Maruti Suzuki India (MARUTI)

CMP: | 5,000 Target: | 4,650 (-7%) Target Period: 12 months REDUCE

months May 14, 2020

Volume decline in offing, expensive valuations…

Maruti Suzuki (MSIL) reported a muted Q4FY20 performance. Total
operating income was at | 18,199 crore (down 15.2% YoY) tracking 16.0%
Particulars
YoY decline in total volumes to 3.85 lakh units and 1.3% YoY dip in ASPs to

Result Update
| 4.46 lakh/unit. EBITDA in Q4FY20 was at | 1,546 crore with corresponding Particular Amount
Market Capitalization ₹ 151040 Crore
EBITDA margins at 8.5%. EBITDA margins dropped 165 bps QoQ, with the
Total Debt (FY20P) ₹ 106.3 Crore
decline entirely on account of negative operating leverage. Other expenses
Cash & Investment (FY20P) ₹ 34780.5 Crore
(as a proportion of sales) rose 350 bps sequentially, even as gross margins EV ₹ 116365.8 Crore
improved 220 bps tracking softer commodity costs. Consequent PAT for the 52 week H/L (₹) 7755 / 4002
quarter was at | 1,292 crore (down 28.1% YoY), with profitability aided by Equity capital ₹ 151 Crore
lower tax outgo (tax rate 18%) and higher other income. MSIL declared a Face value ₹5
dividend of | 60/share for FY20.
Key Highlights
Best case estimates peg lower double digit decline in FY20!  EBITDA margins for Q4 came in at
new low of 8.5%, primarily tracking
Covid-19 is a black swan event, which has brought the entire economy to a negative operating leverage amid
standstill. It was a further blow to the automobile sector, which was already savings realised out of RM costs
struggling with weak consumer sentiment with domestic sales volume down  PAT in Q4FY20 was supported by
18% YoY in FY20. With movement of people highly restricted as well as higher other income & lower
income levels taking a hit, car purchase as a discretionary spend is expected effective tax rate (~18%)
to take a backseat. A caveat, however, is the initial signs of people traversing  Management refrained from giving
from shared mobility/public transport to personal mobility. However, there any volume guidance for FY21E.

ICICI Securities – Retail Equity Research

However, it is seeing initial signs of
also pre-owned car, 2-W category can gain precedence over a new car
down-trading by customers
purchase. MSIL being the leader in the passenger car segment can be the
likely beneficiary of this transition. Hence, its decline in volumes is expected  Margin improvement expected to
be limited, going forward
to be limited to 12% in FY21E. With two years of double digit decline, a
recovery is expected in FY22E with volumes gaining 15% YoY.  Downgrade from HOLD to
REDUCE, valuing MSIL at 24x P/E
on FY22E EPS
Down-trading, competition in UV, to limit margin improvement Research Analyst
MSIL is currently witnessing initial signs of down-trading by customers in Shashank Kanodia, CFA
the prevailing difficult times. Down-trading is both buying a lower variant of shashank.kanodia@icicisecurities.com
a particular model as well as going for a lower configuration/car tyre
Jaimin Desai
altogether. This, coupled with absence of diesel powertrain in the mid-SUV jaimin.desai@icicisecurities.com
segment with fierce competition in the marketplace (Hyundai Venue) will
limit margin improvement for MSIL. Only tailwind is the decline in crude with
MSIL saving some RM costs on plastics. Factoring in the same, we expect
MSIL to clock EBITDA margins of 11.0% in FY22E vs. 9.7% in FY20.

Valuation & Outlook

MSIL has retained its market leadership with 51% market share in passenger
vehicle category (FY20). It also possesses healthy B/S with net cash on
books > ~| 35,000 crore with core average RoIC placed at healthy ~22%.
Prevailing valuations, however, provide little comfort with MSIL currently
trading at ~26x P/E on FY22E numbers. Hence, we downgrade the stock to
REDUCE valuing MSIL at | 4,650 i.e. 24x P/E on FY22E EPS of | 194.4.

