Technology

For 4QFY2019, Maruti Suzuki India (MSIL) posted below expectation results both
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
operating margins contracted by 370bps yoy. On the bottom-line front, MSIL
reported de-growth of ~5% yoy to `1,796cr on the back of lower sales and poor
operating performance.

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.

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