CMP 1227.95

Target Price 1330.00

ISIN: INE585B01010

AUGUST 29th

, 2013

MARUTI SUZUKI INDIA LTD. Result Update: Q1 FY14

BUYBUYBUYBUY

Index Details

Stock Data

Sector Automobile

BSE Code 532500

Face Value 5.00

52wk. High / Low (Rs.) 1773.45/1128.05

Volume (2wk. Avg.) 78000

Market Cap (Rs. in mn.) 370939.14

Annual Estimated Results (A*: Actual / E*: Estimated)

Years FY13A FY14E FY15E

Net Sales 435879.30 488184.82 541885.15

EBITDA 50420.50 63776.01 74067.90

Net Profit 23921.30 29816.50 34468.72

EPS 79.19 98.70 114.10

P/E 15.51 12.44 10.76

Shareholding Pattern (%)

1 Year Comparative Graph

MARUTI SUZUKI INDIA LTD. BSE SENSEX

SYNOPSIS

� Maruti Suzuki is India’s largest passenger vehicle

company with a market share close to 40% which

offers 15 models with over 200 variants across the

Industry segments like: Passenger cars, Utility

vehicles and Vans.

� The Company has posted a net profit of Rs. 6316.10

million for the quarter ended June 30, 2013 where

as the same was at Rs. 4237.70 million for the

quarter ended June 30, 2012.

� Total Income is Rs. 104416.40 million for the

quarter ended June 30, 2013 where as the same was

at Rs. 108904.60 million for the quarter ended June

30, 2012.

� Maruti Suzuki India Limited announced the launch

of the CNG variant of Ertiga, 7-seater utility vehicle

coinciding with Environment month, June 2013.

� The company’s market share also went up from 38.3

per cent to 39.1 per cent during 2012-13.

� The capital investment proposed for this year is

approximately Rs. 35000 million.

� Suzuki Japan has decided that India will now be

responsible for the export markets of Africa, the

Middle East and its neighbouring countries.

� During the year, the Company was rated 1st in

customer satisfaction for the 13th consecutive year

in the annual survey by J.D. Power Asia Pacific.

� Net Sales and Operating Profit of the company are

expected to grow at a CAGR of 15% and 28% over

2012 to 2015E respectively.

PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Maruti Suzuki India Ltd 1227.95 370939.14 79.19 15.51 2.00 150.00

Mahindra & Mahindra Ltd 778.50 479872.60 57.88 13.46 3.27 260.00

Force Motors Ltd 280.00 3649.20 13.83 20.03 0.32 100.00

Tata Motors Ltd 299.45 969301.10 2.48 121.43 4.97 200.00

Quarterly Highlights STANDALONE

Results updates- Q1 FY14,

Maruti Suzuki is India’s largest passenger vehicle

company with a market share close to 40% which

offers 14 models with over 200 variants across the

Industry segments like: Passenger cars, Utility

vehicles and Vans, reported its financial results for

the quarter ended 30 JUNE, 2013.

Months JUNE-13 JUNE-12 % Change

Net Sales 102373.40 107781.50 -5.02%

PAT 6316.10 4237.70 49.05%

EPS 20.91 14.67 42.55%

EBITDA 13704.60 8986.00 52.51%

The company’s net profit jumps to Rs.6316.10 million against Rs. 4237.70 million in the corresponding quarter

ending of previous year, an increase of 49.05%. Revenue for the quarter fell 5.02% to Rs. 102373.40 million from

Rs.107781.50 million, when compared with the prior year period. Reported earnings per share of the company

stood at Rs.20.91 a share during the quarter, registering 42.55% increase over previous year period. Profit

before interest, depreciation and tax is Rs.13704.60 millions as against Rs.8986.00 millions in the corresponding

period of the previous year.

