MSIL - Q1 FY22 results - YES Securities

Weak set impacted by RM, lower vols ; New launches key for growth - Not Rated

- Revenues declined 26% QoQ to Rs177.7b (inline with cons) led by volume fall of 28% at 353.6k units while ASP grew 3% QoQ at Rs505.5k/unit (-6% YoY).

- EBITDA declined ~59% QoQ to Rs8.2b (cons Rs11.4b) impacted by RM inflation, negative op. leverage and front-loaded cost related to SMG 3rd line. Margins contracted 370bp QoQ to multi year low at 4.6% (cons 6.4%).

- PAT declined 62% QoQ to Rs4.4b (cons Rs8.5b) led by weak op. performance and lower other income.

Call highlights

- Healthy volume recovery to help offset margins pressure

- Demand recovery healthy - Inquiries are similar to 4Q while bookings are at 80%. Inquiries are +20% MoM in July. Current orderbook at ~170k units.

- Expects SUV share to inch up to 42% of industry mix over five years (v/s 38% in 1Q). Mid SUV is weak link for MSIL where it is working with Toyota.

- 1Q retail was 501k and MSIL was ~200k units (retail market share at 40%). The non-availability of CNG cylinders impacted retail market share by ~5%.

- RM inflation of 3.5% in Q1 was partially offset by price hikes of ~1.3-1.8% in Apr and July.

- Average discount of Rs14k/unit in 1Q (flat QoQ and Rs25k/unit YoY).

- View - Margins levers missing - While healthy bookings post second wave should partially offset current margins pressures, the new model launches are critical for market share expansion and re-rating. Heightened competition across segments would prioritize volume over margins to keep margins under check in near-mid term. MSIL trades at 25x FY23 bloom cons EPS. Not rated.

Shares of MARUTI SUZUKI INDIA LTD. was last trading in BSE at Rs. 6978.7 as compared to the previous close of Rs. 6991.9. The total number of shares traded during the day was 14879 in over 3319 trades.

The stock hit an intraday high of Rs. 7095 and intraday low of 6965.3. The net turnover during the day was Rs. 104475032.

Source : Equity Bulls

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