April 26, 2019 Maruti Suzuki€¦ · Q4FY19 – e April 26, 2019 Maruti Suzuki Downside Scenario...
Transcript of April 26, 2019 Maruti Suzuki€¦ · Q4FY19 – e April 26, 2019 Maruti Suzuki Downside Scenario...
Q4
FY1
9 –
Re
sult
Up
dat
e
April 26, 2019
Maruti Suzuki Downside
Scenario
Current
Price
Price
Target
7,2174.5%
Upside
Scenario
Hold
6,903
Q4FY19 Decoded!Maruti’s 4th quarter results were expected to be weak and meets streetestimates, but the margins came in lower than the expectations on account of 1)adverse movement of forex 2) YoY increase in the commodity prices 3) higherone-off fixed costs and 4) to improve volume sales, the company has spent ahigher amount on A&P and given discounts. This was partially offset by Maruti’scost rationalization efforts.
We expect Q1FY20 to remain subdued and will be similar like Q4FY19 onaccount of 1) increase in the vehicle prices due to the introduction of safetyregulations and 2) subdued consumer sentiments as buyers’ are postponing thepurchases due to uncertainty before the general elections. The Q4FY19 wassimilar like Q3FY19 where volumes were near flat. This has been observed in thepast that before the general elections, the economy as well as automobileindustry sales slows down and spurt post the elections.
We expect certain negative factors that could affect the demand/financials inthe short term:1. Uncertainty on petrol prices, especially post restriction on export of Iran’s
crude.2. The prices would go up further due to the phase wise introduction of new
safety regulations viz. ABS, Reverse Parking Sensors, Airbags, Seat BeltReminders, etc.
3. Adverse forex movement.4. The commodities could move up if there is a resolution in the US-China
trade war and on the expectation that the Chinese economy would dobetter.
5. Due to inauguration of 2nd plant in Gujarat, the fixed cost as well asdepreciation expense increased, that can affect the margins.
6. The continuous low consumer sentiments in the industry would push thediscounts higher.
7. We don’t expect any new model launch in FY20E and sees a new launch onlypost the implementation of BS6. This would create un-excitement amongbuyers and hence, prefers to further postponed its purchases. However, therefreshers are in the pipeline.
Hence, due to a combination of macro-economic factors, we believe FY20 isgoing to be a very difficult year to predict, on account of the introduction of newregulations, emission changes, an uncertain year due to an election, poorconsumer sentiments, unpredictability of monsoons, etc. Hence, we expectQ1FY20 to remain subdued quarter; for the rest of the year, on a lower base &led by pre-buying before the implementation of BS6, the volume growth could beabout 7% YoY in FY20E for Maruti.
Maruti Suzuki vs SENSEX
* Read last page for disclaimer & rating rationale
Market Data
Industry Automobile
Sensex 38,731
Nifty 11,642
Bloomberg Code MSIL:IN
Eq. Cap. (INR Crores) 151
Face Value (INR) 5
52-w H/L 9,923/6,324
Market Cap (INR Crores) 2,08,524
Valuation Data FY19 FY20E FY21E
OPM 12.8% 13.5% 14.0%
NPM 8.7% 9.4% 9.7%
P/E (x) 27.8 23.4 20.2
EV/EBITDA (x) 18.5 15.6 13.2
Shareholding Pattern (%)
Mar-18 Dec-18 Mar-19
Promoters 56.2% 56.2% 56.2%
FII 25.2% 22.7% 22.3%
DII 11.5% 13.4% 13.4%
Retail 7.1% 7.7% 8.1%
Total 100.0% 100.0% 100.0%
(INR Crores) FY17 FY18 FY19 FY20E FY21E
Revenue 68,035 79,763 86,020 95,093 1,06,747
Growth (%) 18.2% 17.2% 7.8% 10.5% 12.3%
EBITDA 10,145 11,863 10,999 12,860 14,986
Growth (%) 16.5% 16.9% -7.3% 16.9% 16.5%
EBITDA Margin (%) 14.9% 14.9% 12.8% 13.5% 14.0%
PAT 7,350 7,722 7,500 8,897 10,320
Growth (%) 37.0% 5.1% -2.9% 18.6% 16.0%
EPS (INR) 243 256 248 295 342
P/E (x) 20.1 30.7 27.8 23.4 20.2
EV/EBITDA (x) 14.4 19.9 18.5 15.6 13.2
Source: Company, NSPL Research
Institutional Research
*
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com
0
100
200
300
400
500
600
700
800
10-2
010
05-2
011
12-2
011
07-2
012
02-2
013
09-2
013
04-2
014
11-2
014
06-2
015
01-2
016
08-2
016
03-2
017
10-2
017
05-2
018
12-2
018
SENSEX Maruti
Leader in short term pain
Maruti Suzuki | Q4FY19 - Result Update | Page 2
Signals Tough Road Ahead..!• FY19 was a challenging year for Maruti as well as for the automobile industry. The industry in FY19 has seen a lowest growth in
the last five years. The weak demand, which started in Q2FY19 has continued to impact the industry in Q4 as well. Maruti hastaken efforts to revive the demand, but failed to lift the volumes much higher. The management has lower down its volumegrowth guidance in the range of 4-8% for FY20E and we believe it would still continue to grow ahead of the industry growth.