Expenditure :

Break up of Expenditure

Rs. Millions

Q1 FY14 Q1 FY13

Cost of Material consumed 68762.10 80630.40

Depreciation 4801.60 3399.10

Employees Benefit Expenses 2951.10 2268.40

Other Expenditure 14104.60 13746.60

Purchase of Traded Goods 5640.70 4680.50

Latest Updates

Production and Sales in July 2013

SEGMENT MODEL PRODUCTION DOMESTIC SALES EXPORTS SALES

Month July.2012 July.2013 July.2012 July.2013 July.2012 July.2013

Mini Car, Alto, A Star,

Wagon R 36349 43313 28998 33587 8665 6582

Compact Ritz, Swift, Estilo 13179 20621 15759 13882 609 48

Super Compact, Missize &

Executive class

Dzire, SX4,

Kizashi 11590 21613 12094 15571 1833 1448

Utility Vehicles Gypsy, Ertiga,

Grand Vitara 7343 5657 7294 4562 5 11

Vans Eeco, Omni 7248 8032 6879 7543 98 65

GRAND TOTAL 75709 99236 71024 75145 11210 8154

� Maruti Suzuki India Limited announced the launch of the CNG variant of Ertiga, 7-seater utility vehicle

coinciding with Environment month, June 2013. With this launch, Ertiga will now be available in all three

fuel variants: CNG, petrol and diesel. Ertiga Green will be available in states with CNG infrastructure

including Delhi NCR, Gujarat, Mumbai, Pune, and parts of Andhra Pradesh, Uttar Pradesh and Madhya

Pradesh.

� Maruti Suzuki India Limited introduced the stylish, aggressive and sporty ‘Stingray’. This car will be

available in Lxi and Vxi variants.

Introductory Prices

VARIANTS Ex Showroom DELHI (in Rs.)

Stringray Lxi 409999

Stringray Vxi 437999

Stringray Vxi (O) 466999

Future plan of action

The Company will continue to introduce new range of products and variants in automobiles to meet growing

customers’ expectations. The company will take initiative step to introduce alternate fuel options like LPG and

CNG in the company’s vehicles.

In the long term, the company will focus on enhancing the capability in the field of EV-HEV (Electric Vehicle –

Hybrid Electric Vehicle) and other environment friendly initiatives.

Company Profile

Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a subsidiary of Suzuki Motor

Corporation, Japan. Maruti Suzuki has been the leader of the Indian car market for over two and a half decades.

The company has two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India. Both

the facilities have a combined capability to produce over a 1.5 million (1,500,000) vehicles annually. The

company plans to expand its manufacturing capacity to 1.75 million by 2013.

Products: CARS

The Company offers 15 brands and over 150 variants ranging from people's car Maruti 800 to the latest Life

Utility Vehicle, Ertiga. The portfolio includes Maruti 800, Alto, Alto K10, A-star, Estilo, WagonR, Ritz, Swift,

Swift DZire, SX4, Omni, Eeco, Kizashi, Grand Vitara, Gypsy and Ertiga. These include Eeco, Alto, Estilo,

Wagon R and Sx4. With this Maruti Suzuki became the first company in India to introduce factory fitted CNG

vehicles.

a. 1206 Sales Outlets across 878 Cities

b. 2965 Service Stations across 1422 Cities

Financial Highlight STANDALONE (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at March31, 2012

FY12 FY13 FY14E FY15E

EQUITY AND LIABILITIES:

Shareholders’ Funds:

Share Capital 1445.00 1510.00 1510.00 1510.00

Reserves and Surplus 150429.00 184279.00 214095.80 248564.51

a. Net worth 151874.00 185789.00 215605.80 250074.51

Non-Current Liabilities:

Long-term borrowings 0.00 5429.00 5971.90 7166.28

Deferred Tax Liabilities [Net] 3023.00 4087.00 5313.10 6747.64

Other Long Term Liabilities 966.00 1036.00 1087.80 1136.75

Long Term Provisions 1683.00 2259.00 2620.44 2961.10

b. Long term liabilities 5672.00 12811.00 14993.24 18011.77

Current Liabilities:

Short-term borrowings 10783.00 8463.00 6939.66 5759.92

Trade Payables 33499.00 41674.00 50008.80 57510.12

Other Current Liabilities 15892.00 11661.00 9328.80 7089.89

Short Term Provisions 5302.00 6482.00 7778.40 8945.16

c. Current Liabilities 65476.00 68280.00 74055.66 79305.09

Total (a+b+c) 223022.00 266880.00 304654.70 347391.37

ASSETS:

Non-Current Assets:

Fixed Assets:

i. Tangible Assets 73108.00 95765.00 116833.30 140199.96

ii. Intangible Assets 2099.00 2227.00 2347.26 2464.62

iii. Capital work-in-progress 6114.00 19422.00 23500.62 28200.74

81321.00 117414.00 142681.18 170865.32

Other non-current assets 263.00 8946.00 9393.30 9862.97

Non Current Investments 13933.00 18485.00 22434.03 25861.64

Long Term Loans and Advances 16715.00 12787.00 10229.60 8183.68

d. Non-Current Assets 112232.00 157632.00 184738.11 214773.61

Current Assets:

Current Investments 47541.00 52298.00 56481.84 61000.39

Inventories 17965.00 18407.00 18775.14 19150.64

Trade Receivables 9376.00 14237.00 17796.25 21355.50

Cash and Bank Balances 24361.00 7750.00 5347.50 3850.20

Short Term Loans and Advances 7783.00 11153.00 14275.84 17987.56

Other Current Assets 3764.00 5403.00 7240.02 9273.47

e. Current Assets 110790.00 109248.00 119916.59 132617.76

Total (d+e) 223022.00 266880.00 304654.70 347391.37

Annual Profit & Loss Statement for the period of 2012 to 2015E

Value(Rs.in.mn) FY12 FY13E FY14E FY15E

Description 12m 12m 12m 12m

Net Sales 355870.90 435879.30 488184.82 541885.15

Other Income 8268.60 8123.70 8611.12 9041.68

Total Income 364139.50 444003.00 496795.94 550926.82

Expenditure -330742.00 -393582.50 -433019.93 -476858.93

Operating Profit 33397.50 50420.50 63776.01 74067.90

Interest -552.10 -1898.20 -2410.71 -2977.23

Gross profit 32845.40 48522.30 61365.29 71090.66

Depreciation -11383.50 -18611.70 -22892.39 -27013.02

Profit Before Tax 21461.90 29910.60 38472.90 44077.64

Tax -5110.50 -5989.30 -8656.40 -9608.93

Net Profit 16351.40 23921.30 29816.50 34468.72

Equity capital 1444.60 1510.40 1510.40 1510.40

Reserves 150429.00 184279.30 214095.80 248564.51

Face value 5.00 5.00 5.00 5.00

EPS 56.59 79.19 98.70 114.10

Quarterly Profit & Loss Statement for the period of 31 DEC, 2012 to 30 SEP, 2013E

