 90,000 units annually at an investment of Rs. 140 Crores. The company s 250,000 unit capacity at Manesar is expected to commence in FY 2012. The company is planning to launch a new small car by the end of July or Early August in a price range between Rs 2.75-3.25 lakhs. Maruti expects a muted growth in exports for the FY 2011 given the fact that Europe contributes a major portion of its total exports and post scrappage incentives in Europe being withdrawn would affect the overall sales in the region. Increasing competition from international car majors in the domestic market segment will put pressure on margins for the company.

Income Statement (in crores RS.) FY 2009 FY 2010 FY 2011E FY 2012E Sales 23,307.6 32,180.5 37,971.5 43,505.7 Exise 2,749.7 2,877.7 3,797.1 4,350.6 Net Sales 20,557.9 29,302.8 34,174.34 39,155.1 Other Operating Income 614.3 819.7 767.8 784.5 Total Income 21,172.2 30,122.51 34,942.2 39,939.7 Cost Of Raw Material 16,135.6 22,900.7 26,580.0 30,454.0 Stock Adjustment 281.0 (194.1) - - Employee Expenses 481.3 560.5 645.5 739.6 Manufacturing and SGA exp 2,406.8 2,812.1 3,447.8 3,946.0 Total Expenditure 19,304.7 26,079.2 30,673.4 35,139.6 EBITDA 1,867.5 4,043.3 4,268.8 4,800.1 Interest 54.5 37.4 34.1 29.9 Depreciation & Amortization 716.5 841.4 1,015.0 1,206.4 Other income 608.9 502.4 401.9 442.1 Profit Before Tax 1,705.4 3,666.9 3,621.6 4,005.9 Total Taxes 473.7 1,121.9 1,231.3 1,362.0 Fringe benefit tax - - - - Deferred Tax - - - - Net Income After Taxes 1,231.7 2,545.0 2,390.3 2,643.9 Extraordinary Items - - - - Minority Interest Income (4.3) 79.7 - - Adjusted Net Profit 1,227.4 2,624.6 2,390.3 2,643.9 Preferred Dividends - - - - Net Income Available to EqSh holders 1,227.4 2,624.6 2,390.3 2,643.9 Earnings Per Share (Rs) 42.6 88.1 82.7 91.5

Balance Sheet (in crores) 2009 2010E 2011E 2012E Sources of Funds Shareholders' Equity 144.5 144.5 144.5 144.5 Reserves 9,420.8 11,900.9 14,100.0 16,632.4 Minority Interest - - - - Share Holders Funds 9,565.3 12,045.4 14,244.5 16,776.9 Secured Loans 11.9 11.9 11.9 11.9 Unsecured Loans 746.9 746.9 746.9 620.0 Total Debt 758.8 758.8 758.8 631.9 Net Deferred Tax 159.8 159.8 159.8 159.8 Total Liabilities and Equity 10,483.9 12,964.0 15,163.1 17,568.6 Application Of Funds Gross Fixed Assets 8,904.1 10,404.1 12,404.1 14,404.1 Less:Depreciation 4,687.8 5,529.2 6,544.1 7,750.5 Net Fixed Assets 4,216.3 4,874.9 5,860.0 6,653.6 Investments 3,277.2 3,277.2 3,277.2 3,277.2 WIP 867.4 774.6 200.0 300.0 Curent Assets, Loans & Adv Cash 1,986.8 3,910.2 5,167.0 6,257.8 Receivables 959.9 1,146.2 1,352.4 1,549.5 Inventories 921.3 1,322.5 1,560.5 1,787.9 Loans and Advances 1,753.6 1,851.5 2,184.7 2,503.1 Total Current Assets 5,621.6 8,230.3 10,264.6 12,098.2 Current Liabilities & Prov Current Liabilities 3,143.1 3,594.0 3,777.6 4,003.1 Provisions 355.5 599.0 661.1 757.3 Total Curr.Liabs & Prov. 3,498.6 4,193.0 4,438.7 4,760.5 Net Current Assets 2,123.0 4,037.3 5,825.9 7,337.8 Total Assets 10,483.9 12,964.0 15,163.1 17,568.6

Ratios Profitability Ratios 2009 2010E 2011E 2012E EBITDA 9.1% 13.8% 12.5% 12.3% PAT 6.0% 9.0% 7.0% 6.8% RoCE 18.8% 35.0% 23.4% 22.2% RoNW 13% 24% 18% 17% Growth Ratios 2009 2010E 2011E 2012E Sales 9.9% 38.1% 18.0% 14.6% EBITDA -41.3% 116.5% 5.6% 12.4% PAT -26.8% 113.8% -8.9% 10.6% Valuation Ratios 2009 2010E 2011E 2012E PE 30.5 14.2 15.6 14.1 P/BV 3.9 3.1 2.6 2.2 EV/EBIDTA 7.6 7.1 7.0 5.9 M.Cap/Sales 1.6 1.2 1.0 0.9 Per Share Data 2009 2010E 2011E 2012E BV 331.0 416.8 492.9 580.5 EPS 42.5 90.8 82.7 91.5 Cash EPS 42.6 88.1 117.8 133.2 DPS 7.00 9.50 13.23 14.64

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