Key Financial Summary

Key Financials FY18 FY19 FY20P FY21E FY22E CAGR (FY20-22E)
Net Sales 79,762.7 86,020.3 75,610.6 63,639.3 74,780.5 -0.6%
EBITDA 12,061.5 10,999.3 7,302.6 6,090.0 8,225.1 6.1%
EBITDA Margins (%) 15.1 12.8 9.7 9.6 11.0
Net Profit 7,721.8 7,500.6 5,650.6 4,180.2 5,872.4 1.9%
EPS (₹) 255.6 248.3 187.1 138.4 194.4
P/E 19.6 20.1 26.7 36.1 25.7
RoNW (%) 18.5 16.3 11.7 8.2 10.6
RoCE (%) 21.1 16.3 7.4 4.8 7.9
Source: ICICI Direct Research, Company
 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 1: Variance analysis

Q4FY20 Q4FY20E Q4FY19 YoY (Chg %) Q3FY20 QoQ (Chg %) Comments
Topline came in marginally below estimates tracking
Total Operating Income 18,199 18,382 21,459 -15.2 20,707 -12.1
lower than anticipated ASPs by ~| 9,000
Raw Material Expenses 12,791 13,282 15,424 -17.1 15,013 -14.8
Employee Expenses 819 805 817 0.3 867 -5.5
Other expenses were a dampener, which for the
Other expenses 3,042 2,538 2,956 2.9 2,725 11.6
quarter came in at 16.7%, up 355 bps QoQ
Operating Profit (EBITDA) 1,546 1,755 2,263 -31.7 2,102 -26.4
EBITDA margins came in at a new low at 8.5%
primarily tracking negative operating leverage (higher
EBITDA Margin (%) 8.5 9.5 10.5 -205 bps 10.2 -165 bps
other expenses & employee costs), partially
compensated by RM cost benefits
Other income came in higher tracking capital gains
Other Income 880 682 868 1.5 784 12.3
realised on investment book
Depreciation 823 822 810 1.6 858 -4.1
Interest 28 22 9 221.6 22 30.4
Total Tax 283.8 358.7 516.5 -45.1 441.6 -35.7 Tax rate for the quarter came in lower at 18%
PAT 1,292 1,236 1,796 -28.1 1,565 -17.5
PAT was ahead of estimates tracking beat on other
EPS 42.8 40.9 59.4 -28.1 51.8 -17.5
income and lower effective tax rate
Key Metrics
ASPs in Q4FY20 were at | 4.46 lakh/unit, flat QoQ but
ASP (₹) 446,357 454,681 452,311 -1.3 449,265 -0.6
lower than our expectation of | 4.55 lakh/unit
Discounts (₹) 19,051 30,000 15,125 26.0 33,000 -42.3 Discounts came in lower QoQ
Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates

FY21E FY22E
(₹ Crore) Old New % Change Old New % Change Comments
Prolonged impact of Covid-19 leads to sharp downward
Total Operating revision in our forward estimates. We expect sales to be
77,344 63,639 -17.7 86,910 74,781 -14.0
Income largely flat over FY20-22, factoring in 15.8% YoY decline in
FY21E and a recovery in FY22E (up 17.5% YoY)
EBITDA 7,841 6,090 -22.3 9,537 8,225 -13.8
Negative operating leverage to keep margins under check
EBITDA Margin (%) 10.1 9.6 -57 bps 11.0 11.0 3 bps in FY21E to about ~9.6%. With a pick-up in volumes,
margins are expected to improve to 11.0% in FY22E
PAT 6,058 4,180 -31.0 7,258 5,872 -19.1
Downward revision in sales estimates coupled with lower
EPS (₹) 201 138 -31.0 240 194 -19.1 treasury income due to lower yields leads to sharp
downward revision in PAT estimates for FY21-22E
Source: Company, ICICI Direct Research

Exhibit 3: Assumptions
Current Earlier Comments
FY18 FY19 FY20 FY21E FY22E FY21E FY22E
With uncertain consumer discretionary spends
coupled with washout Q1FY21E we expect
volumes to de-grow 12% in FY21E. With two
Total Volumes (lakh units) 17.8 18.6 15.6 13.8 15.8 16.1 17.9
years of decline and normalised economic
activity, we expect sales volume to recover in
FY22E (up 15% YoY)
Average ASPs expected to decline given
consumer's behaviour of down trading in difficult
Average ASPs (₹ lakh/unit) 4.39 4.46 4.59 4.39 4.48 4.57 4.64 times and MSIL losing market share in the SUV
segment courtesy fierce competition in the
marketplace and absence of diesel powertrain
RMC/Unit (₹ lakh/unit) 3.09 3.24 3.45 3.30 3.33 3.47 3.52
Discount (₹/unit) 15,895 18,334 23,688 17,500 15,000 20,000 17,500
Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 2

