msil 4q fy 2013

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Please refer to important disclosures at the end of this report 1

Y/E March (` cr) 4QFY13* 4QFY12 % chg (yoy) 3QFY13 % chg (qoq)Net Sales 12,793 11,727 9.1 11,200 14.2EBITDA 1,328 859 54.7 891 49.0

EBITDA Margin (%) 10.4 7.3 306bp 8.0 243bp

Adj. PAT 1,148 640 79.3 501 128.9Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger

Impressive performance driven by better product-mix and Yen depreciation: For4QFY2013, Maruti Suzuki (MSIL) reported extremely strong results (pre SuzukiPowertrain India Ltd [SPIL] merger), beating our as well as consensus estimates bya significant margin. The top-line registered an in-line growth of 9.1% yoy (14.2%

qoq) to `12,793cr, driven by a strong net average realization growth of 14.7%yoy (flat qoq) owing to better product-mix, price hikes and lower levels ofdiscounts. The volumes however, registered a decline of 4.6% yoy led by weakdemand for entry segment cars (down 13.7% yoy) and slowdown in exports (down10.5% yoy). Nevertheless, the bottom-line at `1,148cr was substantially ahead ofour expectations driven by strong expansion in EBITDA margins (up 306bp yoyand 243bp qoq to 10.4%), higher other income (up 120% qoq) and lower taxrate (17.1% vs 25.8% in 3QFY2013). The EBITDA margin expansion was led by abetter product-mix, price hikes, lower average discounts (at `10,500/unit vs`12,100/unit in 3QFY2013) and favorable currency movement (+ve impact of~120bp qoq). During the quarter, MSIL merged its engine manufacturingsubsidiary SPIL with itself through a share swap ratio of 1:70 as announced earlier.

Outlook and valuation: Going ahead, we expect MSIL to register a healthyvolume growth of ~8% in FY2014 primarily due to the low base of 1HFY2013(on account of the strike at the Manesar plant). Additionally, expected easing ofinterest rates in CY2013 is likely to boost consumer sentiments which may lead todemand revival in the passenger car segment. Further, the ongoing weakness inYen (down ~10% yoy against INR in YTDCY2013), which partially benefitedEBITDA margins in 4QFY2013, is expected to enhance profitability in FY2014 asthe favorable currency impact on indirect exposure is expected to reflectcompletely in FY2014. We expect EBITDA margins to improve 150bp in FY2014,driven by favorable product-mix and currency movement, lower discounts,ongoing cost reduction initiatives and also on account of the SPIL merger. As aresult, we expect MSIL to register a strong earnings CAGR of ~25% overFY2013-15. At `1,673, MSIL is trading at 13.6x FY2015E earnings (including theimpact of SPIL merger). We recommend an Accumulate rating on the stock with atarget price of `1,847, valuing the stock at 15x FY2015 earnings.Key financials (post SPIL merger)Y/E March (` cr) FY2012 FY2013 FY2014E FY2015ENet Sales 35,587 43,588 48,455 55,723% chg (2.8) 22.5 11.2 15.0

Net Profit 1,635 2,392 3,258 3,720% chg (28.6) 46.3 36.2 14.2

EBITDA (%) 7.1 9.7 11.2 10.9

EPS (`) 54.1 79.2 107.8 123.1P/E (x) 30.9 21.1 15.5 13.6

P/BV (x) 3.3 2.7 2.3 2.0RoE (%) 11.3 14.2 16.2 16.0

RoCE (%) 8.7 12.6 15.3 15.4

EV/Sales (x) 1.1 1.0 0.9 0.7

EV/EBITDA (x) 15.0 10.4 7.8 6.7

Source: Company, Angel Research

ACCUMULATECMP `1,673

Target Price `1,847

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters

MF / Banks / Indian Fls

FII / NRIs / OCBsIndian Public / Others

Abs. (%) 3m 1yr 3yr

Sensex (4.1) 12.6 8.7

Maruti Suzuki 4.6 21.2 25.4

56.2

18.9

22.5

2.4

Face Value (`)

BSE Sensex

Nifty

Reuters Code

MSIL@IN

5

19,287

5,871

MRTI.BO

Automobile

Avg. Daily Volume

Market Cap (` cr)

