Result Update
July 30, 2015
Rating matrix
Rating
Target
Target Period
Potential Upside
:
:
:
:
Maruti Suzuki India (MARUTI)
Buy
| 4857
12 months
13%
Multiple drivers for “domestic recovery play”!
What’s Changed?
Target
EPS FY16E
EPS FY17E
Rating
Changed from | 4266 to | 4857
Changed from | 176.4 to | 179.9
Changed from | 213 to | 220.8
Unhanged
Quarterly Performance
(| Crore)
Q1FY16 Q1FY15 YoY (%) Q4FY15 QoQ (%)
Revenue
13,424.9 11,369.6
18.1 13,624.8
-1.5
EBITDA
2,189.1 1,328.2
64.8 2,164.3
1.1
EBITDA (%)
16.3
11.7 462 bps
15.9 42 bps
Reported PAT 1,192.9
762.3
56.5 1,284.2
-7.1
Key Financials
| Crore
Net Sales
EBITDA
Net Profit
EPS (|)
FY14
42,645
5,089.9
2,783.0
92.1
FY15E
48,606
6,605.9
3,711.2
122.9
FY16E
55,890
9,147.6
5,432.9
179.9
FY17E
65,934
10,833.4
6,669.8
220.8
FY15E
35.0
39.5
19.2
5.5
15.6
17.2
FY16E
23.9
27.0
13.7
4.6
19.4
23.3
FY17E
19.5
22.0
11.2
3.9
20.1
23.6
Valuation summary
P/E (x)
Target P/E (x)
EV/EBITDA (x)
P/BV (x)
RoNW (%)
RoCE (%)
FY14
46.6
52.7
24.0
6.2
13.3
13.3
Stock data
Particular
Market Capitalization (| Crore)
Total Debt (FY14) (| Crore)
Cash and Investments (FY14) (| Crore)
EV (| Crore)
52 week H/L (|)
Equity capital (| crore)
Face value (|)
Amount
| 129773.6 Crore
| 1685.1 Crore
| 9442.8 Crore
| 122015.9 Crore
3704 / 1540
| 151 Crore
|5
Price performance (%)
Maruti Suzuki India Ltd
M&M Ltd
Tata Motors Ltd
1M
7.0
2.4
-12.1
| 4296
3M
13.5
12.2
-27.7
6M
15.9
1.4
-36.4
12M
70.6
9.1
-16.2
Research Analyst
Nishit Zota
nishit.zota@icicisecurities.com
Vidrum Mehta
vidrum.mehta@icicisecurities.com
ICICI Securities Ltd | Retail Equity Research
• Maruti Suzuki Ltd (MSIL) reported its Q1FY16 numbers with a strong
beat on the EBITDA margin front. MSIL reported revenues of |13,425
crore vs. our estimate of |13,400 crore (up ~18.1% YoY) led by
13.8% YoY increase in volumes
• EBITDA grew by 64.8% YoY to |2,189 crore, above our estimates of
| 2071 crore. The reported EBITDA margins came in at 16.3% as
against 11.7% YoY and 15.9% QoQ. However post normalizing for
one-off related to asset impairment (which is included in other
expenses) margins would have come at 16.9%.
• The company reported a PAT of | 1,193 crore crore (vs. expectation
of | 1,374 crore), The PAT came below our estimates on account of
lower other income (down 42% YoY/46% QoQ) & higher effective tax
rate
Structural factors favour recovery for PV industry; MSIL to benefit
Domestic sales of passenger vehicle grew by 3.7% in FY15 led by slight
improvement in consumer sentiment with expectation of faster economic
growth. The industry has shown recovery in FY16E, with the industry
volumes growing by 6.2% in Q1FY16, & MSIL outpacing that growth,
growing by 13.8%. We believe there are lot of favourable demand &
supply side variables that will lead to faster volume growth in FY16. While
the demand side variables include revival in economic growth, low
inflation, steady growth in disposable income, declining cost of
ownership (driven by lower fuel cost/ interest rates), the supply side
variables are new model launches & capacity expansions. We believe
MSIL’s largely petrol denominated small car portfolio is likely to benefit
the most as most small car buyers are first time buyers & sensitive to
change in cost of ownership. MSIL’s small car segment sales will also
gain from the 7th Pay commission that is expected in late FY16.
Strong product pipeline & reach to help maintain dominance
MSIL’s strength lies in withstanding slowdown & competition through its
wide distribution network. Maruti gained ~300 bps market share in FY14
& another ~200 bps in FY15. The gain in market share In FY14 is partly
driven by increasing rural penetration, gain in market share in FY15 is
driven by successful new products like Celerio, Ertiga & Ciaz. Maruti has
entered a strong product cycle & is looking to plug the gaps in its product
portfolio. While MSIL has already addressed the upper segment sedan
with its product Ciaz. Its recent launch S-cross & upcoming compact SUV
will help MSIL create presence in the SUV segment. Its premium
hatchback YRA will be pitted against the likes of Hyundai i20 & Honda
Jazz. Hence strong product pipeline of new launches and facelifts of
some of its existing models coupled with further enhancement of
distribution network & production capacity will help MSIL grow faster than
the industry.
