4QFY2019 Result Update | Automobile
April 26, 2019
Maruti Suzuki India
BUY
CMP
`6,832
Performance Update
Target Price
`8,552
Y/E March (` cr)
4QFY19 4QFY18
% yoy
3QFY19
% qoq
Investment Period
12 months
Net sales
21,459
21,166
1.4
19,668
9.1
EBITDA
2,263
3,015
(24.9)
1,931
17.2
Stock Info
EBITDA margin (%)
10.5
14.2
(370bp)
9.8
73bp
Sector
Automobile
Adjusted PAT
1,796
1,882
(4.6)
1,489
20.6
Market Cap (` cr)
2,04,443
Source: Company, Angel Research
Net Debt (` cr)
(37,534)
For 4QFY2019, Maruti Suzuki India (MSIL) posted below expectation results both
Beta
1.0
on top-line and bottom-line fronts. MSIL reported ~1% yoy top-line growth to
`21,459cr on the back of price hikes (up ~2% yoy). Moreover, the company’s
52 Week High / Low
9923/6324
operating margins contracted by 370bps yoy. On the bottom-line front, MSIL
Avg. Daily Volume
61,575
reported de-growth of ~5% yoy to `1,796cr on the back of lower sales and poor
Face Value (`)
5
operating performance.
BSE Sensex
38,928
Top-line flat: MSIL’s top-line grew by ~1% yoy to `21,459cr on the back of price
Nifty
11,691
hikes (up ~2% yoy). Overall volume growth declined by ~0.7% yoy, mainly due to
Reuters Code
MRTI.BO
weak domestic market conditions and sluggish export markets during the quarter.
Going forward, management expects to outpace industry growth despite increase
Bloomberg Code
MSIL.IN
in the competition intensity.
Subdued volume and poor operating performance impacted profitability: On the
Shareholding Pattern (%)
operating front, the company reported contraction in margins, down 370bps yoy
at 10.5%. Operating margin was impacted mainly due to higher discounts,
Promoters
56.2
unfavourable currency movement and commissioning of phase II of the Gujarat
MF / Banks / Indian Fls
13.4
plant at a time when volume growth remained flat yoy. On the bottom-line front,
FII / NRIs / OCBs
22.3
MSIL reported de-growth of ~5% yoy to `1,796cr.
Indian Public / Others
8.1
Outlook and Valuation: We expect MSIL to report net revenue CAGR of ~12% to
~`1,07,023cr over FY2019-21E mainly due to new launches and upcoming facelift
in various models. Further, on the bottom-line front, we expect CAGR of ~13% to
Abs. (%)
3m 1yr
3yr
`9,697cr over the same period on the back of healthy sales and improvement in
Sensex
7.5
12.3
50.8
operating margin (due to ramp-up of Gujarat plant over next 6-12 months, royalty
rate reduction on the back of volume growth and cost reduction efforts). Thus, we
MSIL
5.9
(22.8)
84.9
maintain our Buy recommendation on MSIL with Target Price of `8,552.
Key Financials
Price Chart
11000
Y/E March (` cr)
FY2018
FY2019
FY2020E
FY2021E
10000
Net sales
79,809
86,069
95,691
107,023
9000
% chg
17.2
7.8
11.2
11.8
8000
Adj. Net profit
7,881
7,651
8,518
9,697
7000
6000
% chg
4.9
(2.9)
11.3
13.8
5000
EBITDA margin (%)
15.1
12.8
13.8
14.3
4000
EPS (`)
261.0
253.3
282.1
321.1
3000
P/E (x)
25.9
26.7
24.0
21.1
P/BV (x)
4.8
4.3
3.9
3.6
RoE (%)
18.5
16.2
16.4
16.9
Source: Company, Angel Research
RoCE (%)
21.6
16.9
19.0
20.2
Research Analyst
EV/Sales (x)
2.1
1.9
1.7
1.4
EV/EBITDA (x)
14.0
15.0
12.1
10.0
Amarjeet S Maurya
Source: Company, Angel Research Note
022-40003600 Ext: 6831
Please refer to important disclosures at the end of this report
1
Maruti Suzuki India Ltd| 4QFY2019 Result Update
Exhibit 1: 4QFY2019 Performance
Y/E March (` cr)
4QFY19
4QFY18
% yoy
3QFY19