Beta

52 Week High / Low

48,349

0.9

1,690/1,052

83,315

Net Debt (` cr) (5,744)

Yaresh Kothari022-3935 7800 Ext: 6844

[email protected]

Maruti SuzukiPerformance Highlights

4QFY2013 Result Update | Automobile

April 26, 2013

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Maruti Suzuki | 4QFY2013 Result Update

April 26, 2013 2

Exhibit 1:Quarterly financial performance (pre SPIL merger)Y/E March (` cr) 4QFY13* 4QFY12 % chg (yoy) 3QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)Net Sales 12,793 11,727 9.1 11,200 14.2 43,077 35,587 21.0Raw-material cost 9,789 9,333 4.9 8,784 11.4 33,575 28,066 19.6(% of Sales) 76.5 79.6 78.4 77.9 78.9

Staff cost 251 246 2.3 231 8.8 956 801 19.3

(% of Sales) 2.0 2.1 2.1 2.2 2.3

Other Expenses 1,424 1,290 10.4 1,294 10.0 5,032 4,207 19.6

(% of Sales) 11.1 11.0 11.6 11.7 11.8

Total Expenditure 11,465 10,869 5.5 10,309 11.2 39,562 33,074 19.6Operating Profit 1,328 858 54.7 891 49.0 3,514 2,513 39.9OPM (%) 10.4 7.3 8.0 8.2 7.1

Interest 19 21 (6.7) 46 (57.8) 136 55 147.2

Depreciation 339 331 2.6 358 (5.3) 1,385 1,138 21.6

Other Income 415 297 39.7 189 119.9 872 827 5.5

PBT (excl. Extr. Items) 1,384 804 72.2 676 104.9 2,865 2,146 33.5Extr. Income/(Expense) - - - - - - -

PBT (incl. Extr. Items) 1,384 804 72.2 676 104.9 2,865 2,146 33.5(% of Sales) 10.8 6.9 6.0 6.7 6.0

Provision for Taxation 237 164 44.2 174 35.8 565 511 10.6

(% of PBT) 17.1 20.4 25.8 19.7 23.8

Reported PAT 1,148 640 79.3 501 128.9 2,300 1,635 40.7Adj PAT 1,148 640 79.3 501 128.9 2,300 1,635 40.7

Adj. PATM 9.0 5.5 4.5 5.3 4.6

Equity capital (cr) 151.0 144.5 144.5 151.0 144.5

Reported EPS (`) 38.0 22.1 71.5 17.4 118.9 76.1 56.6 34.5Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger

Exhibit 2:4QFY2013 Actual vs Angel estimatesY/E March (` cr) Actual* Estimates Variation (%)Net Sales 12,793 12,930 (1.1)EBITDA 1,328 1,112 19.4EBITDA margin (%) 10.4 8.6 178bp

Adj. PAT 1,148 722 58.9Source: Company, Angel Research; Note: *Financials are derived and are pre SPIL merger

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Exhibit 3:Quarterly volume performanceVolume (units) 4QFY13 4QFY12 % chg (yoy) 3QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)A: Mini:M800, Alto, A-Star, WagonR 132,837 153,966 (13.7) 111,709 18.9 429,569 491,389 (12.6)

A: Compact:Swift, Estilo, Ritz 73,895 81,568 (9.4) 68,790 7.4 255,302 235,754 8.3A: Super Compact: Dzire 55,454 40,156 38.1 40,967 35.4 169,571 110,132 54.0

A: Mid-Size:SX4 2,130 5,492 (61.2) 1,716 24.1 6,707 17,997 (62.7)

A: Executive: Kizashi 2 71 - 151 (98.7) 188 458 -

Total Passenger cars 264,318 281,253 (6.0) 223,333 18.4 861,337 855,730 0.7B: Utility Vehicles: Gypsy, Grand Vitara 18,540 1,991 831.2 20,286 (8.6) 79,192 6,525 1,113.7

C: Vans: Omni, Eeco 26,013 38,180 (31.9) 25,338 2.7 110,517 144,061 (23.3)