• The exports volume growth continues to remain subdued on account of the challenges faced like currency devaluation andexport restriction in some countries. The export volume de-grew by 13.7% YoY to ~1.09L units in FY19, we expect the situationto remain little grim on the exports in FY20E as well, hence, volume growth is expected to decline by 4.1% YoY to 1.04L units inthe next financial year. The management has plans to tap the African market, but, still needs to work on the roadmap.
Margins Bottomed!• The margins fell sharply on a YoY basis (picked up QoQ) led by higher fixed costs, adverse movement of FX and operating
deleverage. However, we believe, the margins would gradually come back to normal 1) once we see a pickup in the volumes. 2)the commodity prices are softening. 3) forex movement has stabilized. 4) stringent cost rationalization efforts. 5) target ofimport reduction on procurements. 6) efforts to improve the productivity in the plants. 7) looking at every element of the costvery closely. 8) All this would aid in further improving the margins in the coming years and despite tough market conditions, theon going efforts would support in improving the overall performance.
• Changes in the Royalty terms to further aid margins. The royalty was ~5% for the quarter and we believe directionally it shouldcome down in the coming years, this is on account of the revised agreement with Suzuki that will move from Yen based toRupee based formula for all the new models starting from Ignis. We expect that by FY22, all the models will move to a newformula. Maruti to get dual advantage as a) the FX fluctuation will go away and b) If certain models attains certain level oftargets, then royalty will reduce further. At present, 40% of the models moved to a new formula.
Maruti to Grow Higher than IndustryOn competition, which was present earlier and will continue to remain in the future as well. The Maruti has been successful inbeating the industry growth since the past six years as its market share improved from 37% to 51.2% in FY19. We expect, movingforward as well the company is in a better position to surpass the industry growth. This is possible as the company has 16 models +variants and is a market leader in all the segments. Secondly, it is well prepared for the upcoming BS6, has been rolling out modelsone year ahead of the deadline and much ahead of the competition. Maruti has been the preferred choice for majority of thebuyers as over the years it has developed a trust and loyalty among the consumers. This along with unmatched distributionnetwork.
Multiple Headwinds Impacted FY19• Maruti started FY19 with a bang, reported high growth in the 1st quarter, but since then all the consecutive quarters have
reported a flattish kind of a growth. The FY19 was a very difficult year for the company as on one side, it was hit by poor volumesales and on the other side by a sharp increase in the commodity prices and forex rates.
• On the financial performance - FY19, was a tough one for Maruti as the company got impacted due to an industry wideslowdown in the volumes as the cost of ownership increased sharply and operating deleverage. Secondly, the commodity pricesreversed the trend and went up in FY19. It also incurred higher D&A on account of commissioning of new Suzuki plant inGujarat.
• Recommend dividend of Rs. 80 per share, which were similar to the last year. This decision was intentionally taken as the profitswere lower YoY in FY19.
On BS6, which is around the corner can affect the demand further due to expectation of sharp increase in the prices. Maruti has 16models and needs to convert all of them to BS6 and hence they decided to rollout BS6 models in a phased manner. Themanagement already started rolling out BS6 models with Alto and Baleno few days back. The management believes that there arecustomers who prefers to have more environment friendly models.