 Result Update | Maruti Suzuki India ICICI Direct Research

Conference Call Highlights

Management guidance/outlook, demand and volumes
 MSIL did not provide forward demand guidance but maintained that cars being a discretionary spend item, overall
sentiment and feelings around vehicle affordability would govern fortunes. The company did see private transport
gaining at the expense of shared mobility in a post Covid-19 world

 The company sold ~8 lakh units of BS-VI vehicles during the year

 Against total MSIL volume dip of 16% in FY20, CNG volumes grew ~1% YoY

Covid-19 update
 Manesar plant production has started this week, with Gurugram plant set to follow suit next week. Gujarat plant,
however, could take more time due to higher infection instances in nearby vicinities

 The company has reopened ~1,100 outlets and retailed ~2,500 units after May 4, with initial trends in enquiries
for lower-priced hatchbacks suggesting down trading as a phenomenon could take hold, going forward

 The company has 400 Tier-I and 3,000 Tier-II suppliers from nine states

 The company has digitised 17-21 of total 28 touch points of a normal purchase process. Some financing aspects,
test drives and deliveries remain physical, however

Diesel commentary
 Diesel formed <15% of total industry sales and ~7% of MSIL sales as of March 2020, and only enjoys a significant
share of mid-to-higher priced UVs. The company retains its view of shrinking diesel pie going forward, with
~| 1.5-1.8 lakh acquisition cost difference vs. petrol under BS-VI regime fueling its confidence

Revenues, costs and margins

 Margin performance was hit by higher sales promotion expenses and low capacity utilisation. Further, the
company was unable to undertake price hikes amid tepid demand scenario

 Discount levels were at | 19,051/unit vs. | 15,214 crore in the year ago period

 Royalty rate during the quarter was at 5.4% and at 5.3% for the full year

 Export revenues for the quarter were at | 1,119 crore

 Material costs during Q4FY20 included | 125 crore towards BS-IV write-offs

Other
 FY20 capex spend was at | 3,248 crore, with FY21E spend seen at ~| 2,700 crore. The company would not be
cutting back on long term project spends

 Rural contribution to volumes for MSIL was at ~39%. Salaried buyers formed ~46% of its clients, while
businesses/self-employed/others constituted ~34%, ~12%, ~9%, respectively. Within salaried buyers, the split
between government and non-government cadres was equal

 First time buyers formed 45-47% of industry sales. The ratio is higher for MSIL

ICICI Securities | Retail Research 3

 Result Update | Maruti Suzuki India ICICI Direct Research

Financial story in charts

Exhibit 4: Topline and bottomline trends
100000 9000
90000 7338 7722 8000
80000 7501 5872
5651 7000
70000 We expect sales to be largely flat over FY20-22E,
4180 6000
60000 4571 factoring in 15.8% YoY decline in FY21E and 17.5%
(₹ crore)

5000

(₹ crore)
50000 3711 YoY growth in FY22E

86020
4000

79763

75611

74781
40000
68035

63639
3000
57746

30000
49874

20000 2000
10000 1000
0 0
FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Topline Bottomline

Source: Company, ICICI Direct Research

Exhibit 5: EBITDA and margin profile

14,000 18
15.5 15.2 15.1
12,000 16
12.8 11.0 14
10,000 9.6 Going forward, we build in EBITDA margin trajectory
12
9.7 of 9.6% and 11.0% in FY21E & FY22E, respectively
8,000 10
(₹ crore)

vs. 9.7% in FY20. Negative operating leverage, fierce

(%)

6,000 8
competition in the marketplace would limit margin
6 improvement over FY20-22E
4,000
10,353.0

12,061.5

10,999.3

4
7,302.6
8,978.6

6,090.0

8,225.1

2,000 2
- -
FY16 FY17 FY18 FY19 FY20P FY21E FY22E

EBITDA Margins (%)