Margin expansion & strong earnings growth
We prefer four-wheeler auto segment to the two-wheeler segment as low
penetration levels still provide headroom for sustained growth. Strong
operational performance in the two consecutive quarters has led us to
raise our EBITDA margin estimates to 16% for both FY16E & FY17E. We
believe earnings growth trajectory would be strong (~34% CAGR in
FY15-17E). Thus, we ascribe a multiple of 22x its FY17E EPS of |221 and
recommend Buy with target of |4,857.
Variance analysis
Total Operating Income
Raw Material Expenses
Employee Expenses
Q1FY16 Q1FY16E Q1FY15 YoY (Chg %) Q4FY15 QoQ (Chg %)
13,425 13,400 11,370
18.1 13,625
-1.5
9,045
9,107
8,184
10.5
9,223
-1.9
463
457
354
31.0
508
-8.9
Other expenses
EBITDA
EBITDA Margin (%)
1,728
2,189
16.3
1,766
2,071
15.5
1,504
1,328
11.7
14.9
64.8
462 bps
1,730
2,164
15.9
-0.1
1.1
42 bps
Other Income
Depreciation
Interest
Total Tax
PAT
172
672
19
477.6
1,193
359
641
5
410.4
1,374
297
584
39
240.3
762
-42.0
15.1
-50.6
98.8
56.5
320
660
103
437
1,284
-46.2
1.8
-81.5
9.2
-7.1
39.5
45.5
25.2
56.5
43
-7.1
3.8 382,812
5.7
717
-23.7 15,116
0.1
1.6
6.0
EPS
Key Metrics
ASP (|)
Provision for Royalty(| cr)
Discounts (|)
383,159 382,832 369,249
728
707
689
16,018 15,500 21,000
Comments
Topline in-line with estimates
Employee cost to sales lower 30 bps QoQ as last quarter included bonus
component
Increased 20 bps QoQ as it also included asset impairment
Higher than estimate mainly due to gross margin expansion, operating leverage
benefits & lower sales promotion expense
PAT came below estimates on account of lower other income &n higher effective
tax rate
Higher ASPs due to better product mix led by Swift Dzire
No fresh launches & facelifts Q1FY16 led to QoQ increase in discount. Q4
discounts tend to be lower due to seasonal factors.
Source: Company, ICICIdirect.com Research
Change in estimates
Old
56,167
FY16E
New
57,350
% Change
2.1
Old
65,219
FY17E
New
67,649
% Change
3.7
EBITDA
EBITDA Margin (%)
8,223
14.6
9,148
16.0
11.2
131 bps
9,638
14.8
10,833
16.0
12.4
124 bps
PAT
5,329
5,433
2.0
6,444
6,670
3.5
176
180
2.2
213
221
3.7
(| Crore)
Revenue
EPS (|)
Comments
Estimates have been raised marginally on improved demand sentiment & newer
product launches
Margins estimates raised to reflect benefit of expected gross margin expansion,
operating leverage benefit, reduced discounts & currency benefit
Reduced other income as per management guidance & higher effective tax rate
partially offsets the benefit from margin expansion
Source: Company, ICICIdirect.com Research
Assumptions
Total Volumes (nos)
Current
Earlier
FY14E
FY15E
FY16E
FY17E
FY16E
FY17E
1155041 1292414 1457200 1670564 1428198 1652967
Average ASPs (|)
369,205
376,083
383,545
394,683
383,496
384,746
RMC/Unit (|)
Royalty rates (%)
Discount (|)
271,069
6.0
16,950
270,873
5.7
19,529
264,936
5.5
16,005
271,757
5.6
16,000
269,085
5.6
17,000
271,098
5.6
15,000
Comments
Volume growth of ~13.7% CAGR in FY15-17E on expectation of economic recovery,
demand pick-up & new product launches
ASPs increase assumed on change in product mix with expected launches in premium
hatchbacks, sedan & compact UV segment
Raw material like steel and plastics likely to remain favourable
New launches & improvement in macro-environment will lead to reduction in discount
Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 2
Key conference call takeaways
ICICI Securities Ltd | Retail Equity Research
•
In FY15, the Indian passenger vehicle (PV) industry grew by 3.9%,
with only one quarter in the year posting ~5% growth & that too was
supported by the festive season. FY16 started on a good note, with
the growth for Q1FY16 at 6.2% as against 1.3% in Q1FY15. As per the
management, MSIL’s growth is attributable to new models &
increasing penetration. In Q1, MSIL’s market share increased by 2.8
percentage points to 46.8%.
