Motilal Oswal Maintains Buy on Maruti Suzuki

Maruti Suzuki (MSIL IN; Mkt Cap USD7.8b, CMP Rs1,234, Buy)

Volumes grew 28% YoY to 330,687 units. Realizations declined 1.5% QoQ, impacted by higher discounts (~60bp QoQ impact) and lower export realizations.

Net revenues grew 26% YoY to Rs94.9b. EBITDA margin declined to 9.5%, impacted by 100bp QoQ increase in RM cost and 70bp QoQ increase in staff cost.

Maruti is preparing for 15-20% volume growth for FY12, with further debottlenecking taking total capacity to 1.4m units by April.

We are downgrading our consolidated EPS estimates by 3% to Rs88.2 for FY11, by ~2.6% to Rs104.6 for FY12 and by ~2.6% to Rs124.4 for FY13. The stock trades at 11.8x FY12E and 9.9x FY13E consolidated EPS, and 8.9x FY12E and 7.5x FY13E CEPS. Maintain Buy with price target of Rs1,655 (~10x FY13E CEPS).

Source : Equity Bulls

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