Total Domestic 308,871 321,424 (3.9) 268,957 14.8 1,051,046 1,006,316 4.4Total Exports 34,838 38,910 (10.5) 32,496 7.2 120,388 127,379 (5.5)Total Volume 343,709 360,334 (4.6) 301,453 14.0 1,171,434 1,133,695 3.3


Top-line growth in line with estimates: For 4QFY2013, net sales registered ahealthy growth of 9.1% yoy (14.2% qoq) to `12,793cr, which was broadly in line

with our estimates. The top-line performance was primarily driven by a strong

14.7% yoy (flat qoq) growth in net average realization, led by better product-mix

(higher share of Swift, Dzire and Ertiga), price hikes and lower levels of discounts

(at `10,500/unit vs `12,100/unit in 3QFY2013). The volumes however, registered

a decline of 4.6% yoy led by the weak demand for entry segment cars (down

13.7% yoy) and slowdown in exports (down 10.5% yoy). The proportion of diesel

cars during the quarter stood at 36.3% as against 39.8% in 3QFY2013. The export

revenue for the quarter stood at `1,530cr (strong growth of 23% yoy and 15.9%

qoq), driven by a robust net average realization growth of 37.4% yoy (8.2% qoq).

The exports performance continues to benefit from the sales of Ertiga kits to

Indonesia and favorable forex movement.

Exhibit 4:Volume growth remains under pressure...


Exhibit 5:... net average realization surges 14.7% yoy


343,350

281,526

252,307239,528

360,334

295,896

230,376

301,453

343,709

19.5

(0.6)

(19.6)

(27.6)

4.9 5.1

(8.7)

25.9

(4.6)

(40.0)

(30.0)

(20.0)

(10.0)

0.0

10.0

20.0

30.0

0

50,000

100,000150,000

200,000

250,000

300,000

350,000

400,000

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(units) Total volume yoy growth (RHS)

(0.4)3.2 3.4

12.0 11.7

21.318.9

15.714.7

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

0

50,000

100,000150,000

200,000

250,000

300,000

350,000

400,000

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(`) Net average realisation/unit yoy growth (RHS)

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April 26, 2013 4

Exhibit 6:... leading to net-sales growth of 9.1% yoy


Exhibit 7:Domestic passenger car market share trend

Source: Company, SIAM, Angel Research

Exhibit 8:Quarterly revenue and realization performance2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13*

Domestic revenue (` cr) 6,547 6,589 10,242 9,429 6,612 9,637 11,037Change yoy (%) (17.6) (21.9) 14.7 27.6 1.0 46.3 7.8

Domestic realization (`) 294,367 311,096 318,656 358,165 314,921 358,310 357,321

Change yoy (%) 3.0 10.4 11.5 21.5 7.0 15.2 12.1

Export revenue (` cr) 889 938 1,244 1,100 824 1,320 1,530Change yoy (%) (10.4) 11.8 43.0 26.9 (7.3) 40.7 23.0

Export realization (`) 297,314 338,323 319,712 337,092 403,486 406,204 439,176

Change yoy (%) 7.1 25.7 13.7 19.9 35.7 20.1 37.4

Source: Company, Angel Research; ; Note: * Derived and are pre SPIL merger

Favorable currency impact and better product-mix boosts margins: MSILs EBITDAmargin registered a sharp expansion of 306bp yoy to 10.4%, which was

significantly ahead of our estimates of 8.6%. The EBITDA margin expansion was

led by better product-mix, price hikes, lower average discounts and favorable

currency movement (+ve impact of ~120bp qoq). The raw-material cost as a

percentage of sales declined 310bp yoy to 76.5%, led largely by superior product-

mix (towards Swift, Dzire and Ertiga), positive impact of Yen depreciation and

ongoing cost reduction initiatives. Due to the favorable movement in exchange

rate, the royalty outgo during the quarter stood at 4.8% (down 30bp yoy and 80bp

qoq). On a sequential basis, EBITDA margin improved 243bp, led by the positiveimpact of the exchange rate (~120bp) and growth in net average realization

(~100bp). Consequently, operating profit jumped 54.7% yoy (49% qoq) to

`1,328cr.

