eq_rrl_maruti

8/8/2019 eq_rrl_MARUTI

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ote: ) YTD returns are since April 1, 2010 to Nov 30, 2010. ) 1m, 3m and 12m returns are up to Nov 30, 2010.

Industry : Automobiles l Sub Industry : Automobile Manufacturers l Website : www.marutisuzuki.com

SE Ticker : MARUTI loomberg Ticker : MSIL:IN ace value / Share: 5.0 iv. Yield (%): 0.4

CMP (as on 30 Nov 2010Rs/share): 1,422.0 52 week range up to 30 Nov 2010 (Rs)(H/L): 1,643.00/1,191.45 Market Cap as on 30 Nov 2010 (Rs mn): 410,830 Enterprise Value as on 30 Nov 2010 (Rs mn): 418,933

Shares outstanding (mn) : 288.9 Free Float (%) : 46.0 Average daily volumes (12 months) : 593,609 Beta (2 year) : 0.8

Key Stock

Indicators

Maruti Suzuki India Ltd

CRISIL COMPANY REPORT | 1

Key Financial Indicators

n.m. : Not meaningful

Shareholding (As on September 30, 2010)

Indexed price chart

Promoter

54%

FII20%

DII17%

Others9%

0

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6,000

7,000

0

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Dec09 Feb 10 Apr 10 Jun 10 Aug 10 Oct 10

('000)(index)

Volumes (RHS) Maruti Suzuki India Ltd NIFTY

Maruti Suzuki India Ltd (MSIL) was incorporated as a 74:26 joint venture (JV) between the Government of India and Suzuki Motor Corporation (SMC) in 1981 as Maruti Udyog Ltd (MUL). SMC cquired 26 per cent equity in MSIL and increased it to 54.2 per cent in 2002, making MUL a subsidiary

of SMC. In June 2003, the government offloaded another 25 per cent of its stake in MSIL through an nitial public offer (IPO). MSILs manufacturing facilities are located at Gurgaon and Manesar. In 2006

07,

the

company

amalgamated

with

MSAIL,

which

was

incorporated

on

April

12,

2005

as

a

JV

manufacturing facility (Manesar), in which MSIL and SMC had a 70:30 partnership.

KEY HIGHLIGHTS

Sustained leadership position in compact and mid sized segments

MSIL is the market leader in the passenger car industry with a market share close to 52 per cent. The ompany improved its market share in the mid size segment from 22 per cent in 2007 08 to 31 per ent in 2008 09. MSIL successfully launched six new models during March 2004 to August 2009 while, ts competitors, Hyundai Motor India Ltd (HMIL) and Tata Motors Ltd (TML), launched three and one

model, respectively during the same period.

New launches further strengthen its leadership position

The launch of Astar (November 2008) and Ritz (May 2009), strengthened MSILs position further in he compact car segment. The compact car segments share, in the total sales volume of MSIL, mproved from 69.8 per cent in 2007 08 to 76.8 per cent during the first quarter of 2009 10 on ccount of new launches and discounts offered on volume generating compact models. The continued uccess of Swift Dzire has reinforced the companys strong position in the mid size segment. Share of he mid size segment, in the total sales volume of MSIL, increased from 6.5 per cent in 2008 09 to 9.6

per cent in the first quarter of 2009 10. However, the mini segments share, in total sales volume of MSIL, declined sharply due to continuously falling sales of Maruti 800.

Company has a strong dealership network

MSIL has a strong dealership network of more than 680 sales outlets spread across 450+ cities. It has Maruti True Value outlets in more than 180 cities which are engaged in the sale, purchase and xchange of pre owned cars and a huge service network of 2,750+ service outlets. MSILs strong

market position has facilitated scale benefits, bargaining power with suppliers and healthy

profitability.