•
For the overall industry, the petrol segment grew by 19% YoY, while
the diesel segment declined by 6.8% YoY. MSIL’s diesel sales were
flat on a YoY basis. For Q1FY16, the share of diesel vehicles sold
stood at 44%.
•
According to the management, the margin expansion is led by
softening commodity prices, operating leverage benefit & lower ad
spend. The management indicated that the benefits of commodity
prices & currency could come in the next quarter.
•
Exports revenues for Q1FY16 stood at | 1384 crore. The export
volumes grew by 22% YoY to 35635 units, with some growth coming
on the back of duty reduction in Sri Lanka & new launches
•
For the quarter, average discounts stood at | 16,018, against |15,116
in Q4FY15.
•
Direct and indirect import content combined currently stands at
~16% of sales while the royalty rate for Q1 came at ~5.6% against
5.4% in Q4. Increase in royalty rate was on account of exchange loss
on royalty provisioning
•
MSIL has an aim to sell 2 mn vehicles in the next five years, while
Suzuki has a plan to launch 20 new models in the same period.
•
MSIL’s AMT capacity has expanded from 4000 units/month to 8000
units/month & is expandable to 12000 units/month
•
On buyer segmentation, the management highlighted the fact that the
first time car buyer class increased from ~43% in Q4FY15 to 46% in
Q1FY16. The rural segment volume growth stood at 15%
•
MSIL intends to increase the share of long term investment
instruments, post a change in taxation rules regarding FMPs. This will
reduce the other income component. Also company has guided for a
higher effective tax rate of 27%
Page 3
Company Analysis
Unique position of dominance in spite of competition…
MSIL has maintained its market leadership despite the increase in
competitive intensity. Despite ~18 players being in the fray fighting for
the 2.5 million large market, MSIL has managed to hold ~45% market
share. The financial performance has been strong over the past years with
operating margins maintained at decent levels (over 10% in the recent
past). On the business levers side, all factors range from cost of car
ownership to demographics to new product launches led by S-Cross.
Allied to this, on the financial levers side, better operating leverage and
FX benefits are also in place to benefit MSIL.
We expect revenue growth at ~16.4% CAGR in FY15-17E reaching
~| 67649 crore in FY17E. Margins are likely to remain on an uptrend and
clock 16% in both FY16E & FY17E, as industry demand improves, leading
to better operating leverage and also reduction in discounting levels.
Also, increased traction in newer products in premium categories would
lead to better ASPs and, consequently, better margins and is likely to aid
profitability. We expect the bottomline to grow at ~34% CAGR in FY1517E and reach ~| 6670 crore in FY17E.
Exhibit 1: Topline and bottomline trends
8000
80000
6670
70000
6000
5433
49874
35587
10000
1635
43701
4000
3000
(| crore)
2392
30000
3711
2783
57350
40000
5000
67649
50000
43588
(| crore)
60000
20000
7000
2000
1000
0
0
FY12
FY13
FY14
FY15E
Topline
FY16E
FY17E
Bottomline
Source: Company press release, ICICIdirect.com Research
Exhibit 2: Margins to trend higher as volumes aid operating leverage
12,000
16.0
18
16.0
16
13.2
10,000
14
11.6
12
9.7
8
6
4
2
-
FY13
FY14
FY15E
EBITDA
FY16E
FY17E
Margins (%)
Source: Company press release, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 4
(%)
10
10,833.4
6,605.9
2,000
4,229.6
4,000
9,147.6
6,000
5,089.9
(| crore)
8,000
Export performance steady; bigger growth post Suzuki’s Gujarat plant!
Suzuki is aiming to let MSIL grow as a low-cost brand to target markets
such as Africa. MSIL already contributes ~45% to Suzuki’s global profits.
As such, Suzuki’s strategy to make MSIL its global export hub for low
priced products is logical. Currently, exports form ~9% of total sales for
MSIL, with the major export oriented product being the A-Star. Going
ahead, we have taken ~15% CAGR in FY15-17E in export volumes.