10,005 8,454 7,674 7,732 11,727 10,778 8,305 11,200 12,793

18.8

2.7

(16.1) (18.6)

17.227.5

8.2

44.9

9.1

(30.0)

(20.0)

(10.0)

0.0

10.0

20.0

30.0

40.0

50.0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(`cr) Net sales yoy change (RHS)

48.044.7

40.9 38.743.6

44.1

37.6

47.3 51.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)

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April 26, 2013 5

Exhibit 9:EBITDA margin surges to 10.4%


Exhibit 10:Net profit zooms, up 79.3% yoy


Net profit zooms, up 79.3% yoy: Led by strong operating performance, higherother income (up 120% qoq) and lower tax rate (17.1% vs 25.8% in 3QFY2013),

net profit surged 79.3% yoy (128.9% qoq) to `1,148cr, which was significantly

ahead of our as well consensus estimates.

Exhibit 11:Quarterly financial performance (post SPIL merger)Y/E March (` cr) 4QFY13 4QFY12 % chg (yoy) 3QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)Net Sales 13,304 11,727 13.4 11,200 18.8 43,588 35,587 22.5Consumption of RM 8,289 8,920 (7.1) 8,217 0.9 30,554 26,533 15.2

(% of Sales) 62.3 76.1 73.4 70.1 74.6

Staff Costs 387 246 57.6 231 67.7 1,070 801 33.5

(% of Sales) 2.9 2.1 2.1 2.5 2.3

Purchases of TG 440 413 6.7 567 (22.3) 1,961 1,533 28.0

(% of Sales) 3.3 3.5 5.1 4.5 4.3

Other Expenses 2,187 1,290 69.6 1,294 69.1 5,774 4,207 37.2

(% of Sales) 16.4 11.0 11.6 13.2 11.8

Total Expenditure 11,304 10,869 4.0 10,309 9.7 39,358 33,074 19.0Operating Profit 2,000 859 132.9 891 124.4 4,230 2,513 68.3OPM (%) 15.0 7.3 8.0 9.7 7.1

Interest 73 21 249.4 46 58.2 190 55 243.8

Depreciation 816 331 146.8 358 127.7 1,861 1,138 63.5

Other Income 399 297 34.4 189 111.5 812 827 (1.8)

PBT (excl. Extr. Items) 1,510 804 87.8 676 123.5 2,991 2,146 39.4Extr. Income/(Expense) - - - - - - -

PBT (incl. Extr. Items) 1,510 804 87.8 676 123.5 2,991 2,146 39.4(% of Sales) 11.4 6.9 6.0 6.9 6.0

Provision for Taxation 270 164 64.8 174 55.1 599 511 17.2

(% of PBT) 17.9 20.4 25.8 20.0 23.8

Reported PAT 1,240 640 93.7 501 147.3 2,392 1,635 46.3Adj PAT 1,240 640 93.7 501 147.3 2,392 1,635 46.3

Adj. PATM 9.3 5.5 4.5 5.5 4.6

Equity capital (cr) 151.0 144.5 144.5 151.0 144.5Reported EPS (`) 41.0 22.1 85.3 17.4 136.5 79.2 56.6 39.9Source: Company, Angel Research

10.1 9.6 5.7 5.2 7.3 7.3 6.1 8.010.4

79.2 79.981.0

79.181.3

79.781.9

80.2 76.5

5.14.8

6.06.0

5.1

6.2

5.4 5.6

4.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0.0

20.0

40.0

60.0

80.0

100.0

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(%) EBITDA margin Raw material cost/sales

Royalty expenses/sales (RHS)

660 549 24 0 206 640 424 227 501 1,148

6.6 6.5

3.12.7

5.5

3.9

2.7

4.5

8.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.08.0

9.0

10.0

0

200

400

600

800

1,000

1,200

1,400

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(`cr) Net profit Net profit margin (RHS)

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Exhibit 12:SPIL performanceY/E March (` cr) FY2011 FY2012 FY2013Total volumes (units) 203,750 244,500 292,000

Net average realization (`) 197,301 186,151 205,479Net sales 4,020 4,551 6,000EBITDA 639 550 671

EBITDA margin (%) 15.9 12.1 11.2

Net profit 121 115 92Source: Company, Angel Research

SPIL merger benefitted MSIL performance: MSIL merged SPIL with itself during thequarter through a share swap ratio of 1:70. MSIL made fresh issue of 13.17mn

shares to Suzuki Motor Corporation, Japan, in lieu of its 70% holding in SPIL. For

FY2013, SPIL reported net sales of `6,000cr, EBITDA of `671cr and net profit of

`92cr. As a result of the merger, SPILs net fixed assets of `2,143cr were

transferred to MSIL. The SPIL merger led to a 150bp improvement in MSILs

EBITDA margin.