ValuationsWe believe all the uncertainties for the next few months are already priced in and trust that the moat of Maruti remains intact w.r.t.low cost manufacturer, an unmatched distribution reach & over the years has created a loyalty among the consumers. The companyhas been gaining market share from the last few years as they keep innovating & introducing newer products/refreshers which keptthe consumers excited. We have arrived the fair value of Maruti Suzuki at Rs. 7,217 per share, valued it by averaging P/E &EV/EBITDA valuation methodology. The company has been trading at a forward P/E multiple of close to 23.2x in the past few yearsand 12.4x on EV/EBITDA. We have assigned similar earning multiples to its FY21E EPS & EBITDA to arrive at a fair value andrecommending buying on dips. We have drilled down our estimates post change in the guidance by the management.
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com
Maruti Suzuki | Q4FY19 - Result Update | Page 3
Q4FY19 Result Analysis
On the LCVs, Maruti in a very short span of time has grown the market share. The expectation is to continue to take the growthhigher by expanding the networks. Post BS6, Maruti would discontinue the diesel models of LCVs and will only offer Petrol/CNGvariants of it as the management feels its more economical for the users.
Maruti plans to phase out diesel engines in FY21E and its under discussion. The management believes that conversion of dieselengines from BS4 to BS6 would lead to a sharp increase in the costs & prices of the vehicles and can impact the demand heavily.Hence, the push is to move the buyers’ more towards Petrol/CNG vehicles. Maruti’s diesel car sales were 23% of the total for thequarter, which remains lower than the industry.
Other Key Highlights1. The EV program continues and will launch an electric vehicle next year.2. The tax rate was much lower on a YoY basis on account of a one-time reversal of tax provision from earlier years. This was
related to a tax benefit on R&D expenditure.3. The other income sharply increased on account of higher fair value gains.4. Average discounts for the quarter was Rs. 15,125 per vehicle.5. The royalty rate for the year was ~5%.6. The export revenue for the quarter was Rs. 1,474 crores, while for the year it was Rs. 5,335 crores.7. The company incurred capex of Rs. 4,500 crores in FY19 and expects similar amount in FY20E. This will be spent on new
models, R&D, capacity enhancement, land purchase, to grow the network, annual maintenance capex, etc.8. The wage revision happened in FY19 and will have it after three years in FY22E.9. The channel inventory in the system is 25-28 days.10. Maruti has inaugurated 2nd plant in Gujarat in the month of January and hence the fixed costs as well as D&A is higher.
However, we expect it to come down over the next 6-12 months once the volume ramps up.
(INR Crores) Q4FY19 Q4FY18 YoY (%) Q3FY19 QoQ (%) FY19 FY18 YoY (%)
Volumes (Nos) 4,58,479 4,61,773 -0.7% 4,28,643 7.0% 18,62,449 17,79,574 4.7%
Realization (Rs) 4,68,056 4,58,355 2.1% 4,58,850 2.0% 4,61,867 4,48,212 3.0%
Net sales 21,459 21,166 1.4% 19,668 9.1% 86,020 79,763 7.8%
COGS 15,424 14,949 3.2% 14,044 9.8% 60,254 54,975 9.6%
Employee Expenses 817 828 -1.4% 881 -7.3% 3,255 2,834 14.9%
Other Expenses 2,956 2,946 0.3% 2,812 5.1% 11,512 9,892 16.4%
EBITDA 2,263 3,015 -24.9% 1,931 17.2% 10,999 12,062 -8.8%
D&A 810 703 15.3% 768 5.5% 3,019 2,758 9.5%
Other income 868 595 45.8% 917 -5.4% 2,561 2,046 25.2%
EBIT 2,321 2,908 -20.2% 2,081 11.5% 10,541 11,349 -7.1%
Interest Expense 9 273 -96.8% 21 -57.3% 76 346 -78.1%
PBT 2,312 2,634 -12.2% 2,060 12.2% 10,466 11,003 -4.9%
Tax 517 752 -31.3% 571 -9.5% 2,965 3,282 -9.6%
PAT 1,796 1,882 -4.6% 1,489 20.6% 7,501 7,722 -2.9%
EPS in INR 59 62 -4.6% 49 20.6% 248 256 -2.9%
Margin Analysis Q4FY19 Q4FY18 YoY (%) Q3FY19 QoQ (%) FY19 FY18 YoY (%)
Material Expenses % Net Sales 71.9% 70.6% 1.2% 71.4% 0.5% 70.0% 68.9% 1.1%
Gross Margin 28.1% 29.4% -1.2% 28.6% -0.5% 30.0% 31.1% -1.1%
Employee Expenses % Net Sales 3.8% 3.9% -0.1% 4.5% -0.7% 3.8% 3.6% 0.2%
Other Expenses % Net Sales 13.8% 13.9% -0.1% 14.3% -0.5% 13.4% 12.4% 1.0%
EBITDA Margin (%) 10.5% 14.2% -3.7% 9.8% 0.7% 12.8% 15.1% -2.3%
Tax Rate (%) 22.3% 28.6% -6.2% 27.7% -5.4% 28.3% 29.8% -1.5%
PAT Margin (%) 8.4% 8.9% -0.5% 7.6% 0.8% 8.7% 9.7% -1.0%
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com
Source: Company, NSPL Research
46.
