Maruti Suzuki Q4 FY 2011 Result Update - Above Estimates - Motilal Oswal

MARUTI SUZUKI 4QFY11: Above estimates; Higher margins due to change in accounting policy; Lower tax rate boosts PAT

Volumes grew by 19.5% YoY (3.8% QoQ) to 343,340 units. Realizations improved by 2.4% QoQ (~0.3% YoY) to Rs287,288/unit.

EBITDA margins improved by 50bp QoQ to 10%, benefiting from lower RM cost (due to change in accounting policy for tools given to vendor).

Management indicated signs of slowdown in volumes at retail level due to higher interest rates and fuel prices, resulting in decline in footfalls and conversions.

It expects RM cost inflation on steel, copper and rubber as it negotiates for 1HFY12. This coupled with higher R&D spend would put pressure on margins.

FY11 consolidated operating performance was impacted due to cancellation of its insurance agency license by IRDA.

We are downgrading FY12 stand alone EPS by 1.6% to Rs91.4 and FY13 by ~1.2% to Rs110 to factor in for higher RM cost, R&D expenses, part forex hedging and lower tax rate. Our consolidated EPS for FY12 is downgraded by 5.2% to Rs95.5 and FY13 by 4.8% to Rs110 to factor in lack of contribution from the insurance subsidiaries. Maintain Buy with target price of Rs1,625 (~10x FY13 Cash EPS).

Source : Equity Bulls

Keywords