Conference call Key highlights

Petrol car sales for the industry declined 17% in FY2013 while those of dieselcars surged 23%. As a result the share of the diesel cars in the total volumes

increased to 58% in FY2013 from 48% in FY2012. However, for MSIL, diesel

car sales accounted for ~37% of the total domestic volumes.

The import content for MSIL has come down to 19.6% from 26% in FY2012 onaccount of Yen depreciation and the ongoing localization initiatives. The

Management expects to improve localization by 8-10% over the next 2-3

years.

The average discounts for MSIL stood at `10,500/vehicle during the quarter asagainst `12,100/vehicle in 3QFY2013 and `13,500 in 4QFY2012. Going

ahead, MSIL expects average discounts to remain stable at current levels.

The royalty expenses as a percentage of sales declined 80bp qoq to 4.8%driven by Yen depreciation vs the INR.

The company had hedged its entire Yen exposure (direct + indirect + royalty)at 90 Yen to the US$ in 4QFY2013. For FY2014, the company has hedged

30% of its Yen exposure at a rate of 95.

The company indicated that rural sales grew by 15% in FY2013, accountingfor 28% of total domestic sales.

Other income during the quarter jumped significantly as the company bookedgains on FMPs.

The tax-rate was lower than expected as the company did not pay tax on theincome booked on FMPs. MSIL expects the tax-rate to remain in the range of

20-22% going forward.

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April 26, 2013 7

Investment arguments

Per capita car penetration near inflexion point: In FY2009, car penetration inIndia was estimated at around 12 vehicles/1,000 people compared to around

21 vehicles/1,000 people in China. Moreover, Indias PPP-based per capita is

estimated to approach US$5,000 over the next four to five years, which is

expected to be the inflexion point for the countrys car demand. Further, MSIL

has a sizeable competitive advantage over new foreign entrants due to its

widespread distribution network (nearly 3,000 and 1,000 service and sales

outlets, respectively), which is not easy to replicate.

Suzuki focusing to make Maruti a small car manufacturing hub: Suzuki Japanis making Maruti a manufacturing hub to cater to the increasing global

demand for small cars due to rising fuel prices and stricter emission standards.

Thus, we believe there is a huge potential for the company to increase its

market share in the export market. Moreover, R&D capabilities, so far largely

housed at Suzuki Japan, are progressively moving to MSIL. The company is

aiming to achieve full model change capabilities over the next couple of years,

which will enable it to launch new models and variants at a much faster pace.

This is expected to reduce its royalty payment in the medium-term (2-3 years).

Merger with SPIL to be positive in the long run: MSIL has merged its associatecompany, SPIL with itself. SPIL, a 70:30 JV between Suzuki Motor Corporation

(SMC), Japan, and MSIL, manufactures and supplies diesel engines and

transmission components for vehicles. SPIL currently supplies ~90% of its

production to MSIL. We believe the merger of SPIL with MSIL is positive for

MSIL given that MSIL itself is setting up a new diesel engine facility (capacity of

300,000 units by FY2014) in Gurgaon. Further, with increasing trend of

dieselization, the integration of SPIL will result in better control over diesel

engine sourcing, flexibility in production planning, and managing fluctuations

in market demand. Additionally, single management control of diesel engine

operations will result in better sourcing, localization and cost-reduction.

