Maruti Suzuki's Q4 net profit up 10%

Last Updated: Fri, Apr 27, 2018 18:26 hrs
Maruti Suzuki

Mumbai: Automobile major Maruti Suzuki on Friday reported a rise of 10 per cent in net profit for the fourth quarter of 2017-18.

According to the company, its Q4 net profit increased to Rs 1,882.1 crore from Rs 1,710.5 crore in the corresponding period of the previous financial year.

The company reported that its net sales during the quarter under review increased by 14.4 per cent to Rs 20,594.3 crore, from Rs 20,423 crore earned in the corresponding quarter of 2016-17.

First Cut on Maruti Suzuki 4QFY18 by Abhishek Jain, Analyst at HDFC Securities:

Maruti Suzuki 4QFY18- Operating margin below expectation (Current Market Price - 8947 Market cap-Rs 2.70T , Neutral, Target Price –Rs 9525)

MSIL posted revenue at Rs 212 billion (+15% YoY, 1.2% above estimates), 11.4% growth in vol and 3.6% in net ASP.

EBITDA at Rs 30 billion (+18% YoY, 9% below est) with margin at 14.2 %( est. of 15.8%) dragged by higher advertisement expenses

APAT at Rs. 18.8 billionn (+10% YoY), was impacted by higher effective tax rate and interest cost

MSIL’s rapid acceleration in premium cars and UV segment is heartening. We continue to like MSIL’s unique moats, although valuation leaves little room for an upside.

We remain positive on MSIL’s growth story based on (1) steady volume growth plus increase in PV market share (2) Increasing ASP, led by expanding portfolio in the premium segment, (3) incremental volumes from the Gujarat facility (4) Ramp-up in rural demand and 5) healthy ROE/ROCE (25% in FY19/20E) and free cash flows. However, challenges persist in the form of (1) increasing fuel prices, and (2) slowdown in demand from cab aggregators such as Ola and Uber owing to cut down in incentives for car owners/drivers.

We expect rev/EPS growth of 13/17% CAGR over FY18-20E. The stock is fairly valued at 23x FY20E (5/10 yr median at 20/16x). Maintain NEUTRAL with TP of Rs 9525, 25x FY20E.



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