% qoq
FY2019
FY2018
% chg
Net Sales
21,459
21,166
1.4
19,668
9.1
86,020
81,994
4.9
Consumption of RM
15424
14,376
7.3
14044
9.8
60,254
57,207
5.3
(% of Sales)
71.9
67.9
71.4
70.0
69.8
Staff Costs
817
828
(1.4)
881
(7.3)
3,255
2,834
14.9
(% of Sales)
3.8
3.9
4.5
3.8
3.5
Other Expenses
2,956
2,946
0.3
2,812
5.1
11,512
9,892
16.4
(% of Sales)
13.8
13.9
14.3
13.4
12.1
Total Expenditure
19,196
18,151
5.8
17,737
8.2
75,021
69,933
7.3
Operating Profit
2,263
3,015
(24.9)
1,931
17.2
10,999
12,062
(8.8)
OPM
10.5
14.2
9.8
12.8
14.7
Interest
9
273
(96.8)
21
(57.3)
76
346
(78.1)
Depreciation
810
703
15.3
768
5.5
3019
2758
9.5
Other Income
868
595
45.8
917
(5.4)
2561
2046
25.2
PBT (excl. Ext Items)
2,312
2,634
(12.2)
2,060
12.2
10,466
11,003
(4.9)
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
2,312
2,634
(12.2)
2,060
12.2
10,466
11,003
(4.9)
(% of Sales)
10.8
12.4
10.5
12.2
13.4
Provision for Taxation
517
752
(31.3)
571
(9.5)
2,965
3,282
(9.6)
(% of PBT)
22.3
28.6
27.7
28.3
29.8
Reported PAT
1,796
1,882
(4.6)
1,489
20.6
7,501
7,722
(2.9)
PATM
8.4
8.9
7.6
8.7
9.4
Minority Interest After NP
Reported PAT
1,796
1,882
(4.6)
1,489
20.6
7,501
7,722
(2.9)
Source: Company, Angel Research
April 26, 2019
2
Maruti Suzuki India Ltd| 4QFY2019 Result Update
Outlook and Valuation
We expect MSIL to report net revenue CAGR of ~12% to ~`1,07,023cr over
FY2019-21E mainly due to new launches and upcoming facelift in various models.
Further, on the bottom-line front, we expect CAGR of ~13% to `9,697cr over the
same period on the back of healthy sales and improvement in operating margin
(due to ramp-up of Gujarat plant over next 6-12 months, royalty rate reduction on
the back of volume growth and cost reduction efforts). 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.
April 26, 2019
3
Maruti Suzuki India Ltd| 4QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2017
FY2018
FY2019
FY2020E
FY2021E
Net Sales
68,085
79,809
86,069
95,691
107,023
% chg
18.2
17.2
7.8
11.2
11.8
Total Expenditure
57,727
67,746
75,065
82,486
91,719
Raw Material
46,742
54,986
60,264
66,984
74,916
Personnel
2,360
2,863
3,285
3,445
4,067
Others Expenses
8,624
9,897
11,516
12,057
12,736
EBITDA
10,358
12,063
11,003
13,205
15,304
% chg
16.5
16.5
(8.8)
20.0
15.9
(% of Net Sales)
15.2
15.1
12.8
13.8
14.3
Depreciation& Amortisation
2,604
2,760
3,021
3,265
3,655
EBIT
7,754
9,304
7,982
9,940
11,649
% chg
27.8
20.0
(14.2)
24.5
17.2
(% of Net Sales)
11.4
11.7
9.3
10.4
10.9
Interest & other Charges
89
346
76
95
95
Other Income
2,462
2,209
2,562
2,500
2,500
(% of PBT)
24.3
19.8
24.5
20.3
17.8
Recurring PBT
10,127
11,167
10,468
12,345
14,054
% chg
33.5
10.3
(6.3)
17.9
13.8
Tax
2,616
3,286
2,973
3,827
4,357
(% of PBT)
25.8
29.4
28.4
31.0
31.0
PAT (reported)
7,511
7,881
7,495
8,518
9,697
Extraordinary Items
-
-
-
-
-
ADJ. PAT
7,511
7,881
7,651
8,518
9,697
% chg
36.6
4.9
(2.9)
11.3
13.8
(% of Net Sales)
11.0
9.9
8.9
8.9
9.1
Basic EPS (`)
248.7
261.0
253.3
282.1
321.1
Fully Diluted EPS (`)
248.7
261.0
253.3
282.1
321.1
% chg
36.6
4.9
(2.9)
11.3
13.8
April 26, 2019
4
Maruti Suzuki India Ltd| 4QFY2019 Result Update
Balance Sheet
Y/E March (` cr)
FY2017
FY2018
FY2019
FY2020E FY2021E
SOURCES OF FUNDS
Equity Share Capital
151
151
151
151
151
Reserves& Surplus
36,924
42,389
47,019
51,914
57,383
Shareholders Funds
37,075
42,540
47,170
52,065
57,534
Total Loans