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April 26, 2013 8

Outlook and valuation

We broadly retain our volume estimates for MSIL and expect the company to

register a healthy volume growth of ~8% in FY2014 primarily due to the low base

of 1HFY2013 (on account of the strike at the Manesar plant). Additionally,

expected easing of interest rates in CY2013 is likely to boost consumer sentiments

which may lead to demand revival in the passenger car segment. Further, the

ongoing weakness in Yen (down ~10% yoy against INR in YTDCY2013), which

partially benefited EBITDA margins in 4QFY2013, is expected to enhance

profitability in FY2014 as the favorable currency impact on indirect exposure is

expected to reflect completely in FY2014. We expect EBITDA margin to improve

150bp in FY2014, driven by favorable product-mix and currency movement, lower

discounts, ongoing cost reduction initiatives and also on account of the SPIL

merger. As a result, we expect MSIL to register a strong earnings CAGR of ~25%

over FY2013-15. Our EPS estimates for MSIL (including the impact of SPIL merger)for FY2014/15 stand at `107.8/`123.1.

We continue to remain positive on long-term volume growth in the passenger car

industry, driven by economic growth and low penetration levels in the country. At

`1,673, MSIL is trading at 13.6x FY2015E earnings (including the impact of SPIL

merger). We recommend Accumulate rating on the stock with a target price of`1,847, valuing the stock at 15x FY2015 earnings.

Exhibit 13:Volume assumptionsY/E March FY2010 FY2011 FY2012 FY2013 FY2014E FY2015EA: Mini: M800, A-Star, Alto, WagonR 33,028 573,238 491,389 429,569 446,752 491,427A: Compact: Swift, Estilo, Ritz 633,190 261,799 235,754 255,302 280,832 317,340

A: Super Compact: Dzire 99,315 107,955 110,132 169,571 193,311 220,374

A: Midsize: SX4 - 23,317 17,997 6,707 7,378 8,115

A: Executive: Kizashi - 138 458 188 207 227

Total passenger cars 765,533 966,447 855,730 861,337 928,479 1,037,485B: UV - Gypsy, Vitara, Ertiga 3,932 5,666 6,525 79,192 88,695 101,112

C: Vans - Omni, Versa, Eeco 101,325 160,626 144,061 110,517 119,358 131,294

Total passenger vehicles - domestic 870,790 1,132,739 1,006,316 1,051,046 1,136,533 1,269,891Total passenger vehicles - exports 147,575 138,266 127,379 120,388 127,611 140,372

Total sales (domestic + exports) 1,018,365 1,271,005 1,133,695 1,171,434 1,264,144 1,410,264% chg 28.6 24.8 (10.8) 3.3 7.9 11.6


Exhibit 14:Angel vs consensus forecastAngel estimates Consensus Variation (%)

FY14E FY15E FY14E FY15E FY14E FY15ETotal op. income (` cr) 48,455 55,723 48,538 56,692 (0.2) (1.7)EPS (`) 107.8 123.1 100.6 124.3 7.2 (0.9)

Source: Bloomberg, Angel Research

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April 26, 2013 9

Exhibit 15:One-year forward P/E band


Exhibit 16:One-year forward P/E chart


Exhibit 17:One-year forward EV/EBITDA band


Exhibit 18:Premium/Discount to Sensex P/E


Exhibit 19:Automobile - Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%)

P/E (x) EV/EBITDA (x) RoE (%) FY13E-15E EPSFY14E FY15E FY14E FY15E FY14E FY15E CAGR (%)

Ashok Leyland Buy 22 27 18.4 11.4 8.4 5.2 4.4 12.1 15.2 43.9

Bajaj Auto Accumulate 1,893 2,014 6.4 16.1 14.1 10.8 9.1 40.2 36.6 13.8

Hero MotoCorp Accumulate 1,597 1,767 10.6 15.4 11.8 7.6 6.8 38.8 42.7 13.2

Maruti Suzuki Accumulate 1,673 1,847 10.4 15.5 13.6 7.8 6.7 16.2 16.0 24.7Mahi. & Mahi. Accumulate 891 1,006 12.9 15.0 13.1 8.1 6.6 22.3 21.6 11.5

Tata Motors Accumulate 296 324 9.2 9.2 7.6 4.2 3.5 23.1 23.1 16.9

TVS Motor Accumulate 38 40 7.3 7.8 6.5 2.7 2.0 16.5 17.5 16.0


0

500

1,000

1,500

2,000

2,500

Apr-04

Jan-05

Nov-05

Sep-06

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(%) Absolute premium Five-yr average premium

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April 26, 2013 10

Company background

Maruti Suzuki (MSIL), a subsidiary of Suzuki Motor Corporation, Japan (with a

54.2% stake), is the largest passenger car (PC) company in India, accounting for

42.4% of the domestic passenger car market. MSIL derives ~75% of its overallsales from the small car segment and has a dominant position in the segment with

a market share of ~50%, led by popular models likeAlto, Wagon R andSwift. The

company operates from two facilities in India (Gurgaon and Manesar) and is in the

process of expanding its manufacturing capacity to 1.9mn units (currently 1.65mn

units) by FY2014. Also, MSIL has steadily increased its presence internationally and

exports now account for ~11% of its overall sales volume.