2%
48.
1%
47.
5%
47.
6%
50.
5%
50.
4%
50.
1%
49.
1%
52.
5%
51.
7%
50.
7%
49.
9%
47.
4%
50.
0%
51.
2%
16.2
%
16.7
%
14.
4%
17.2
%
14.3
%
18.
9%
15.3
%
18.0
%
15.4
%
15.
9%
14.0
%
17.6
%
16.1
%
16.6
%
15.7
%
40.7
%
41.
6%
40.3
%
41.9
%
43.3
%
45.1
%
43.
2%
43.5
%
46.6
%
45.5
%
44.5
%
44.
6%
41.1
%
43.8
%
45.3
%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
1Q
FY1
7
2Q
FY1
7
3Q
FY1
7
4Q
FY1
7
1Q
FY1
8
2Q
FY1
8
3Q
FY1
8
4Q
FY1
8
1Q
FY1
9
2Q
FY1
9
3Q
FY1
9
4Q
FY1
9
FY1
7
FY1
8
FY1
9
Maruti's Rising Market Share (%)
Domestic Exports Total
Maruti Suzuki | Q4FY19 - Result Update | Page 4
Demand Environment• Given the on ground uncertainty, the management has drilled down its volume growth guidance in the range of 4-8% in FY20E.
This is in spite of expectation of pre-buying ahead of the implementation of BS6 from FY21E. We expect the company wouldachieve 7% YoY growth in FY20E as Maruti has 16 models and is a leader in all the segments, the company has been growinghigher then industry with an improving market share every year. We expect this trend to continue in the coming years as well.
• Additionally, we expect spurt in the volumes post the general elections (as per historical trend). The early roll out of BS6 modelsshows the leaders capability to stay ahead of the competition. The company over the years has developed trust & loyalty amongthe customers and is a preferred choice for buyers. The company has been pioneer in cracking a deal with Toyota for EVtechnologies and has already been working on sourcing as part of it. All these initiatives would keep Maruti well ahead of thecompetition in the coming years.
Export MarketsThe export markets are also facing challenges as the macro-economic situation doesn’t look stable. Few of the market has imposedrestriction on its imports and currencies sharply devalued for those countries. We feel, globally there are many headwinds on theexports as most of the markets are facing the economic slowdown and hence, we expect a decline in Maruti’s exports in FY20E aswell. The focus remains on the domestic market.
Realization to continue to improve gradually led by new models/refreshers and change in the product mix towards premium &compact SUV models. We have estimated moderate realization growth in FY20E led by higher sales from the premium launches,along with mandatory safety standards from next year and expect higher realization growth in FY21E led by the implementation ofBS6.
