X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Maruti Suzuki: Strong finish - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Maruti Suzuki: Strong finish
Apr 28, 2015

Maruti Suzuki announced its results for the fourth quarter ended March 2015 recently. The company reported a 12.5% YoY and 60.5% YoY growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Net sales grow by 12.5% YoY led by the 7% YoY increase in volumes.
  • Operating profits grow by an impressive 72% YoY as margins expand by 5.5% to 15.9% in 4QFY15. The same is due to lower raw material costs (as a percentage of sales).
  • Growth in net profits comes in at a relatively slower rate of 60.5% YoY on account of the surge in interest costs and tax expenses.
  • The Board declares a dividend of Rs 25 per share (dividend yield of 0.7%).

Financial performance: A snapshot
(Rs m) 4QFY14 4QFY15 Change FY14 FY15 Change
Total Vehicles Sold (No.) 324,870 346,712 6.7% 1,155,041 1,292,415 11.9%
Net sales 121,097 136,248 12.5% 437,918 499,706 14.1%
Expenditure 108,539 114,606 5.6% 386,047 432,577 12.1%
Operating profit (EBDITA) 12,559 21,643 72.3% 51,871 67,130 29.4%
EBDITA margin (%) 10.4% 15.9%   11.8% 13.4%  
Other income 3,983 3,199 -19.7% 7,317 8,316 13.6%
Finance costs 434 1,027 136.4% 1,759 2,060 17.2%
Depreciation 5,637 6,600 17.1% 20,844 24,703 18.5%
Profit before tax 10,470 17,215 64.4% 36,586 48,682 33.1%
Tax 2,470 4,373 77.1% 8,755 11,570 32.1%
Profit after tax/(loss) 8,000 12,842 60.5% 27,831 37,112 33.4%
Net profit margin (%) 6.6% 9.4%   6.4% 7.4%  
No. of shares (m)         302.1  
Diluted earnings per share (Rs)*         122.9  
Price to earnings ratio (x)*         30.5  
*On a trailing 12 month basis

What has driven performance in FY15?
  • Maruti Suzuki's revenues during the year grew by a decent 14% YoY with volumes up by 12% YoY. This is commendable given that the auto industry had not completely recovered from the slowdown yet. In the domestic market, the 11% YoY volume growth was largely led by the super compact segment whose volumes were up 86% YoY as well as the mid-sized segment whose volumes grew 8 times. But these were not the only segments that did well. Vans also saw volumes rise by 26% YoY. That said, volumes in the mini segment fell by 2% YoY, while those of the compact segment and multi-utility vehicles (MUVs) grew by 13% YoY and 12% YoY respectively. It must be noted that the mini and compact segments together account for around 79% of the domestic volumes. Exports did quite well during the year as volumes were up 20% YoY.

  • Maruti's operating margins improved by 1.6% to 13.4% in FY15 on account of a fall in raw material costs as well as other expenditure (as percentage of sales). Fall in raw material costs was attributed to a favourable exchange rate as well as initiatives to reduce material costs. Other expenditure was lower despite higher ad spends on new model introductions.

  • Led by the strong growth at the operating level, net profits for the year grew by a healthy 33% YoY.
What to expect?

At the current price of Rs 3,750, the stock trades at a multiple of 13.8 times our estimated FY17 cash flow per share. Maruti's management is upbeat about the recovery in the urban markets and is looking at various ways to capitalise on this. The company has lined up a series of new product launches which include a sedan, LCV and a compact SUV over the next two fiscals. The company has also outlined a capex of Rs 120 bn in FY16, which will be towards new product launches, R&D, marketing expenses and maintenance. From a long term perspective, the management remains confident of growth prospects led by thrust on infrastructure and rising disposable incomes. As far as valuations are concerned, our view is that investors do not buy the stock at current levels.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

MARUTI SUZUKI SHARE PRICE


Apr 20, 2018 (Close)

TRACK MARUTI SUZUKI

  • Track your investment in MARUTI SUZUKI with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARUTI SUZUKI 8-QTR ANALYSIS

COMPARE MARUTI SUZUKI WITH

MARKET STATS