3QFY2019 Result Update | Automobile
February 15, 2019
Maruti Suzuki India
BUY
CMP
`7,040
Performance Update
Target Price
`8,552
Y/E March (` cr)
3QFY19
3QFY18
% yoy
2QFY19
% qoq
Investment Period
12 months
Net sales
19,668
19,283
2.0
22,433
(12.3)
EBITDA
1,931
3,038
(36.4)
3,431
(43.7)
EBITDA margin (%)
9.8
15.8
(594bp)
15.3
(548bp)
Stock Info
Adjusted PAT
1,489
1,799
(17.2)
2,240
(33.5)
Sector
Automobile
Source: Company, Angel Research
Market Cap (` cr)
2,11,971
For 3QFY2019, Maruti Suzuki India (MSIL) posted below expectation results both
Net Debt (` cr)
(35,713)
on top-line and bottom-line fronts. MSIL reported ~2% yoy top-line growth to
Beta
1.0
`19,668cr on the back of price hike (up ~2% yoy). The company’s operating
margins contracted by 594bps yoy. On the bottom-line front, MSIL reported de-
52 Week High / Low
9923/6324
growth of ~17% yoy to `1,489cr on the back of lower sales and poor operating
Avg. Daily Volume
62,647
performance.
Face Value (`)
5
Top-line remains flat: MSIL’s top-line grew by ~2% yoy to `19,668cr on the back
BSE Sensex
35,876
of price hike (up ~2% yoy). Overall volume growth declined by ~0.6% yoy,
Nifty
10,746
mainly due to weak domestic market conditions and sluggish export markets
Reuters Code
MRTI.BO
during the quarter.
Bloomberg Code
MSIL.IN
Subdued volume and poor operating performance impactedprofitability: On the
operating front, the company reported contraction in margins, down 594bps yoy
at 9.8%. Operating margin was impacted mainly due to an increase in material
Shareholding Pattern (%)
prices, higher discounts, unfavorable currency movement, higher selling expense,
Promoters
56.1
adverse foreign exchange variation and higher depreciation expense due to
introduction of new models and new engine. On the bottom-line front, MSIL
MF / Banks / Indian Fls
13.4
reported de-growth of ~17% yoy to `1,489cr
FII / NRIs / OCBs
22.9
Outlook and Valuation: We expect MSIL to report net revenue CAGR of ~9% to
Indian Public / Others
7.6
~`94,790cr over FY2018-20E mainly due to new launches and upcoming facelift
in various models. Further, on the bottom-line front, we expect CAGR of ~6% to
`8,670cr over the same period on the back of healthy sales. Thus, we maintain
Abs. (%)
3m 1yr 3yr
our Buy recommendation on MSIL with Target Price of `8,552.
Sensex
2.1
5.0
52.3
Key Financials
MSIL
(22.7)
(22.9)
92.2
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Net sales
68,085
79,809
85,396
94,790
Price Chart
% chg
18.2
17.2
7.0
11.0
400
Adj. Net profit
7,511
7,881
7,504
8,670
350
300
% chg
36.6
4.9
(4.8)
15.5
250
EBITDA margin (%)
15.2
15.1
13.5
14.2
200
150
EPS (`)
248.7
261.0
248.5
287.1
100
P/E (x)
28.3
27.0
28.3
24.5
50
P/BV (x)
5.7
5.0
4.5
4.1
0
RoE (%)
20.3
18.5
16.0
16.7
RoCE (%)
20.6
21.6
18.1
19.7
EV/Sales (x)
2.7
2.2
2.0
1.8
Source: Company, Angel Research
EV/EBITDA (x)
17.8
14.7
14.9
12.4
Source: Company, Angel Research Note
Research Analyst
Amarjeet S Maurya
022-40003600 Ext: 6831
Please refer to important disclosures at the end of this report
1
Maruti Suzuki India Ltd| 3QFY2019 Result Update
Exhibit 1: 3QFY2019 Performance
Y/E March (` cr)
3QFY19
3QFY18
% yoy
2QFY19
% qoq
9MFY19
9MFY18
% chg
Net Sales
19,668
19,283
2.0
22,433
(12.3)
64,561
58,597
10.2
Consumption of RM
14044
13,332
5.3
15285
(8.1)
44,831
40,599
10.4
(% of Sales)
71.4
69.1
68.1
69.4
69.3
Staff Costs
881
687
28.3
792
11.3
2,438
2,006
21.6
(% of Sales)
4.5
3.6
3.5
3.8
3.4
Other Expenses
2,812
