Motilal Oswal Maintains Buy on Maruti Suzuki Ltd

MARUTI SUZUKI: Below estimates led by exports; Domestic volume growth robust at 24% YoY

Maruti's Jan-11 volumes are below estimates with 15% YoY growth (~11% MoM) to 109,743 units (est 113,000 units).

This is driven by 24% YoY (12% MoM) growth in domestic volumes. However, export volumes declined by 36% YoY (~4.5% MoM).

Volume growth in domestic market will remain robust driven by strong retail demand and launch of Alto-K10 as well as re-launch of Wagon-R CNG.

While competitive intensity has been increasing in the domestic PV market, among incumbents Maruti is the least impacted with growth in-line with the industry.

It would further debottleneck capacity to 1.4m units by Apr-11. It is prepared for 15-20% volume growth in FY12. We model FY11 volume growth of 24.9% to 1.27m units, with domestic volume growth of 29.5% and export volume de-growth of 2%, implying residual monthly run rate of 117,431 units. The stock trades at 12.8x FY12 EPS of Rs96.8, 11.9x FY12E consol. EPS of Rs104.6 and 8.9x FY12 Cash EPS. Maintain Buy.

Source : Equity Bulls

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