Maruti Suzuki India Ltd CMP : Rs. 7277.

90

Sector : Automobiles • MSIL is the market leader in PV segment with

an almost 50% market share. We expect it to
Market
Rs 223,249 Cr report lower volumes & growth owing to
Capitalisation
slowing economic growth and increase in cost of
52 –week high/low Rs 7929/5447 ownership such as mandatory third party
NSE volume: (No insurance, safety norms & increase in road tax in
11.6 lakhs key states.
of shares)
• In Q2FY2020, MSIL lost market share in the
BSE Code 532500
PV space. Market share dropped from 51.7% last
NSE Code MARUTI year to 48.4%. Further, the Working Capital
Position deteriorated significantly and Cash flow
Promoters 56.2% from operations have become negative.
• We believe MSIL, being the market leader, will
reap the benefits of any positive changes in the industry but given the current liquidity
crunches and weak consumer sentiments, PV industry demand is not expected to recover in
the near term.
• Festive demand has shown small positive growth but the management is uncertain about it’s
sustainability. Despite of maximum discount of Rs 25,671/vehicle offered this year as
against Rs 18,750/ vehicle in the last year, demand has been comparatively low.
• Company’s 8 top selling models are BS-6 compliant. It has increased the cost of vehicles
and further MSIL has reiterated it’s broad desires to not be present in the diesel segment
after implementation of BS6 norms.

• Key Risks: Scrappage policy may uplift the momentum and any changes by government
in favour of Automobile industry.

Particulars FY18 FY19 FY20E FY21E

Revenue 79763 86020.3 82624.4 89045.2
Growth % 17.2 7.8 -3.9 7.8
Adjusted PAT 7722 7500.6 6564.2 7681.7
Adjusted EPS 255.6 248.3 217.3 254.3
P/E (x) 28.9 29.8 34.0 29.1
P/B (x) 5.3 4.8 4.4 3.9
EV/EBIDTA 18.4 19.8 19.7 16.6
(x)
RoNW(%) 18.5 16.3 12.9 13.5
RoCE (%) 24.8 20.8 16.1 17.0

Sharekhan
By BNP PARIBAS