Source: Company, ICICI Direct Research

Exhibit 6: Domestic vs. export volume trend

2000
106
126

1800
124

102

94

1600
124

82
122

1400
We expect domestic volumes to grow at a CAGR of
101

1200
0.9% over FY20E-22E while export volumes are
('000s)

1000
expected to de-grow at a CAGR of 4.1% in this time.
1754
1654

800
1488
1461
1445

Blended volume CAGR is expected at 0.6% CAGR in

1305

1294
1171

600
1054

FY20-22E
400
200
0
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E
Domestic Exports
Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 4

 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 7: Domestic market PV share

55.0 52.5 52.1 51.7
50.5 50.4 50.3 50.0 51.2 51.0 50.3 51.0
49.8
50.0 47.4

45.0
40.0
MSIL has maintained its market leadership in the
(%)

35.0 passenger vehicle segment with market share as of

30.0 FY20 end pegged at 51.0%

25.0
20.0
Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Q1FY20

Q2FY20

Q3FY20

Q4FY20
Source: Company, ICICI Direct Research

Exhibit 8: Annual discount trends and expectations

25,000 23,688

19,529 18,898
20,000 18,334 17,500
16,774
15,895
15,000
15,000
Discounts for Q4FY20 came in low at | 19,051/unit
(₹)

10,000 vs. our expectation of | 30,000/unit

5,000

-
FY15 FY16 FY17E FY18 FY19 FY20P FY21E FY22E

Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 5

 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 9: Segment-wise, model-wise volumes for Q4FY20

Do m e s tic Exp o r ts T o tal Do m e s tic
m ar k e t
Q 4FY19 Q 4FY20 Yo Y (%) Q 4FY19 Q 4FY20 Yo Y (%) Q 4FY19 Q 4FY20 Yo Y (%) s h ar e (%)
I. P a ssen g er C a r s 3,05,408 2,69,301 -11.8% 26,825 22,799 -15.0% 3,32,233 2,92,100 -12.1% 62.6
Mini 64,937 69,372 6.8% 4,427 6,481 46.4% 69,364 75,853 9.4%
A lto 64,937 47,664 -26.6% 4,427 1,899 -57.1% 69,364 49,563 -28.5%
S-Pres s o - 21,708 NA - 4,582 NA - 26,290 NA
Wagon-R (old) - - NA - - NA - - NA
Compact 2,30,781 1,94,687 -15.6% 21,351 15,866 -25.7% 2,52,132 2,10,553 -16.5%
Wagon-R (new ) 41,861 42,618 1.8% 98 195 99.0% 41,959 42,813 2.0%
Sw ift 51,237 47,252 -7.8% 1,464 3,124 113.4% 52,701 50,376 -4.4%
Celerio 24,655 16,350 -33.7% 2,508 1,565 -37.6% 27,163 17,915 -34.0%
Dz ire 54,923 35,178 -36.0% 2,865 2,889 0.8% 57,788 38,067 -34.1%
Baleno 51,925 48,476 -6.6% 12,058 6,296 -47.8% 63,983 54,772 -14.4%
Ignis 6,180 4,813 -22.1% 2,358 1,797 -23.8% 8,538 6,610 -22.6%
Mid Siz e 9,690 5,242 -45.9% 1,047 452 -56.8% 10,737 5,694 -47.0%
Ciaz 9,690 5,242 -45.9% 1,047 452 -56.8% 10,737 5,694 -47.0%

II. UV 69,827 50,968 -27.0% 1,939 1,275 -34.2% 71,766 52,243 -27.2% 24.9
XL 6 - 6,877 NA - 11 NA - 6,888 NA
Ertiga 23,282 20,748 -10.9% 1,022 1,119 9.5% 24,304 21,867 -10.0%
G yps y 563 272 -51.7% 71 - -100.0% 634 272 -57.1%
S-Cros s 7,016 558 -92.0% 616 31 -95.0% 7,632 589 -92.3%
V itara Brez z a 38,966 22,513 -42.2% 230 114 -50.4% 39,196 22,627 -42.3%