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April 26, 2013 11

Profit and loss statement (post SPIL merger)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015ETotal operating income 29,623 36,618 35,587 43,588 48,455 55,723% chg 42.1 23.6 (2.8) 22.5 11.2 15.0Total expenditure 25,672 32,980 33,074 39,358 43,032 49,655Net raw material costs 22,170 28,364 28,108 32,515 35,697 41,188

Other mfg costs 526 365 411 570 664 737

Employee expenses 538 704 844 1,070 1,233 1,419

Other 2,439 3,547 3,711 5,204 5,439 6,311

EBITDA 3,951 3,639 2,513 4,230 5,423 6,068% chg 115.7 (7.9) (30.9) 68.3 28.2 11.9

(% of total op. income) 13.3 9.9 7.1 9.7 11.2 10.9

Depreciation & amortization 825 1,014 1,138 1,861 2,041 2,203

EBIT 3,126 2,625 1,375 2,368 3,382 3,865% chg 177.7 (16.0) (47.6) 72.3 42.8 14.3


Interest and other charges 34 25 55 190 152 122

Other income 500 509 827 812 894 965

Recurring PBT 3,593 3,109 2,146 2,991 4,124 4,709% chg 114.4 (13.5) (31.0) 39.4 37.9 14.2

Extraordinary income/ (expense) - - - - - -

PBT 3,593 3,109 2,146 2,991 4,124 4,709Tax 1,095 820 511 599 866 989

(% of PBT) 30.5 26.4 23.8 20.0 21.0 21.0

PAT (reported) 2,498 2,289 1,635 2,392 3,258 3,720ADJ. PAT 2,498 2,289 1,635 2,392 3,258 3,720% chg 104.9 (8.4) (28.6) 46.3 36.2 14.2


Basic EPS (`) 82.7 75.8 54.1 79.2 107.8 123.1Adj. EPS (`) 82.7 75.8 54.1 79.2 107.8 123.1% chg 104.9 (8.4) (28.6) 46.3 36.2 14.2

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April 26, 2013 12

Balance sheet statement (post SPIL merger)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015ESOURCES OF FUNDSEquity share capital 145 145 145 151 151 151Reserves & surplus 11,691 13,723 15,043 18,428 21,405 24,844

Shareholders Funds 11,835 13,868 15,187 18,579 21,556 24,995Total loans 821 309 1,237 1,389 1,139 889

Deferred tax liability 137 164 302 409 409 409

Other long term liabilities - 96 97 104 104 104

Long term provisions - 140 168 226 226 226

Total Liabilities 12,794 14,577 16,992 20,706 23,433 26,622APPLICATION OF FUNDSGross block 10,407 11,738 14,735 19,600 23,373 26,688

Less: Acc. depreciation 5,382 6,208 7,214 9,075 11,116 13,319

Net Block 5,025 5,529 7,521 10,525 12,257 13,369Capital work-in-progress 388 863 611 1,216 943 829

Investments 7,177 5,107 6,147 7,078 7,967 9,052Long term loans and advances - 1,255 1,672 1,279 1,279 1,279

Other noncurrent assets - 47 26 895 895 895

Current assets 3,772 5,625 6,325 5,695 6,502 8,456Cash 98 2,509 2,436 775 1,690 1,806

Loans & advances 1,656 684 778 1,115 990 1,453

Other 2,019 2,433 3,111 3,805 3,822 5,197

Current liabilities 3,568 3,849 5,311 5,982 6,409 7,256

Net current assets 205 1,776 1,014 (287) 92 1,200Total Assets 12,794 14,577 16,992 20,706 23,433 26,622

