Dear All,
Forwarding you the Result Flash on Maruti Suzuki for 4QFY2011 with a Buy recommendation and a Target Price of Rs1522 (12 months).
| Y/E March (Rs cr) | 4QFY11 | 4QFY10 | % chg (yoy) | Angel est. | % diff |
| Net Sales (Incl other opr. inc.) | 10,092 | 8,425 | 19.8 | 9,865 | 2.3 |
| EBITDA | 1,010 | 1,111 | (9.1) | 886 | 13.9 |
| EBITDA Margin (%) | 10.0 | 13.2 | (318)bps | 9.0 | 102bps |
| Reported PAT | 660 | 657 | 0.5 | 530 | 24.5 |
Source: Company, Angel Research
Review
v Better than expected top-line performance – Maruti Suzuki (Maruti) reported a better than expected 19.8% yoy (6.3% qoq) growth in top-line at Rs10,092cr largely aided by 19.5% yoy (3.8% qoq) jump in volumes and a marginal improvement in average net realisation. The top-line performance was also aided by a 29.6% increase in other operating income at Rs186cr. On a sequential basis, average net realisation increased by 2.4% at Rs287,288 owing to the better product mix and price increases carried out during the quarter.
v Operating marign at 10% as against our expectation of 9% – Maruti’s EBITDA margins for 4QFY2011 came in 102bp above our estimate at 10%, decline of 318bp yoy in EBITDA margin, largely due to 129bp yoy increase in raw material cost. On a sequential basis, raw-material cost declined due to the change in the accounting policy which helped the company in mitigating the rising raw-material cost pressures. However, higher other expenses due to increased R&D spends and repairs and maintenance impacted yoy EBITDA performance. As a result, Maruti recorded 9.1% yoy (up 12% qoq) decline in EBITDA, beating our estimate by 13.9% for the quarter.
v Net Profit beats estimates due to higher other income and lower tax rate – Maruti’s net profit came in flat on a yoy basis at Rs660cr, above our estimate of Rs530cr, largely due to higher than expected other income (Rs120cr against expectation of Rs110cr) and lower than expected tax outgo (20.2% of PBT v/s 31.2% in 4QFY2010). Moreover, the company also benefitted from better than expected performance on the operating front.
Outlook and Valuation
At Rs1,327, the stock is trading at 14.7x and 13.1x FY2012E and FY2013E earnings of Rs90.5 and Rs101.4 respectively. We maintain our Buy rating on Maruti with a Target Price of Rs1,522. We may revise our estimates and release a detailed result note soon.
4QFY2011- Volume Performance
| Y/E March (Rs cr) | 4QFY11 | 4QFY10 | % chg | FY2011 | FY2010 | % chg |
| Total Volume (units) | 343,350 | 287,422 | 19.5 | 1,271,015 | 1,018,365 | 24.8 |
| A1 M800 | 7,503 | 8,434 | (11.0) | 26,485 | 33,028 | (19.8) |
| C Omni, Versa , Eeco | 41,897 | 32,466 | 29.0 | 160,626 | 101,325 | 58.5 |
| A2 Alto, Wagon R, Zen,Swift, | 223,029 | 173,683 | 28.4 | 808,552 | 633,190 | 27.7 |
| A3 SX4, Dezire | 38,864 | 29,702 | 30.8 | 131,282 | 99,315 | 32.2 |
| A4 Kizashi | 138 | - | - | 138 | - | - |
| Total Passenger Cars | 311,431 | 244,285 | 27.5 | 1,127,083 | 866,858 | 30.0 |
| MUV: Gypsy, Vitara | 968 | 1,097 | (11.8) | 5,666 | 3,932 | 44.1 |
| Domestic | 312,399 | 245,382 | 27.3 | 1,132,749 | 870,790 | 30.1 |
| Exports | 30,951 | 42,040 | (26.4) | 138,266 | 147,575 | (6.3) |
Source: Company, Angel Research
4QFY2011 Performance
| Y/E March (Rs cr) | 4QFY11 |
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