III. Va n s 46,148 29,517 -36.0% 465 272 -41.5% 46,613 29,789 -36.1% 89.6
O mni 19,529 - -100.0% 354 - -100.0% 19,883 - -100.0%
Eeco 26,619 29,517 10.9% 111 272 145.0% 26,730 29,789 11.4%
-
A. P V (I +II +III) 4,21,383 3,49,786 -17.0% 29,229 24,346 -16.7% 4,50,612 3,74,132 -17.0% 51.0

B. L CV - goods 7,480 3,590 -52.0% 382 251 -34.3% 4.9

C . Sa l es to o th er O E M - 7,052 NA

D. T o ta l d o m esti c (A +B +C ) 4,28,863 3,60,428 -16.0%

E . T o ta l exp o r ts 29,611 24,597 -16.9%

F . G r a n d to ta l (D +E ) 4,58,474 3,85,025 -16.0%

Source: SIAM, ICICI Direct Research; Note – Domestic market share of March 2020

ICICI Securities | Retail Research 6

 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 10: Segment-wise, model-wise volumes for FY20

Do m e s tic Exp o r ts T o tal Do m e s tic
m ar k e t
FY19 FY20 Yo Y (%) FY19 FY20 Yo Y (%) FY19 FY20 Yo Y (%) s h ar e (%)
I. P a ssen g er C a r s 12,87,023 10,60,644 -17.6% 99,098 93,183 -6.0% 13,86,121 11,53,827 -16.8% 62.6
Mini 3,68,990 2,47,776 -32.9% 17,710 16,668 -5.9% 3,86,700 2,64,444 -31.6%
A lto 2,59,401 1,90,814 -26.4% 17,181 11,158 -35.1% 2,76,582 2,01,972 -27.0%
S-Pres s o - 56,962 NA - 5,510 NA - 62,472 NA
Wagon-R (old) 1,09,589 - -100.0% 529.0 - -100.0% 1,10,118 - -100.0%
Compact 8,71,864 7,87,610 -9.7% 79,076 73,985 -6.4% 9,50,940 8,61,595 -9.4%
Wagon-R (new ) 41,873 1,56,724 274.3% 104 798 667.3% 41,977 1,57,522 275.3%
Sw ift 2,23,924 1,87,916 -16.1% 7,342 10,711 45.9% 2,31,266 1,98,627 -14.1%
Celerio 1,03,734 62,625 -39.6% 11,273 9,029 -19.9% 1,15,007 71,654 -37.7%
Dz ire 2,53,859 1,79,159 -29.4% 13,342 13,135 -1.6% 2,67,201 1,92,294 -28.0%
Baleno 2,12,330 1,80,413 -15.0% 37,757 33,518 -11.2% 2,50,087 2,13,931 -14.5%
Ignis 36,144 20,773 -42.5% 9,258 6,794 -26.6% 45,402 27,567 -39.3%
Mid Siz e 46,169 25,258 -45.3% 2,312 2,530 9.4% 48,481 27,788 -42.7%
Ciaz 46,169 25,258 -45.3% 2,312 2,530 9.4% 48,481 27,788 -42.7%

II. UV 2,64,197 2,35,294 -10.9% 5,724 6,132 7.1% 2,69,921 2,41,426 -10.6% 24.9
XL 6 - 22,117 NA - 37 NA - 22,154 NA
Ertiga 65,263 90,543 38.7% 2,121 4,739 123.4% 67,384 95,282 41.4%
G yps y 3,232 272 -91.6% 155 1 -99.4% 3,387 273 -91.9%
S-Cros s 37,822 11,721 -69.0% 2,226 809 -63.7% 40,048 12,530 -68.7%
V itara Brez z a 1,57,880 1,10,641 -29.9% 1,222 546 -55.3% 1,59,102 1,11,187 -30.1%

III. Va n s 1,78,606 1,18,404 -33.7% 1,664 974 -41.5% 1,80,270 1,19,378 -33.8% 89.6
O mni 86,837 1,401 -98.4% 1,217 11 -99.1% 88,054 1,412 -98.4%
Eeco 91,769 1,17,003 27.5% 447 963 115.4% 92,216 1,17,966 27.9%
-
A. P V (I +II +III) 17,29,826 14,14,342 -18.2% 1,06,486 1,00,289 -5.8% 18,36,312 15,14,631 -17.5% 51.0