Value(Rs.in.mn) 31-Dec-12 31-Mar-13 30-June-13 30-Sep-13E

Description 3m 3m 3m 3m

Net sales 112003.40 133040.10 102373.40 88041.12

Other income 1886.20 3989.90 2043.00 2145.15

Total Income 113889.60 137030.00 104416.40 90186.27

Expenditure -103090.70 -113044.00 -90711.80 -78356.60

Operating Profit 10798.90 23986.00 13704.60 11829.67

Interest -459.30 -726.40 -442.30 -499.80

Gross profit 10339.60 23259.60 13262.30 11329.87

Depreciation -3583.30 -8158.90 -4801.60 -5041.68

Profit Before Tax 6756.30 15100.70 8460.70 6288.19

Tax -1743.40 -2704.50 -2144.60 -1509.17

Net Profit 5012.90 12396.20 6316.10 4779.03

Equity capital 1444.60 1510.40 1510.40 1510.40

Face value 5.00 5.00 5.00 5.00

EPS 17.35 41.04 20.91 15.82

Ratio Analysis

Particulars FY12 FY13 FY14E FY15E

EPS (Rs.) 56.59 79.19 98.70 114.10

EBITDA Margin (%) 9.38% 11.57% 13.06% 13.67%

PBT Margin (%) 6.03% 6.86% 7.88% 8.13%

PAT Margin (%) 4.59% 5.49% 6.11% 6.36%

P/E Ratio (x) 21.70 15.51 12.44 10.76

ROE (%) 10.77% 12.88% 13.83% 13.78%

ROCE (%) 27.53% 34.57% 37.93% 38.43%

EV/EBITDA (x) 10.62 7.36 5.82 5.01

Book Value (Rs.) 525.66 615.03 713.74 827.84

P/BV 2.34 2.00 1.72 1.48

Charts

Outlook and Conclusion

� At the current market price of Rs.1227.95, the stock P/E ratio is at 12.44 x FY14E and 10.76 x FY15E

respectively.

� Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.98.70 and

Rs.114.10 respectively.

� Net Sales and Operating Profit of the company are expected to grow at a CAGR of 15% and 28% over 2012 to

2015E respectively.

� On the basis of EV/EBITDA, the stock trades at 5.82 x for FY14E and 5.01 x for FY15E.

� Price to Book Value of the stock is expected to be at 1.72 x and 1.48 x respectively for FY14E and FY15E.

� We recommend ‘BUY’ in this particular scrip with a target price of Rs.1330.00 for Medium to Long term

investment.

Industry Overview

The favourable Indian market conditions are acting as a catalyst for luxury and premium carmakers, which are

receiving impetus from new launches. The top-end carmakers have posted double-digit growth for the quarter

ended June 30, 2013, with firms like Honda at 45 per cent and Audi recording 28.8 per cent, besides others.

India is emerging as an export hub for sports utility vehicles (SUVs). Global automobile majors are looking to

leverage India's cost-competitive manufacturing practices and are assessing opportunities to export SUVs to

Europe, South Africa and Southeast Asia too. India is also one of the key markets for hybrid and electric medium-

heavy-duty trucks and buses.

Ford Motor Company is staking big on Asia-Pacific (APAC) markets, especially India and China. "Ford will export

Figo and EcoSport models out of India. The Indian plants would support the market here, as well as other global

markets," said Mr Alan Mulally, Chief Executive Officer, Ford.

Key Statistics

The production of passenger vehicles in India was recorded at 3.23 million in 2012-13 and is expected to grow at

a compound annual growth rate (CAGR) of 13 per cent during 2012-2021, as per data published by Automotive

Component Manufacturers Association of India (ACMA).

Passenger car sales stood at 1.89 million units in 2012-13. Additionally, share of luxury cars to the total

passenger car market of India is expected to increase to four per cent by 2020. The total number of passenger

cars in India is likely to touch around 8 million units by 2020, as per Mr Boris Fitz, Director, Sales and Network

Development, Mercedes-Benz India.

The industry produced 1.74 million vehicles in May 2013. The export of passenger vehicles and three- wheelers

grew by 7.34 percent and 26.53 percent respectively during the April-May 2013, as per data released by Society

of Indian Automobile Manufacturers’ (SIAM).

Furthermore, the amount of cumulative FDI inflow into the Indian automobile industry during April 2000 to

April 2013 was worth US$ 8.32 million, amounting to 4 per cent of the total FDI inflows (in terms of US$), as per

data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce.