Volume Projections FY17 FY18 FY19 FY20E FY21E
Domestic Sales (in units)
Utility Vehicles 1,95,741 2,53,759 2,64,197 2,87,975 3,11,013
Vans 1,52,009 1,55,137 1,78,606 1,89,322 1,98,788
Passenger Cars 10,95,891 12,34,571 12,87,023 13,77,115 14,59,741
Goods Carriers 900 10,033 23,874 35,811 48,345
Total Domestic Volume Sales 14,44,541 16,53,500 17,53,700 18,90,223 20,17,888
YoY Growth (%) - 14.5% 6.1% 7.8% 6.8%
Export Sales (in units)
Utility Vehicles 11,423 5,463 5,724 5,982 6,400
Vans 1,868 1,480 1,664 1,780 1,923
Passenger Cars 1,08,742 1,16,960 99,110 94,155 97,921
Goods Carriers 1,968 2,171 2,251 2,330 2,516
Total Export Volume Sales 1,24,001 1,26,074 1,08,749 1,04,246 1,08,760
YoY Growth (%) - 1.7% -13.7% -4.1% 4.3%
Domestic + Exports (in units)
Utility Vehicles 2,07,164 2,59,222 2,69,921 2,93,956 3,17,413
Vans 1,53,877 1,56,617 1,80,270 1,91,103 2,00,711
Passenger Cars 12,04,633 13,51,531 13,86,133 14,71,269 15,57,662
Goods Carriers 2,868 12,204 26,125 38,141 50,861
Total Volume Sales 15,68,542 17,79,574 18,62,449 19,94,469 21,26,648
YoY Growth (%) - 13.5% 4.7% 7.1% 6.6%
Blended Realization (Rs.) 4,33,729 4,48,212 4,61,864 4,76,784 5,01,950
YoY Growth (%) - 3.3% 3.0% 3.2% 5.3%
Key Risks:1. Higher than expected increase in the commodity prices can impact its margins2. Continued weakness in the domestic passenger vehicle industry3. Rising competition4. Sharp weakness in the export markets led by a correction in the oil and commodity prices, etc.
Source: Company, NSPL Research
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com
Maruti Suzuki | Q4FY19 - Result Update | Page 5
Source: Company, NSPL Research
Story in Charts
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com
4,44
,609
4,42
,337
4,47
,285
4,58
,364
4,57
,907
4,62
,685
4,58
,850
4,68
,056
3.6% 3.6%
2.6%
3.6%
3.0%
4.6%
2.6%
2.1%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
4,25,000
4,30,000
4,35,000
4,40,000
4,45,000
4,50,000
4,55,000
4,60,000
4,65,000
4,70,000
1Q
FY1
8
2Q
FY1
8
3Q
FY1
8
4Q
FY1
8
1Q
FY1
9
2Q
FY1
9
3Q
FY1
9
4Q
FY1
9
Healthy & Consistent Growth in Realization
Realization (Rs) YoY Realization Growth (%)
17,5
43
21,7
68
19,2
83
21,1
66
22,4
59
22,4
33
19,6
68
21,4
59
17.4
%
21.
8%
14.2
%
15.
5%
28.0
%
3.1
%
2.0
%
1.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0
5,000
10,000
15,000
20,000
25,000
1Q
FY1
8
2Q
FY1
8
3Q
FY1
8
4Q
FY1
8
1Q
FY1
9
2Q
FY1
9
3Q
FY1
9
4Q
FY1
9
Revenue Growth Performance
Net Revenues YoY Growth (%)
2,1
58
2,9
81
2,4
17
2,5
35
2,2
88
3,6
78
3,0
02
2,9
83
3,3
51
3,4
31
1,93
1 2,2
6314.4
%
16.7
%
14.3
%
13.8
%
13.0
%
16.
9%
15.6
%
14.1
% 14.9
%
15.3
%
9.8
% 10.5
%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
18.0%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1Q
FY1
7
2Q
FY1
7
3Q
FY1
7
4Q
FY1
7
1Q
FY1
8
2Q
FY1
8
3Q
FY1
8
4Q
FY1
8
1Q
FY1
9
2Q
FY1
9
3Q
FY1
9
4Q
FY1
9
Margins in Good Shape Despite of Turbulent Times
EBITDA EBITDA Margin (%)
0.0 0.0 0.0 0.0 0.1 0.1 0.3 1.2 1.7 1.9 2.2 3.9 3.9 4.0 4.2
53.4 52.8 52.7 52.1 52.2 51.9 52.155.5 56.6 56.4 56.8
59.7 59.0 58.1 58.1
13.8 15.3 16.1
23.6 24.6 25.8 25.730.1 28.2 28.6 27.5 28.0 28.0 28.5 28.1
80.9 81.9 80.8 82.0 82.7 83.9 83.6 82.6 82.1 81.8 80.7 81.3 80.5 82.2 82.2
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Sep
-15
No
v-1
5
Jan
-16
Mar
-16
May
-16
Jul-
16
Sep
-16
No
v-1
6
Jan
-17
Mar
-17
May
-17
Jul-
17
Sep
-17
No
v-1
7
Jan
-18
Mar
-18
May
-18
Jul-
18
Sep
-18
No
v-1
8
Jan
-19
Mar
-19
Segmentwise - Improving Market Share (%)
Goods Carriers Passenger Cars Utility Vehicles Vans
13.3
%
17.6
%
11.3
%
11.4
%
24.3
%
-1.5
%
-0.6
%
-0.7
%
6.1% 7.