B. L CV 23,874 21,778 -8.8% 2,251 1,877 4.9

C . Sa l es to o th er O E M - 25,002 NA

D. T o ta l d o m esti c (A +B +C ) 17,53,700 14,61,122 -16.7%

E . T o ta l exp o r ts 1,08,737 1,02,166 -6.0%

F . G r a n d to ta l (D +E ) 18,62,437 15,63,288 -16.1%

Source: SIAM, ICICI Direct Research; Note – Domestic market share of March 2020

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 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 11: Valuation Summary

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(₹ cr) (%) (₹) (%) (x) (x) (%) (%)
FY18 79,763 17.2 256 5.2 19.6 9.7 18.5 21.1
FY19 86,020 7.8 248 (2.9) 20.1 10.5 16.3 16.3
FY20P 75,611 (12.1) 187 (24.7) 26.7 15.9 11.7 7.4
FY21E 63,639 (15.8) 138 (26.0) 36.1 18.8 8.2 4.8
FY22E 74,781 17.5 194 40.5 25.7 13.3 10.6 7.9
Source: Company, ICICI Direct Research

Exhibit 12: MSIL currently trades at ~26x FY22E EPS of | 194.4/share

14000

12000

10000

8000
(|)

6000

4000

2000

0
Sep-11

Sep-13

Sep-14

Sep-16

Sep-19
Sep-09

Sep-10

Sep-12

Sep-15

Sep-17

Sep-18
Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Dec-19
Jun-09

Jun-10

Jun-11

Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18

Jun-19
Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20
Price 49x 42x 36x 30x 23x 17x 11x
Source: Bloomberg, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 13: Recommendation history vs. consensus

12,000 30.0

10,000 25.0

8,000 20.0
(|)
6,000 15.0 (%)

4,000 10.0

2,000 5.0

0 0.0
Sep-17

Sep-18

Sep-19
Dec-17

Dec-18

Dec-19
Feb-18

Feb-19

Feb-20
Jan-18

Jan-19

Jan-20
Oct-19
Oct-17

Oct-18
Jun-18

Jun-19
Jun-17
May-17

May-18

May-19

May-20
Jul-17

Jul-18

Jul-19
Aug-17

Aug-18

Aug-19
Nov-17
Nov-17

Nov-18

Nov-19
Mar-18

Mar-19

Mar-20
Apr-18

Apr-19

Apr-20
Price Idirect target Consensus Target Mean % Consensus with HOLD
Source: Bloomberg, ICICI Direct Research

Exhibit 14: Top 10 shareholders

Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 SUZUKI MOTOR CORP 31-03-2020 56.3 170.0M 0
2 LIC OF INDIA 31-12-2019 6.8 20.6M 0
3 JPMORGAN CHASE & CO 01-05-2020 1.7 5.2M +1.3M
4 SBI FUNDS MANAGEMENT 31-03-2020 1.3 4.0M +0.5M
5 CAPITAL GROUP COMPAN 31-03-2020 1.2 3.7M -0.3M
6 ICICI PRUDENTIAL ASS 31-03-2020 1.1 3.3M +0.4M
7 GIC PRIVATE LIMITED 30-06-2019 1.1 3.3M +3.3M
8 VANGUARD GROUP 31-03-2020 1.1 3.2M +0.2M
9 BLACKROCK 11-05-2020 1.1 3.2M +0.0M
10 AXIS ASSET MANAGEMEN 31-03-2020 1.1 3.2M -0.1M
Source: Bloomberg, ICICI Direct Research

Exhibit 15: Shareholding pattern

(in %) Dec-18 Mar-19 Jun-19 Sep-19 Dec-19
Promoter 56.2 56.2 56.2 56.2 56.2
FII 22.7 22.3 25.3 23.4 23.2
DII 13.4 13.4 11.3 15.0 15.6
Others 7.7 8.1 7.2 5.3 5.0
Source: Bloomberg, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Financial Summary