KEY RISKS:

Higher than estimated volatility in prices of key raw materials Sustainability of export orders Ability to successfully garner market share with newer models Movement of exchange rate (yen to rupee) which could impact interest cost

tock Performances visvis market

YTD 1m 3 m 12 m

Maruti Suzuki India Ltd 2 5 11 12NIFTY 11 4 7 14

Returns (%)

Mar 08 Mar 09 Mar 10Revenue (Rs mn) 185,025.0 212,244.0 300,767.0

EBITDA margins

(%) 14.4 9.5 13.4

PAT (Rs mn ) 17,899.0 12,274.0 26,247.0PAT margi ns(%) 9.7 5.8 8.7Gearing (x) 0.1 0.1 0.1EPS (Rs /share) 61.9 42.5 90.8PE (x) 13.4 18.4 15.7P/BV (x) 2.8 2.4 3.4RoCE (%) 28.8 18.8 31.9RoE (%) 22.9 13.5 24.2EV/EBITDA (x) 9.3 10.5 10.4


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ACKGROUND

MSIL is the leader in the passenger car industry with a market share close to 52 per cent. The company continues its dominant position in the small car segment, accounting or around 60 per cent of the total mini and compact car (A1+A2) sales in India. SMC, Japan holds a majority stake of 54.2 per cent in the company. The company has a rong dealership network of 681 outlets as of March 2009.

With the launch of Astar (November 2008) and Ritz (May 2009), MSIL strengthened its position further in the compact car segment. The compact car segments share, in e total sales volume of MSIL, improved from 69.8 per cent in 2007 08 to 76.8 per cent during the first quarter of 2009 10 on account of new launches and discounts

ffered on volume generating compact models.

MSIL, being the largest player in the compact and mid size segment, dominates the domestic passenger car market despite factors like increasing competitive pressures cross segments, new model launches from existing OEMs and new entrants; MSIL has consolidated its market position on the back of its strong distribution reach and uccessful new launches in the compact segment Astar and Ritz. The companys focus on the rural region and government employees, through its marketing strategies, ded its strong growth.

Maruti SuzukiIndia Ltd.

Mahindra & Mahindra Ltd. Tata Motors Ltd.

Mar 10 Mar 10 Mar 10evenue (Rs mn) 300,767.0 299,867.3 964,558.5BITDA margins (%) 13.4 13.2 6.0AT (Rs mn) 26,247.0 28,714.9 25,168.9AT Margin (%) 8.7 9.6 2.6earing (x) 0.1 1.8 n.mPS (Rs/share) 90.8 38.6 51.2E(x) 15.7 20.8 25.1/BV (x) 3.4 4.8 3.9oCE (%) 31.9 23.6 17.1oE (%) 24.2 37.5 n.mV/EBITDA (x) 10.4 14.7 16.1

COMPETITIVE POSITION

eer Comparison

INANCIAL PROFILE

rong growth in revenues; Operating margins improve in 2009 10

SILs sales grew by 42 per cent (yoy) in 2009 10 with strong demand. High discounts fered by MSIL to government employees, along with wage hikes in the sixth pay commis on have attracted strong demand from government employees. The share of government mployees, in the companys total sales, has gone up from 5 per cent in 2007 08 to 15 per nt in 2009 10. The company has also been focusing more on rural demand through its ural Dealer Sales Executive (RDSE) initiative. Consequently demand from government mployees and rural region aided strong growth in 2009 10. The companys operating argins improved by nearly 400 basis points during 2009 10 on the back of its strong top ne growth and a sharp decline in basic raw material costs.

nancial flexibility remains strong

SIL has a comfortable financial flexibility given its healthy cash accruals and low gearing. 2009 10 the company had a gearing of 0.08 while its cash accruals to total debt was

ound 3.4 times. The company also derives strength from its parent Suzuki Motor Comany (SMC). SMC has maintained a long term position in the Japanese mini vehicle market, ith estimated share of 30 per cent. Sales from automobiles account for about 82 per cent its total revenue. Its strong position in the compact car segment has helped strengthen

s operational performance. Suzuki is also the worlds third largest manufacturer of mo rcycles, after Honda Motor Co Ltd and Yamaha Motor Co Ltd