Major Developments & Investments

• Nissan Motor India Pvt Ltd is expecting to sell over 60 per cent more units this year on the back of the

launch of its upgraded small car - Nissan Micra

• Daimler India Commercial Vehicles (DICV) exported its first lot of 64 Fuso trucks manufactured at its

Oragadam plant in Chennai

• Mahindra USA, a subsidiary of Mahindra and Mahindra (M&M), will set up an assembly and distribution

centre, expanding one of the four tractor facilities in North America, by January 2014

• The Japan-based automobile manufacturer Isuzu Motors' local subsidiary Isuzu Motors India has entered

into an agreement with Hindustan Motors (HM) for contract manufacturing of Isuzu SUVs and pickup

trucks

• A year after introducing the popular 'MINI' range of cars in India, luxury car maker BMW has started local

production of 'MINI Countryman' at its facility in Chennai

• New Holland Fiat India plans to invest Rs 1,100 crore (US$ 184.56 million) to set up a new greenfield

plant in Maharashtra and also to increase its tractor manufacturing capacity by 50 per cent in the next

three years

• Hero MotoCorp has bought a 49.2 per cent stake in its US-based technology partner Erik Buell Racing

(EBR) for US$ 25 million. This is Hero MotoCorp's first-ever equity purchase in an overseas company.

Also, Hero MotoCorp has entered into the African continent with launch of its brand and products in

Kenya, where it has also set up an assembly unit. The company has also partnered with Ryce East Africa

to sell its two-wheelers in the country

• Daimler is developing its Indian commercial vehicle operations as an export hub. Daimler India

Commercial Vehicles (DICV) will export locally assembled trucks from the conglomerate's Mitsubishi

Fuso range in 15 markets in Asia and Africa

With India becoming a magnet for car makers, Kochi in particular has emerged as India's strongest growing

market for luxury car brands like BMW, Audi, Mercedes and Jaguar Land Rover on back of rising value of spices

and rubber and ever-increasing inflows from non-resident Keralites. Kerala now accounts for 10 per cent of

India's luxury car sales.

Government Initiatives

The Government of India plans to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that

consume less petrol or diesel, as per Mr Veerappa Moily, Union Minister for Petroleum and Natural Gas,

Government of India.

The Union Budget 2013-14 announced by Mr P Chidambaram, the Union Finance Minister, Government of India,

in the Parliament on February 28, 2013, had a few add-ons for the industry. The analysis by Deloitte on the Union

Budget highlighted the following:

• The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been

extended upto March 31, 2015

• The basic customs duty (BCD) on imported luxury goods such as high-end motor vehicles, motor cycles,

yachts and similar vessels was increased. The duty was raised from 75 percent to 100 percent on Cars /

motor vehicles (irrespective of engine capacity) with CIF value more than US$ 40,000; from 60 percent to 75

percent on motorcycles with engine capacity of 800cc or more and on yachts and similar vessels from 10

percent to 25 percent

• In addition, an increase in excise duty from 27 to 30 per cent has been allowed for SUVs with engine capacity

exceeding 1,500 cc, while excise duty was decreased from 80 to 72 per cent, in case of SUVs registered solely

for taxi purposes

• An exemption from BCD on lithium ion automotive battery for manufacture of lithium ion battery packs for

supply to manufacturers of hybrid and electric vehicles

• The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14% to 13%

Moreover, the Government of India allows 100 per cent foreign direct investment (FDI) in the automotive

industry through automatic route. The Government also plans to accelerate the supply of electric vehicles over

the next eight years. It is expected that there will be a demand for 5-7 million electricity-operated vehicles by

2020.

The contribution of automotive sector in the gross domestic product (GDP) is expected to double, reaching a

turnover worth US$ 145 billion in 2016, with special focus on export of small cars, MUVs, two & three wheelers

and auto components, as per the Automotive Mission Plan (AMP) 2006-2016.

Road Ahead

Global and Indian manufacturers are focusing their efforts to develop innovative products, technologies and

supply chains in the industry.

Car makers are launching a slew of car models, mostly compact SUVs, in the coming months. The automobile

body SIAM expects the launches to be able to brighten the market.

Lastly, the vision of AMP 2006-2016 sees India, “to emerge as the destination of choice in the world for design

and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion;

accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by

2016.”

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

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