Exhibit 16: Profit and loss statement | crore Exhibit 17: Cash flow statement | crore
(Year-end March) FY19 FY20P FY21E FY22E (Year-end March) FY19 FY20P FY21E FY22E
Total operating Income 86,020 75,611 63,639 74,781 Profit after Tax 7,501 5,651 4,180 5,872
Growth (%) 7.8 -12.1 -15.8 17.5 Add: Depreciation 3,019 3,526 3,500 3,627
Raw Material Expenses 60,254 53,995 45,353 52,768 (Inc)/dec in Current Assets -504 -50 927 -1,096
Employee Expenses 3,255 3,384 3,354 3,436 Inc/(dec) in CL and Provisions -1,331 -2,812 -1,995 1,609
Other expenses 11,512 10,929 8,842 10,352 Others 76 133 108 97
Total Operating Expenditure 75,021 68,308 57,549 66,555 CF from operating activities 8760.5 6446.7 6719.2 10109.4
EBITDA 10999.3 7302.6 6090.0 8225.1 (Inc)/dec in Investments -975 297 -2,000 -4,850
Growth (%) -9 -34 -17 35 (Inc)/dec in Fixed Assets -4,542 -3,637 -2,700 -3,000
EBITDA margins (%) 12.8 9.7 9.6 11.0 Others 17 266 -310 -310
Depreciation 3,019 3,526 3,500 3,627 CF from investing activities -5499.2 -3073.3 -5010.0 -8160.0
Interest 76 133 108 97 Issue/(Buy back) of Equity 0 0 0 0
Other Income 2,561 3,421 2,912 3,076 Inc/(dec) in loan funds 39 -43 -10 -20
PBT 10,466 7,065 5,394 7,577 Dividend paid & dividend tax -2,900 -2,175 -1,510 -1,812
Total Tax 2,965 1,414 1,214 1,705 Others -301 -1,304 -108 -97
Tax Rate (%) 28.3 20.0 22.5 22.5 CF from financing activities -3162.5 -3522.2 -1627.9 -1929.3
PAT 7500.6 5650.6 4180.2 5872.4 Net Cash flow 99 -149 81 20
Growth (%) -3.0 -24.7 -26.0 40.5 Opening Cash 71 170 21 102
EPS (₹) 248.3 187.1 138.4 194.4 Closing Cash 169.9 21.1 102.4 122.5
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

Exhibit 18: Balance Sheet | crore Exhibit 19: Key ratios

(Year-end March) FY19 FY20P FY21E FY22E (Year-end March) FY19 FY20P FY21E FY22E
Liabilities Per share data (₹)
Equity Capital 151 151 151 151 EPS 248.3 187.1 138.4 194.4
Reserve and Surplus 45,981 48,286 50,956 55,016 Cash EPS 348.2 303.8 254.2 314.5
Total Shareholders funds 46132.4 48437.0 51106.8 55166.7 BV 1,527.2 1,603.4 1,691.8 1,826.2
Total Debt 150 106 96 76 DPS 80.0 60.0 50.0 60.0
Deferred Tax Liability 564 598 598 598 Cash Per Share 5.6 0.7 3.4 4.1
Others Liabilties 2,076 2,222 2,262 2,302 Operating Ratios
Total Liabilities 48922.0 51363.6 54063.4 58143.3 EBITDA Margin (%) 12.8 9.7 9.6 11.0
Assets PBIT / Net sales (%) 9.3 5.0 4.1 6.1
Gross Block 26,492 30,391 33,678 36,678 PAT Margin (%) 8.7 7.5 6.6 7.9
Less: Acc Depreciation 11,084 14,610 18,110 21,737 Inventory days 14.1 15.5 15.0 15.0
Net Block 15407.8 15781.2 15568.4 14941.6 Debtor days 9.8 10.3 12.0 12.0
Capital WIP 1,600 1,337 750 750 Creditor days 40.9 36.2 35.0 35.0
Total Fixed Assets 17,008 17,119 16,318 15,692 Return Ratios (%)
Investments 36515.0 36467.6 38717.6 43817.6 RoE 16.3 11.7 8.2 10.6
Inventory 3,326 3,215 2,615 3,073 RoCE 16.3 7.4 4.8 7.9
Debtors 2,310 2,127 2,092 2,459 RoIC 58.1 22.9 15.1 27.6
Loans and Advances 16 17 14 17 Valuation Ratios (x)
Other Current Assets 1,485 1,829 1,539 1,809 P/E 20.1 26.7 36.1 25.7
Cash 169.9 21.1 102.4 122.5 EV / EBITDA 10.5 15.9 18.8 13.3
Total Current Assets 7,307 7,209 6,363 7,480 EV / Net Sales 1.3 1.5 1.8 1.5
Creditors 9,633 7,494 6,102 7,171 Market Cap / Sales 1.8 2.0 2.4 2.0
Provisions 624 680 553 650 Price to Book Value 3.3 3.1 3.0 2.7
Other current Liabilities 3,743 3,015 2,537 2,982 Solvency Ratios
Total Current Liabilities 14,001 11,189 9,193 10,803 Debt/EBITDA 0.0 0.0 0.0 0.0
Net Current Assets -6693.6 -3979.9 -2829.9 -3323.1 Debt / Equity 0.0 0.0 0.0 0.0
Other Assets 2,093 1,757 1,857 1,957 Current Ratio 0.7 0.9 0.9 0.9
Application of Funds 48922.0 51363.6 54063.4 58143.3 Quick Ratio 0.4 0.5 0.5 0.5
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

