Accumulate Maruti Suzuki India - Kotak

Maruti Suzuki India's (MSIL) 4QFY12 results were mixed. While the operating performance came in below expectations, higher other income and low tax led to higher than expected net profit.

- For MSIL, 4QFY12 was the first full quarter of normal performance after the labor issues disrupted production.

- MSIL's revenues grew by 17% YoY, but adverse forex movement and weak macro factors led to YoY drop in operating margins leading to a 3% drop in net profits.

- However, the situation for the company has improved and we expect the performance to get better in the coming quarters.

- Increased availability of diesel engines, strong response to new launches and low last year base will drive volume growth for the company. Further, favorable foreign exchange movement has given the company an opportunity to hedge portion of its FY13 forex exposure.

- We continue to maintain our ACCUMULATE rating on stock with price target of Rs1,368.

Source : Equity Bulls

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