Units Mar 08 Mar 09 Mar 10

Revenue Rs million 185,025.0 212,244.0 300,767.0

EBITDA margins Per cent 14.4 9.5 13.4

PAT Rs mill ion 17,899.0 12,274.0 26,247.0

PAT ma rgi ns Per cent 9.7 5.8 8.7

Revenue growth Per cent 21.3 14.7 41.7

EBITDA growth Per cent 16.7 24.0 98.2

PAT growth Per cent 12.7 31.4 113.8

Gearing Times 0.1 0.1 0.1RoCE Per cent 28.8 18.8 31.9

RoE Per cent 22.9 13.5 24.2

Key Financial Indicators

m: Not meaningful

NDUSTRY PROFILE

assenger Cars

India, individuals drive a major part of demand for passenger cars. Hence, the level of household income is a key driver of demand for cars. Around 25 per cent of cars are gistered in the four metros, as a large portion of the high income group is based in these cities. However, most car manufacturers are expanding their dealer network to ral and semi urban areas to tap new markets and increase sales volumes. Besides, manufacturers are increasingly tying up with public sector banks (for instance, Maruti

uzuki India Ltd has a tie up with the State Bank of India) to leverage the latter`s extensive branch network and offer finance to rural customers. Despite high entry barriers, uch as capital requirement, technology and brand equity, competition is fairly intense due to the presence of financially and technically strong players. The domestic assenger car industry exhibited a strong revival with a growth of 25.1 per cent in 2009 10 with improvement in financing scenario, lower cost of ownership and better onsumer sentiments.


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ANNUAL RESULTS

QUARTERLY RESULTS

Rs million) Sep 10 % of Rev Sep 09 % of Rev Jun 10 % of Rev Sep 10 % of Rev Sep 09 % of Rev

o of Months 3 3 3 6 6

evenue 92,812.4 100.0 73,126.2 100.0 83,317.3 100.0 176,876.3 100.0 140,221.5 100.0

BITDA 10,942.9 11.8 10,261.5 14.0 8,927.1 10.7 19,870.1 11.2 20,358.5 14.5

nteres t 97.2 0.1 59.7 0.1 79.8 0.1 177.0 0.1 122.8 0.1

eprecia tion 2,381.9 2.6 2,031.1 2.8 2,417.0 2.9 4,798.9 2.7 3,992.0 2.8

BT 8,463.8 9.1 8,170.7 11.2 6,430.3 7.7 14,894.2 8.4 16,243.7 11.6

AT 5,982.4 6.4 5,700.0 7.8 4,653.6 5.6 10,636.1 6.0 11,535.4 8.2

andalone Profit and loss account

come Statement Balance sheetRs million ) Mar 08 Mar 09 Mar 10 (Rs million ) Mar 08 Mar 09 Mar 10et Sales 179,762.0 206,327.0 292,952.0 Equity share capi tal 1,445.0 1,445.0 1,445.0perating Income 185,025.0 212,244.0 300,767.0 Reserves and surplus 84,826.0 94,208.0 120,222.0

Tangible net worth 86,271.0 95,653.0 121,667.0BITDA 26,663.0 20,264.0 40,155.0 Deferred tax l ia bl ity:|a ss et| 1,744.0 1,5 98.0 1,461.0

BITDA Margin 14.4 9.5 13.4 Long

term

debt 5,271.0 5,227.0 3,543.0Short term debt 7,649.0 2,906.0 6,187.0

epreciation 5,727.0 7,165.0 8,414.0 Total debt 12,920.0 8,133.0 9,730.0nterest 320.0 2,388.0 509.0 Current liabili ties 21,444.0 30,886.0 29,614.0ther Income 4,303.0 5,921.0 5,723.0 Total provisions 3,430.0 3,555.0 6,204.0

Total liabilities 125,809.0 139,825.0 168,676.0BT 25,688.0 17,011.0 37,466.0 Gross block 73,561.0 89,041.0 105,891.0AT 17,899.0 12,274.0 26,247.0 Net fixed assets 41,139.0 50,837.0 55,476.0