Exhibit 20: ICICI Direct coverage universe (Auto & Auto Ancillary)
Sector / Company CMP TP M Cap EPS (₹) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%)
(₹) (₹) Rating (₹ Cr) FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E
Apollo Tyre (APOTYR) 90 90 Hold 5,148 8.0 3.7 7.0 11.3 24.5 12.8 5.8 5.3 4.5 4.7 4.1 5.7 4.4 1.9 3.8
Ashok Leyland (ASHLEY) 48 55 Buy 14,050 1.2 1.7 3.2 41.3 28.3 14.9 12.2 10.6 7.2 6.0 7.0 11.9 4.7 5.7 10.4
Bajaj Auto (BAAUTO) 2,550 2,500 Buy 73,789 163.9 146.4 158.6 15.6 17.4 16.1 11.4 12.2 10.6 20.5 22.6 22.5 21.2 17.4 17.2
Bharat Forge (BHAFOR) 275 320 Hold 12,803 10.8 7.0 12.7 25.4 39.1 21.7 13.3 15.3 11.4 8.4 6.3 9.4 9.4 5.7 9.8
Eicher Motors (EICMOT) 14,000 16,870 Hold 38,164 737.9 687.6 838.2 19.0 20.4 16.7 14.5 14.6 11.5 22.9 19.6 20.5 19.1 15.6 16.4
Escorts (ESCORT) 800 740 Hold 9,806 38.6 45.4 53.9 20.7 17.6 14.8 13.4 11.2 9.2 17.7 14.5 14.9 13.9 11.1 11.8
Exide Industries (EXIIND) 150 160 Buy 12,750 9.4 7.6 9.4 15.9 19.7 15.9 8.8 10.0 8.3 16.4 12.8 14.7 12.9 9.6 11.1
Hero Moto (HERHON) 2,150 2,500 Buy 42,936 175.3 118.3 156.4 12.3 18.2 13.7 9.5 11.3 8.6 26.4 20.2 24.6 21.6 15.7 19.1
M&M (MAHMAH) 400 415 Buy 49,728 33.8 15.8 23.5 11.9 25.4 17.0 8.3 12.7 9.2 11.7 6.3 8.9 9.6 5.0 7.1
Maruti Suzuki (MARUTI) 5,000 4,650 Reduce 151,040 187.1 138.4 194.4 26.7 36.1 25.7 15.9 18.8 13.3 7.4 4.8 7.9 11.7 8.2 10.6
Minda Industries (MININD) 260 300 Buy 6,817 7.0 7.6 11.8 37.0 34.1 22.0 12.0 10.8 8.6 11.3 11.8 15.0 11.5 11.6 15.4
Tata Motors (TATMOT) 83 85 Hold 30,337 -9.1 -2.4 9.1 NM NM 9.1 4.1 4.1 3.3 4.6 5.7 8.5 0.0 2.6 9.3
Source: Reuters, ICICI Direct Research

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 Result Update | Maruti Suzuki India ICICI Direct Research

RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock

Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

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 Result Update | Maruti Suzuki India ICICI Direct Research

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ICICI Securities | Retail Research 13