Maruti Suzuki India - Improving product mix and forex relief - Barclays

We hosted senior management of Maruti Suzuki for a US road show. The company highlighted three key trends: 1) product mix to improve in 2H, with higher diesel capacities and new Alto launch; 2) localisation plans on track for FY16; and 3) it is targeting double-digit EBITDA margin by FY15, despite a tepid outlook on volumes for FY14E.

Additionally, the recent favourable currency trends (US$/JPY) may have a further positive impact on earnings (our estimates suggest a c100-150bps increase in EBITDA margin translating into c15-20% higher earnings for FY14/15E). While we maintain our earnings forecasts for FY13/14, we believe MSIL will continue to benefit from receding headwinds.

Maintain OW (OVERWEIGHT) rating and Rs1,542 PT.

Source : Equity Bulls

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