2,226
26.3
2,925
(3.9)
8,556.4
6,946.3
23.2
(% of Sales)
14.3
11.5
13.0
13.3
11.9
Total Expenditure
17,737
16,245
9.2
19,002
(6.7)
55,825
49,551
12.7
Operating Profit
1,931
3,038
(36.4)
3,431
(43.7)
8,736
9,047
(3.4)
OPM
9.8
15.8
15.3
13.5
15.4
Interest
21
26
(21.7)
26
(19.8)
67
73
(7.7)
Depreciation
768
689
11.4
721
6.4
2209
2055
7.5
Other Income
917
245
274.6
527
74.2
1693
1451
16.7
PBT (excl. Ext Items)
2,060
2,567
(19.8)
3,211
(35.8)
8,154
8,369
(2.6)
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
2,060
2,567
(19.8)
3,211
(35.8)
8,154
8,369
(2.6)
(% of Sales)
10.5
13.3
14.3
12.6
14.3
Provision for Taxation
571
768
(25.7)
971
(41.2)
2,449
2,529
(3.2)
(% of PBT)
27.7
29.9
30.2
30.0
30.2
Reported PAT
1,489
1,799
(17.2)
2,240
(33.5)
5,705
5,840
(2.3)
PATM
7.6
9.3
10.0
8.8
10.0
Minority Interest After NP
Reported PAT
1,489
1,799
(17.2)
2,240
(33.5)
5,705
5,840
(2.3)
Source: Company, Angel Research
February 15, 2019
2
Maruti Suzuki India Ltd| 3QFY2019 Result Update
Outlook and Valuation
We expect MSIL to report net revenue CAGR of ~9% to ~`94,790cr over FY2018-
20E mainly due to new launches and upcoming facelift in various models. Further,
on the bottom-line front, we expect CAGR of ~6% to `8,670cr over the same
period on the back of healthy sales. Thus, we maintain our Buy recommendation
on MSIL with Target Price of `8,552.
Downside risks to our estimates
Strong launches and facelift of existing models from competitors like Hyundai
Motors, M&M, Ford, etc. can grab the market share from MSIL.
Slowdown of economy can impact the overall buying sentiment of automobile
segment.
Company Background
Maruti Suzuki, a subsidiary of Suzuki Motor Corporation of Japan, is India's largest
passenger car company, accounting for over 45% of the domestic car market. The
company offers 14 brands spanning across cars, UV and MPV segments. WagonR,
Swift, DZire, Baleno, Brezza and Ciaz are the most popular models and dominate
the market in their respective segments. It has three manufacturing facilities in
Gurgaon and Manesar with installed capacity of c.1.55mn units. It has the most
extensive distribution network among all PV companies in India.
February 15, 2019
3
Maruti Suzuki India Ltd| 3QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E
FY2020E
Net Sales
57,589
68,085
79,809
85,396
94,790
% chg
13.4
18.2
17.2
7.0
11.0
Total Expenditure
48,700
57,727
67,746
73,868
81,329
Raw Material
38,706
46,742
54,986
60,204
66,542
Personnel
2,000
2,360
2,863
3,074
3,412
Others Expenses
7,994
8,624
9,897
10,589
11,375
EBITDA
8,889
10,358
12,063
11,528
13,460
% chg
16.5
16.5
(4.4)
16.8
(% of Net Sales)
15.4
15.2
15.1
13.5
14.2
Depreciation& Amortisation
2,822
2,604
2,760
2,917
3,100
EBIT
6,067
7,754
9,304
8,611
10,360
% chg
27.8
20.0
(7.4)
20.3
(% of Net Sales)
10.5
11.4
11.7
10.1
10.9
Interest & other Charges
82
89
346
92
95
Other Income
1,600
2,462
2,209
2,200
2,300
(% of PBT)
21.1
24.3
19.8
20.5
18.3
Recurring PBT
7,585
10,127
11,167
10,719
12,565
% chg
33.5
10.3
(4.0)
17.2
Tax
2,088
2,616
3,286
3,216
3,895
(% of PBT)
27.5
25.8
29.4
30.0
31.0
PAT (reported)
5,497
7,511
7,881
7,504
8,670
Extraordinary Items
-
-
-
-
-
ADJ. PAT
5,497
7,511
7,881
7,504
8,670
% chg
36.6
4.9
(4.8)
15.5
(% of Net Sales)
9.5
11.0
9.9
8.8
9.1
Basic EPS (`)
182.0
248.7
261.0
248.5
287.1
Fully Diluted EPS (`)
182.0
248.7
261.0
248.5
287.1
% chg
44.4
36.6
4.9
(4.8)
15.5
February 15, 2019
4
Maruti Suzuki India Ltd| 3QFY2019 Result Update