Investments 52,649.0 32,772.0 73,968.0AT Margin 9.7 5.8 8.7 Current assets 32,021.0 5 6,216.0 39,232.0

Receivables 6,798.0 9,599.0 8,494.0o. of shares (Mn No.) 289.0 289.0 289.0 Inventories 10,483.0 9,213.0 12,276.0

Cash 3,836.0 19,868.0 1,627.0arnings per share (EPS) 61.9 42.5 90.8 Total assets 125,809.0 139,825.0 168,676.0

ash flow RatioRs million ) Mar 08 Mar 09 Mar 10 Mar 08 Mar 09 Mar 10re tax profit 24,919.0 16,632.0 36,955.0 Revenue growth (%) 21.3 14.7 41.7otal tax paid 7,757.0 4,883.0 11,356.0 EBITDA growth(%) 16.7 24.0 98.2epreciation 5,727.0 7,165.0 8,414.0 PAT growth(%) 12.7 31.4 113.8hange in working capital 2,833.0 1,404.0 120.0

EBITDA margins(%) 14.4 9.5 13.4ash flow from operating act ivit ies 20,056 .0 20,318 .0 34,133 .0 Tax rate (%) 30.2 28.5 30.6apital Expenditure 17,454.0 16,863.0 1 3,2 12 .0 PAT margins (%) 9.7 5.8 8.7vestments and others 17,503.0 19,877.0 41,196.0

Dividend payout (%) 8.1 8.2 6.6ash flow from investing activities 34,957 .0 3 ,014 .0 54,408.0 Return on Equity (%) 22.9 13.5 24.2quity raised/(repaid) 0.0 0.0 0.0 Return on capital employed (%) 28.8 18.8 31.9ebt rai sed/(repaid) 5,287.0 4,787.0 1 ,597.0ividend (incl. tax) 1,693.0 1,183.0 2,021.0 Gear ing (x) 0.1 0.1 0.1thers (incl extraordinaries) 769.0 1 ,33 0.0 2 ,4 58 .0 I nter es t coverage (x) 83.3 8.5 78.9

Debt/EBITDA (x) 0.5 0.4 0.2ash flow from financing act ivit ies 4 ,3 63 .0 7,300 .0 2 ,034 .0hange in cash position 10,538.0 16,032.0 18,241.0 Asset turnover (x) 2.7 2.6 3.1pening cash 14,374.0 3,836.0 19,868.0 Current ratio (x) 2.5 2.1 2.5losing cash 3,836.0 19,868.0 1,627.0 Gross current assets (days) 61 84 43m : Not meaningful;


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FOCUS CHARTS & TABLES

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Director Name DesignationAmal Ganguli (Mr.) Non Executive DirectorDavinder Singh Brar (Mr.) Non Executive DirectorKeiichi Asai (Mr.) Di rectorKenichi Ayukawa (Mr.) Non Executive DirectorManvinder Singh Banga (Mr.) Non Executive DirectorOsamu Suzuki (Mr.) Non Executive DirectorPallavi Shroff (Ms .) Non Executive DirectorRavindra Chandra Bhargava (Mr.) ChairmanShinzo Nakanishi (Mr.) Managing DirectorShuji Oishi (Mr.) Di rectorTsuneo Ohashi (Mr.) Wholetime Director

Board of Directors

Additional Disclosure This report has been sponsored by NSE Investor Protection Fund Trust (NSEIPFT).

Disclaimer

This report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as

such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assume the entire risk of any use made of this data / report. CRISIL especially states that, it has no financial liability whatsoever, to the subscribers / users of this report. This report is for the personal information only of the authorised recipient in India only. This report should not be reproduced or

redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose.

CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report. For information please

contact 'Client Servicing' at +9122 33423561, or via email: [email protected].

Dec 2009 Mar 2010 Jun 2010 Sep 2010Promoter 54.2 54.2 54.2 54.2FI I 22.8 21.1 20.1 20.1DII 16.3 16.7 17.0 17.0Others 6.7 8.0 8.7 8.7

Shareholding Pattern (Per cent)

eq_rrl_maruti

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