9%
3.2%
6.7%
14.6
%
-2.9
%
-4.0
%
-3.9
%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1Q
FY1
8
2Q
FY1
8
3Q
FY1
8
4Q
FY1
8
1Q
FY1
9
2Q
FY1
9
3Q
FY1
9
4Q
FY1
9
Volume Growth Higher than Industry
Maruti's YoY Volume Growth (%) Industry's YoY Volume Growth (%)
Maruti Suzuki | Q4FY19 - Result Update | Page 6
Profit & Loss (INR Crores) FY17 FY18 FY19 FY20E FY21E
Net Revenues 68,035 79,763 86,020 95,093 1,06,747
COGS 46,732 54,975 60,254 66,610 74,723
Employee Expenses 2,331 2,834 3,255 3,588 3,956
Other Expenses 8,724 9,992 11,634 12,035 13,083
EBITDA 10,145 11,863 10,999 12,860 14,986
D&A 2,602 2,758 3,019 3,150 3,626
Other income 2,300 2,046 2,561 2,785 3,127
EBIT 7,542 9,105 7,980 9,711 11,360
Interest Expense 89 346 76 81 87
PBT 9,960 11,003 10,465 12,415 14,400
Tax 2,610 3,282 2,965 3,517 4,080
PAT 7,350 7,722 7,500 8,897 10,320
EPS in INR 243 256 248 295 342
Balance Sheet (INR Crores) FY17 FY18 FY19 FY20E FY21E
ASSETS
Non-Current Assets
Property, plant and equipment 12,920 13,047 14,957 16,405 17,393
Capital work-in-progress 1,252 2,126 1,600 1,600 1,696
Intangible assets 373 312 451 588 723
Financial assets
Investments 26,302 34,073 31,470 34,789 39,052
Loans 0 0 0 0 0
Other financial assets 24 32 34 38 42
Other non-current assets 1,603 1,858 2,059 2,276 2,555
Total Non-Current Assets 42,474 51,449 50,570 55,696 61,462
Current Assets
Inventories 3,262 3,161 3,326 3,676 4,124
Financial assets
Investments 2,179 1,217 5,046 5,578 6,261
Trade receivables 1,199 1,462 2,310 2,554 2,867
Cash and cash equivalents 13 70 179 1,621 3,496
Loans 3 3 16 16 16
Other financial assets 95 285 496 549 616
Current tax assets (Net) 485 411 427 507 588
Other current assets 1,539 1,312 561 621 697
Total Current Assets 8,775 7,920 12,362 15,121 18,665
Total Assets 51,250 59,369 62,932 70,817 80,127
EQUITY AND LIABILITIES
Equity
Equity Share capital 151 151 151 151 151
Other equity 36,280 41,606 45,991 52,005 58,981
Total Equity 36,431 41,757 46,142 52,156 59,132
LIABILITIES
Non-current liabilities
Provisions 22 27 40 44 49
Deferred tax liabilities (net) 466 559 564 669 776
Other non-current liabilities 1,105 1,585 2,037 2,251 2,527
Total Non - Current Liabilities 1,593 2,171 2,640 2,964 3,352
Current liabilities
Financial liabilities
Borrowings 483 110 150 165 186
Trade Payables 8,367 10,497 9,633 10,649 11,946