484
484
158
158
158
Deferred Tax Liability
1,110
1,110
1,110
1,110
1,110
Total Liabilities
38,684
44,148
48,453
53,347
58,816
APPLICATION OF FUNDS
Gross Block
18,680
22,086
25,660
28,760
32,160
Less: Acc. Depreciation
5,370
8,129
11,150
14,415
18,071
Net Block
13,311
13,957
14,510
14,345
14,090
Capital Work-in-Progress
1,252
1,252
1,252
1,252
1,253
Investments
29,151
36,123
39,823
44,623
49,623
Current Assets
8,247
7,148
8,257
10,340
13,163
Inventories
3,264
3,160
3,301
3,670
4,105
Sundry Debtors
1,203
1,465
2,358
2,622
3,519
Cash
24
74
188
412
1,258
Loans & Advances
2,129
439
430
1,435
1,605
Other Assets
1,628
2,010
1,980
2,201
2,676
Current liabilities
13,881
14,936
16,149
17,973
20,071
Net Current Assets
(5,634)
(7,788)
(7,892)
(7,633)
(6,908)
Deferred Tax Asset
604
604
604
604
605
Mis. Exp. not written off
-
-
-
-
-
Total Assets
38,684
44,148
48,453
53,347
58,816
April 26, 2019
5
Maruti Suzuki India Ltd| 4QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2017
FY2018
FY2019
FY2020E FY2021E
Profit before tax
10127
11167
10468
12345
14054
Depreciation
2604
2760
3021
3265
3655
Change in Working Capital
2192
2204
218
(35)
121
Interest / Dividend (Net)
52
346
76
95
95
Direct taxes paid
(2323)
(3286)
(2973)
(3827)
(4357)
Others
(2370)
0
0
0
0
Cash Flow from Operations
10282
13191
10810
11843
13569
(Inc.)/ Dec. in Fixed Assets
(3236)
(3406)
(3574)
(3100)
(3400)
(Inc.)/ Dec. in Investments
(5937)
(6973)
(3700)
(4800)
(5000)
Cash Flow from Investing
(9173)
(10379)
(7274)
(7900)
(8400)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
253
0
(326)
0
0
Dividend Paid (Incl. Tax)
(1057)
(2416)
(3020)
(3624)
(4228)
Interest / Dividend (Net)
(331)
(346)
(76)
(95)
(95)
Cash Flow from Financing
(1136)
(2762)
(3422)
(3719)
(4323)
Inc./(Dec.) in Cash
(27)
50
114
224
846
Opening Cash balances
51
24
74
188
412
Closing Cash balances
24
74
188
412
1258
April 26, 2019
6
Maruti Suzuki India Ltd| 4QFY2019 Result Update
Key Ratio
Y/E March
FY2017
FY2018
FY2019
FY2020E FY2021E
Valuation Ratio (x)
P/E (on FDEPS)
27.2
26.0
26.8
24.0
21.1
P/CEPS
20.2
19.2
19.5
17.4
15.3
P/BV
5.5
4.8
4.3
3.9
3.6
Dividend yield (%)
1.1
1.2
1.5
1.8
2.1
EV/Sales
2.6
2.1
1.9
1.7
1.4
EV/EBITDA
17.0
14.0
15.0
12.1
10.1
EV / Total Assets
4.5
3.8
3.4
3.0
2.6
Per Share Data (`)
EPS (Basic)
248.7
261.0
253.3
282.1
321.1
EPS (fully diluted)
248.7
261.0
253.3
282.1
321.1
Cash EPS
334.9
352.3
348.2
390.2
442.1
DPS
75.0
80.0
100.0
120.0
140.0
Book Value
1,227.7
1,408.6
1,561.9
1,724.0
1,905.1
Returns (%)
ROCE
20.6
21.6
16.9
19.0
20.2
Angel ROIC (Pre-tax)
92.5
136.3
109.1
138.3
171.0
ROE
20.3
18.5
16.2
16.4
16.9
Turnover ratios (x)
Asset Turnover (Gross Block)
3.6
3.6
3.4
3.3
3.3
Inventory / Sales (days)
17
14
14
14
14
Receivables (days)
6
7
10
10
12
Payables (days)
49
45
46
46
46
Working capital cycle (ex-cash) (days)
(25)
(24)
(22)
(22)
(20)
Source: Company, Angel Research
April 26, 2019
7
Maruti Suzuki India Ltd| 4QFY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and Portfolio
Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
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referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
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contrary view, if any
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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%)
April 26, 2019
8