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April 26, 2013 13

Cash flow statement (post SPIL merger)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EProfit before tax 3,593 3,109 2,146 2,991 4,124 4,709

Depreciation 825 1,014 1,138 1,861 2,041 2,203Change in working capital 133 150 (104) (360) 536 (991)

Direct taxes paid (1,028) (989) (251) (599) (866) (989)

Others (491) (464) (700) (305) - -

Cash Flow from Operations 3,032 2,819 2,229 3,588 5,835 4,931(Inc.)/Dec. in fixed assets (1,459) (2,143) (2,633) (5,470) (3,500) (3,200)

(Inc.)/Dec. in investments (3,879) 2,127 (782) (931) (889) (1,084)

Others 410 359 496 - - -

Cash Flow from Investing (4,928) 343 (2,918) (6,401) (4,389) (4,284)Issue of equity - - - 1,280 - -

Inc./(Dec.) in loans 188 (512) 911 152 (250) (250)

Dividend paid (Incl. Tax) (101) (173) (217) (281) (281) (281)

Others (32) (67) (78) - - -

Cash Flow from Financing 55 (752) 617 1,152 (531) (531)Inc./(Dec.) in cash (1,841) 2,410 (72) (1,661) 915 116

Opening Cash balances 1,939 98 2,509 2,436 775 1,690Closing Cash balances 98 2,509 2,436 775 1,690 1,806

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April 26, 2013 14

Key ratios

Y/E March FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EValuation Ratio (x)P/E (on FDEPS) 20.2 22.1 30.9 21.1 15.5 13.6P/CEPS 15.2 15.3 18.2 11.9 9.5 8.5

P/BV 4.3 3.6 3.3 2.7 2.3 2.0

Dividend yield (%) 0.4 0.4 0.4 0.5 0.5 0.5

EV/Sales 1.3 1.1 1.1 1.0 0.9 0.7

EV/EBITDA 9.4 10.8 15.0 10.4 7.8 6.7

EV / Total Assets 2.9 2.7 2.2 2.1 1.8 1.5

Per Share Data (`)EPS (Basic) 82.7 75.8 54.1 79.2 107.8 123.1

EPS (fully diluted) 82.7 75.8 54.1 79.2 107.8 123.1

Cash EPS 110.0 109.3 91.8 140.8 175.4 196.1

DPS 6.0 7.5 7.5 8.0 8.0 8.0

Book Value 391.8 459.1 502.8 615.0 713.6 827.4

Dupont AnalysisEBIT margin 10.6 7.2 3.9 5.4 7.0 6.9

Tax retention ratio 69.5 73.6 76.2 80.0 79.0 79.0

Asset turnover (x) 2.8 3.0 2.7 2.5 2.3 2.4

ROIC (Post-tax) 20.7 15.6 7.9 11.0 12.8 13.1

Cost of Debt (Post Tax) 3.1 3.3 5.4 11.6 9.5 9.5

Leverage (x) (0.5) (0.5) (0.5) (0.3) (0.4) (0.4)

Operating ROE 11.1 9.1 6.7 11.2 11.5 11.7

Returns (%)ROCE (Pre-tax) 27.2 19.2 8.7 12.6 15.3 15.4

Angel ROIC (Pre-tax) 61.8 41.3 17.7 17.5 17.1 17.3

ROE 23.6 17.8 11.3 14.2 16.2 16.0

Turnover ratios (x)Asset Turnover (Gross Block) 3.1 3.3 2.7 2.5 2.3 2.2

Inventory / Sales (days) 13 13 16 15 15 16

Receivables (days) 11 8 9 10 10 10

Payables (days) 35 29 37 36 36 36

WC cycle (ex-cash) (days) 2 (3) (11) (10) (10) (7)

Solvency ratios (x)Net debt to equity (0.5) (0.5) (0.5) (0.3) (0.4) (0.4)

Net debt to EBITDA (1.6) (2.0) (2.9) (1.5) (1.6) (1.6)

Interest Coverage (EBIT / Int.) 93.3 105.0 24.9 12.5 22.3 31.8

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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Disclosure of Interest Statement Maruti Suzuki

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

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msil 4q fy 2013

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