Maruti Suzuki Dcf

MARUTI SUZUKI INDIA LTD RESEARCH
EQUITY RESEARCH July 24, 2008

RESULTS REVIEW
Share Data Market Cap Price BSE Sensex Reuters Bloomberg Avg. Volume (52 Week) 52-Week High/Low Shares Outstanding Valuation Ratios (Consolidated) Year to 31 March 2009E EPS (Rs.) +/- (%) PER (x) EV/ Sales (x) EV/ EBITDA (x) Shareholding Pattern (%) Promoter FIIs Institutions Public & Others Relative Performance 66.0 2.4% 9.4x 0.8x 7.3x

Maruti Suzuki India Limited
Valuations suggests a steal
Rs. 178.5 bn Rs. 617.90 14,777.01 MRTI.BO MSIL IN 0.2 mn Rs. 1,252 / 530.5 288.9 mn

Buy

• Recent underperformance an opportunity to buy: Maruti Suzuki India Ltd’s (MSIL) stock price recently hit a 52-week low (Rs. 530.5 on July 8, 2008) and is currently trading at a forward P/E of 9.4x for FY09E, much below the Company’s and industry’s historical P/E average of 14x and 13x, respectively. • Strong product pipeline: Despite a sluggish domestic demand, MSIL reported a healthy growth in domestic volumes (up 12.1% yoy), led by a robust growth in the high-margined A2 and A3 segments. The Company boasts of a strong product range, which includes Swift, Wagon-R, SX4, and the recently launched Dzire. Moreover, the launches of A-Star (Dec’08) and Splash (Apr’09) will help tackle the competition from Hyundai Motors’s i10. • Exports—a key driver: The share of exports in the Company’s volume is

2010E 74.5 12.8% 8.3x 0.7x 5.9x

54 15 24 7

on a rise, helping it to offset the sluggish domestic demand. During Q1’09, exports accounted for 6.5% of total sales, as against 5.3% in Q1’08. This share is expected to rise further as the Company plans to export 0.1 mn units of A-Star in addition to supplying units to Nissan under the manufacturing contract. • Capacity expansion underway: In order to meet the rising demand (Dzire has a waiting period of 4-5 months) and manufacture new models, MSIL is rapidly expanding the capacity of its Manesar plant. The Company plans to increase its total annual... [continues]

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