Maruti Suzuki - Celerio debuts - ElaraCapital

- Maruti's January sales was ~2k above estimates, flat YoY and up ~7% MoM

- Domestic sales, up 2% YoY, got support from the launch of the new compact car, Celerio, which saw its first month of deliveries, apart from a surprise 22% jump in van sales

- Mini sales slid 3% MoM instead of posting growth as seen in the past and despite rising rural footprints of the company

- However, the compact segment saw robust growth of 19% YoY and 17% MoM on the launch of Celerio. We believe the decline in mini sales can be partly seen as an upgrade to Celerio, as mentioned by several dealers in our latest survey

- Compact sales has started flattening out on rising base and competition from Honda's Amaze

- UVs continue to slide, although the pace has slowed. However, vans have now found a reasonable base and should continue posting volume growth hereafter

- While domestic sales was up 2%, a sharp fall of 20% in exports led to overall flat sales growth, although still slightly above estimates

Our view: As per our dealer checks, Celerio commands 2-3 months of waiting, implying Maruti can post 10-12% volume growth until at least H1FY15, which we believe should start re-rating in the stock price. We maintain our positive stance based on reasonable valuations and the best balanced product portfolio among 4W firms.

Source : Equity Bulls

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