Balance Sheet
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
SOURCES OF FUNDS
Equity Share Capital
151
151
151
151
151
Reserves& Surplus
30,465
36,924
42,389
46,872
51,918
Shareholders Funds
30,616
37,075
42,540
47,023
52,069
Total Loans
231
484
484
484
484
Deferred Tax Liability
861
1,110
1,110
1,110
1,110
Total Liabilities
31,722
38,684
44,148
48,632
53,678
APPLICATION OF FUNDS
Gross Block
15,343
18,680
22,086
24,586
27,086
Less: Acc. Depreciation
2,813
5,370
8,129
11,046
14,147
Net Block
12,530
13,311
13,957
13,540
12,940
Capital Work-in-Progress
1,007
1,252
1,252
1,252
1,252
Investments
20,676
29,151
36,123
39,823
44,623
Current Assets
8,513
8,247
7,148
9,239
11,841
Inventories
3,133
3,264
3,160
3,509
3,895
Sundry Debtors
1,323
1,203
1,465
1,638
2,078
Cash
51
24
74
1,701
2,076
Loans & Advances
2,303
2,129
439
427
1,422
Other Assets
1,703
1,628
2,010
1,964
2,370
Current liabilities
11,636
13,881
14,936
15,826
17,582
Net Current Assets
(3,122)
(5,634)
(7,788)
(6,587)
(5,741)
Deferred Tax Asset
632
604
604
604
604
Mis. Exp. not written off
-
-
-
-
-
Total Assets
31,722
38,684
44,148
48,632
53,678
February 15, 2019
5
Maruti Suzuki India Ltd| 3QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Profit before tax
7585
10127
11167
10719
12565
Depreciation
2822
2604
2760
2917
3100
Change in Working Capital
1460
2192
2204
426
(470)
Interest / Dividend (Net)
(70)
52
346
92
95
Direct taxes paid
(1912)
(2323)
(3286)
(3216)
(3895)
Others
(1402)
(2370)
0
0
0
Cash Flow from Operations
8483
10282
13191
10939
11395
(Inc.)/ Dec. in Fixed Assets
(2456)
(3236)
(3406)
(2500)
(2500)
(Inc.)/ Dec. in Investments
(4774)
(5937)
(6973)
(3700)
(4800)
Cash Flow from Investing
(7230)
(9173)
(10379)
(6200)
(7300)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
(235)
253
0
0
0
Dividend Paid (Incl. Tax)
(755)
(1057)
(2416)
(3020)
(3624)
Interest / Dividend (Net)
(239)
(331)
(346)
(92)
(95)
Cash Flow from Financing
(1229)
(1136)
(2762)
(3112)
(3719)
Inc./(Dec.) in Cash
23
(27)
50
1627
376
Opening Cash balances
28
51
24
74
1701
Closing Cash balances
51
24
74
1701
2076
February 15, 2019
6
Maruti Suzuki India Ltd| 3QFY2019 Result Update
Key Ratio
Y/E March
FY2016
FY2017
FY2018
FY2019E FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
38.7
28.3
27.0
28.3
24.5
P/CEPS
25.6
21.0
20.0
20.4
18.1
P/BV
6.9
5.7
5.0
4.5
4.1
Dividend yield (%)
0.5
1.1
1.1
1.4
1.7
EV/Sales
3.3
2.7
2.2
2.0
1.8
EV/EBITDA
21.6
17.8
14.7
14.9
12.4
EV / Total Assets
6.1
4.8
4.0
3.5
3.1
Per Share Data (`)
EPS (Basic)
182.0
248.7
261.0
248.5
287.1
EPS (fully diluted)
182.0
248.7
261.0
248.5
287.1
Cash EPS
275.5
334.9
352.3
345.1
389.7
DPS
35.0
75.0
80.0
100.0
120.0
Book Value
1,013.8
1,227.7
1,408.6
1,557.1
1,724.1
Returns (%)
ROCE
19.7
20.6
21.6
18.1
19.7
Angel ROIC (Pre-tax)
59.9
92.5
136.3
143.9
177.0
ROE
18.0
20.3
18.5
16.0
16.7
Turnover ratios (x)
Asset Turnover (Gross Block)
3.8
3.6
3.6
3.5
3.5
Inventory / Sales (days)
20
17
14
15
15
Receivables (days)
8
6
7
7
8
Payables (days)
51
49
45
45
45
Working capital cycle (ex-cash) (days)
(23)
(25)
(24)
(23)
(22)
Source: Company, Angel Research
February 15, 2019
7
Maruti Suzuki India Ltd| 3QFY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER
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public offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
Maruti Suzuki India
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to -15%)
Sell (< -15%)
February 15, 2019
8