Other financial liabilities 1,303 1,334 1,440 1,592 1,787
Provisions 449 560 624 690 775
Current tax liabilities (Net) 799 854 673 798 926
Other current liabilities 1,825 2,086 1,630 1,802 2,023
Total Current Liabilities 13,226 15,441 14,150 15,697 17,643
Total Liabilities 14,819 17,612 16,790 18,661 20,995
Total Equity and Liabilities 51,250 59,369 62,932 70,817 80,127
Source: Company, NSPL Research
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com
Maruti Suzuki | Q4FY19 - Result Update | Page 7
Cash Flow (INR Crores) FY17 FY18 FY19 FY20E FY21E
Profit Before Tax 9,960 11,003 10,465 12,415 14,400
Operating Profit before Working Capital Changes 10,407 12,034 10,313 12,860 14,986
Cash Generated from Operations 12,601 14,840 8,745 13,709 16,030
Less: income tax paid -2,321 -3,055 -2,965 -3,517 -4,080
Cash Flow from Operating 10,279 11,785 5,780 10,192 11,951
(Incr)/ Decr in Gross PP&E -3,250 -3,892 -4,403 -4,599 -4,710
Cash Flow from Investing -9,178 -8,282 -3,206 -5,802 -6,665
Dividends Paid (including tax on dividend) -1,057 -2,266 -2,019 -2,395 -2,778
Finance costs -110 -346 -76 -81 -87
Cash Flow from Financing -1,129 -3,446 -2,466 -2,948 -3,410
Incr/(Decr) in Balance Sheet Cash -28 57 109 1,442 1,875
Cash at the Start of the Year 41 13 70 179 1,621
Cash at the End of the Year 13 70 179 1,621 3,496
RATIOS FY17 FY18 FY19 FY20E FY21E
Growth (%)
Net Revenues 18.2% 17.2% 7.8% 10.5% 12.3%
EBITDA 16.5% 16.9% -7.3% 16.9% 16.5%
PAT 37.0% 5.1% -2.9% 18.6% 16.0%
Profitability
Return on Capital (%) 20.7% 21.8% 17.3% 18.6% 19.2%
Return on Equity (%) 20.2% 18.5% 16.3% 17.1% 17.5%
Margin Trend
EBITDA Margin (%) 14.9% 14.9% 12.8% 13.5% 14.0%
Net profit Margin (%) 10.8% 9.7% 8.7% 9.4% 9.7%
Solvency
Total Debt / Equity 0.0 0.0 0.0 0.0 0.0
Net Debt / Equity 0.0 0.0 -0.1 -0.1 -0.2
Valuation Ratios
P/E 20.1 30.7 27.8 23.4 20.2
EV/EBITDA 14.4 19.9 18.5 15.6 13.2
P/B 4.0 5.7 4.5 4.0 3.5
Source: Company, NSPL Research
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com
OUR RECENT REPORTS
Dalmia Bharat Coromandel International Meghmani Organics IndoStar Capital
Minda Industries Sharda Cropchem Heidelberg Cements Manappuram Finance
Cummins India Ltd.
For more research reports, please visit www.nalandasecurities.com
Suprajit Engineering Ltd.JK Cement Ltd.NOCIL Ltd.
