Maruti Suzuki (MSIL) posted an EBITDA of Rs7.9b for 1QFY13 against an estimate of Rs7.2b, driven by mix-led higher realizations. However, lower other income resulted in in-line PAT at Rs4.24b.
- Volumes grew 5% y-o-y (declined 18% q-o-q) to 295,889 units v/s estimate of 287,800 units, led by (1) higher diesel engine availability, and (2) good response to new launches. Realizations improved by ~21% y-o-y (~12% q-o-q) to Rs355,839/unit v/s an estimate of Rs331,678/unit, led by better product mix, higher export realizations and commencement of Ertiga CKD exports, translating into revenue growth of 27.5% y-o-y to Rs107.8b v/s an estimate of Rs98b.
- EBITDA margin declined 230bp y-o-y (flat q-o-q) to 7.3% v/s estimate of 7.4%, as the benefit of higher realizations (140bp) was offset by the impact of adverse forex movement on raw material (60bp) and royalty (100bp) cost and negative operating leverage.
- EBITDA declined 3% y-o-y (8% q-o-q) to Rs7.9b. Lower other income (timing difference) at Rs1.1b (v/s an estimate of Rs2b) diluted the benefit of lower tax (due to increasing R&D spend), resulting in in-line PAT at Rs4.24b - a de-growth of 23% y-o-y (34% q-o-q).
- MSIL has not entered into any further hedges. It now has forex hedges for ~30% of USD/JPY exposure for the remainder of FY13, whereas natural hedge on USD/Rs is ~36%.
Valuation and view: Motilal Oswal maintains their consolidated EPS estimate for FY13 at Rs74.2, but upgrades FY14 estimate by 3.6% to Rs102.6, driven by lower tax rate. The stock trades at 15x FY13E and 10.8x FY14E consolidated EPS. Maintain Buy with a price target of Rs1,709 (~10x FY14E CEPS / 16.5x FY14E EPS).
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Motilal Oswal was founded in 1987 as a small sub-broking unit, with just two people running the show. Today it has a 2000 member team with a networth of Rs7 bn and market capitalization as of March 31, 2008 at Rs19 bn.
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