Disclaimer:This report has been prepared by Nalanda Securities Pvt. Ltd(“NSPL”) and published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India(Research Analysts) Regulations, 2014, for use by the recipient as information only and is not for circulation or public distribution. NSPL includes subsidiaries, group and associatecompanies, promoters, directors, employees and affiliates. This report is not to be altered, transmitted, reproduced, copied, redistributed, uploaded, published or made available toothers, in any form, in whole or in part, for any purpose without prior written permission from NSPL. The projections and the forecasts described in this report are based upon anumber of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and itcan be expected that one or more of the estimates on which the projections are forecasts were based will not materialize or will vary significantly from actual results and suchvariations will likely increase over the period of time. All the projections and forecasts described in this report have been prepared solely by authors of this report independently.None of the forecasts were prepared with a view towards compliance with published guidelines or generally accepted accounting principles.This report should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this report nor anything containedtherein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. It does not constitute a personal recommendation or take into accountthe particular investment objective, financial situation or needs of individual clients. The research analysts of NSPL have adhered to the code of conduct under Regulation 24 (2) ofthe Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The recipients of this report must make their own investment decisions, based on their owninvestment objectives, financial situation or needs and other factors. The recipients should consider and independently evaluate whether it is suitable for its/ his/ her/their particularcircumstances and if necessary, seek professional / financial advice as there is substantial risk of loss. NSPL does not take any responsibility thereof. Any such recipient shall beresponsible for conducting his/her/its/their own investigation and analysis of the information contained or referred to in this report and of evaluating the merits and risks involved insecurities forming the subject matter of this report. The price and value of the investment referred to in this report and income from them may go up as well as down, and investorsmay realize profit/loss on their investments. Past performance is not a guide for future performance. Actual results may differ materially from those set forth in the projection.Except for the historical information contained herein, statements in this report, which contain words such as ‘will’, ‘would’, etc., and similar expressions or variations of such wordsmay constitute ‘forward‐looking statements’. These forward‐looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differmaterially from those suggested by the forward‐looking statements. Forward‐looking statements are not predictions and may be subject to change without notice. NSPL undertakesno obligation to update forward‐looking statements to reflect events or circumstances after the date thereof. NSPL accepts no liabilities for any loss or damage of any kind arising outof use of this report.This report has been prepared by NSPL based upon the information available in the public domain and other public sources believed to be reliable. Though utmost care has beentaken to ensure its accuracy and completeness, no representation or warranty, express or implied is made by NSPL that such information is accurate or complete and/or isindependently verified. The contents of this report represent the assumptions and projections of NSPL and NSPL does not guarantee the accuracy or reliability of any projection,assurances or advice made herein. Nothing in this report constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable orappropriate to recipients’ specific circumstances. This report is based / focused on fundamentals of the Company and forward‐looking statements as such, may not match with areport on a company’s technical analysis report. This report may not be followed by any specific event update/ follow‐up.
Following table contains the disclosure of interest in order to adhere to utmost transparency in the matter;
Disclosure of Interest Statement
Details of Nalanda Securities Pvt. Limited (NSPL)
• NSPL is a Stock Broker registered with BSE, NSE and MCX ‐ SX in all the major
segments viz. Cash, F & O and CDS segments. Further, NSPL is a Registered
Portfolio Manager and is registered with SEBI
• SEBI Registration Number: INH000004617
Details of Disciplinary History of NSPL No disciplinary action is / was running / initiated against NSPL
Research analyst or NSPL or its relatives'/associates' financial interest in
the subject company and nature of such financial interest
No (except to the extent of shares held by Research analyst or NSPL or its
relatives'/associates')
Whether Research analyst or NSPL or its relatives'/associates' is holding
the securities of the subject companyNO
Research analyst or NSPL or its relatives'/associates' actual/beneficial
ownership of 1% or more in securities of the subject company, at the
end of the month immediately preceding the date of publication of the
document
NO
Research analyst or NSPL or its relatives'/associates' any other material
conflict of interest at the time of publication of the documentNO
Has research analyst or NSPL or its associates received any compensation
from the subject company in the past 12 monthsNO
Has research analyst or NSPL or its associates managed or co‐managed
public offering of securities for the subject company in the past 12 monthNO
Has research analyst or NSPL or its associates received any compensation
for investment banking or merchant banking or brokerage services from
the subject company in the past 12 months
NO
Has research analyst or NSPL or its associates received any compensation
for products or services other than investment banking or merchant
banking or brokerage services from the subject company in the past 12
months
NO
Has research analyst or NSPL or its associates received any compensation
or other benefits from the subject company or third party in connection
with the document.
NO
Has research analyst served as an officer, director or employee of the
subject companyNO
Has research analyst or NSPL engaged in market making activity for the
subject companyNO
Other disclosures NO
Rating Legend
Strong Buy More than 15%
Buy 5% - 15%
Hold 0 – 5%
Reduce -5% - 0
Sell Less than -5%
Maruti Suzuki
Date CMP (INR) Target Price (INR) Recommendation
April 26, 2019 6,903 7,217 Hold
January 26, 2019 6,516 7,610 Strong Buy
October 26, 2018 6,725 8,417 Strong Buy
Maruti Suzuki | Q4FY19 - Result Update | Page 9
Head of ResearchVaibhav Chowdhry vaibhav.chowdhry@ nalandasecurities.com
NALANDA SECURITIES PRIVATE LIMITED310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
AnalystAmit Hiranandani amit.hiranandani@ nalandasecurities.com