Exhibit 3: Export volumes
1600
FY13
FY14E
1510
1171
1054
400
1051
600
1006
800
1307
101
120
127
138
1000
1133
('000s)
1200
122
1400
140
161
1800
200
0
FY11
FY12
FY15E
Domestic
FY16E
FY17E
Exports
Source: Company press release, ICICIdirect.com Research
MSIL turns page as market share remains key focus
With an increase in competitive intensity from FY10-11 onwards coupled
with an increasing gap in petrol-diesel prices shifting customer preference
for diesel cars in FY12-13, MSIL’s market share had reduced from ~47%
in FY09 to ~39% in FY13. The market share was further lost on account of
persistent labour troubles at Manesar in both FY12 and FY13, which
halted production. However, with the fuel price fall and domestic fuel
price deregulation, there has been a recovery in petrol cars.MSIL has
since then increased its presence in terms of products as well as capacity
in both the petrol as well as diesel space. Launches of successful
products like Ertiga and Celerio also aided growth of market share in a
challenging environment. MSIL has regained a lot of lost ground in terms
of market share (YTD ~45% domestic). We expect MSIL to maintain
>40% market share despite the improvement in competition and growth
in the utility vehicle space in the coming years.
ICICI Securities Ltd | Retail Equity Research
Page 5
Exhibit 4: Domestic PV market share for MSIL
50
45
45
45
42
38
47
45
39
(%)
40
45
45
44
35
30
25
20
FY10
FY11
FY12
FY13
FY14
Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16
Domestic Market Share
Source: Company, ICICIdirect.com Research YTD for Q3FY15
Exhibit 5: Passenger car market share (excluding UVs)
62
58.2
(%)
48.8
53.1 52.2
51.3
44.1
46
42
47.9
47.3
50
51.0 51.4 51.0
Q2FY15
54
Q3FY14
58
40.9
38.7
37.6
35.3
38
36.4
34
Q1FY16
Q4FY15
Q3FY15
Q1FY15
Q4FY14
Q2FY14
Q1FY14
Q4FY13
Q3FY13
Q2FY13
Q1FY13
Q4FY12
Q3FY12
Q2FY12
30
MSIL's domestic share
Source: Company press release, ICICIdirect.com Research
Discounting levels declining with better macro environment & new
launches
In an intensely competitive industry struggling with demand slowdown,
the increase in discounting levels to gain volumes is to be expected. As
the market leader, MSIL had also been forced to give incentives to ward
off competition and retain market share. However, we believe the new
products launches (which do not offer any discounts) & facelifts will lead
to improved product mix that will effectively reduce the discount levels.
Discount on small cars (Alto, Wagon R) is broadly linked to the broad
macro environment. These discounts will reduce with the improving
macro economy conditions. From the higher discount levels of |21,000 in
Q3FY15, the same has substantially reduced to ~ |15,000 in Q4FY15 & |
16,000 in Q1FY16. We expect a reduction in average discounts from
|19,625 in FY15 to |16,000 in both FY16E and FY17E.
ICICI Securities Ltd | Retail Equity Research
Page 6
Exhibit 6: Discounting levels reducing
25000
17466
19,529
17500
16,005 16,000
13427
15000
(|)
21000 21000 21000
19412
20000
10500
10000
5000
0
Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 FY15E FY16E FY17E
Source: Company press release, ICICIdirect.com Research
Going ahead, as the industry recovers on the back of an improvement in
overall economic scenario and interest rate cuts, discounting levels are
likely to taper off from FY16E onwards, albeit not too sharply, thereby
aiding profitability slowly.
Exhibit 7: Annual discount trends and expectations
25000
19,529
20000
(|)
15000
16951
12504
12266
FY12
FY13
16,005
16,000
FY16E
FY17E
10000
5000
0
FY14
FY15E
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 7
Outlook and Valuation
We prefer the four-wheeler auto segment to the two-wheeler segment as
low penetration levels still provide headroom for sustained growth. We
continue to remain bullish on the longer-term growth prospects of the car
segment, especially MSIL, considering its dominant market share at
~45%. Strong operational performance in the two consecutive quarters
has led us to raise our EBITDA margin estimates to 16% for both FY16E &
FY17E. We believe earnings growth trajectory would be strong (~34%
CAGR in FY15-17E). Thus, we ascribe a multiple of 22x its FY17E EPS of
|221 and recommend Buy with target of |4,857.
Exhibit 8: Valuation
FY14
FY15E
FY16E
FY17E
Sales
(| cr)
42644.7
48605.5
55890.1
65934.3
Growth
(%)
0.1
14.0
15.0
18.0
EPS
(|)
92.1
122.9
179.9
220.8
Growth
(%)
16.3
33.4
46.4
22.8
PE
(x)
46.6
35.0
23.9
19.5
EV/EBITDA
(x)
24.0
19.2
13.7
11.2
RoNW
(%)
13.3
15.6
19.4
20.1
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 8
RoCE
(%)
13.3
17.2
23.3
23.6
Company snapshot
6,000
Target Price: 4857
5,000
4,000
(|)
3,000
2,000
1,000
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
0
Source: Bloomberg, Company, ICICIdirect.com Research
Key events
Date
Feb-10
Jul-10
Mar-11
Aug-11
Jan-12
Apr-12
Jul-12
Aug-12
Apr-13
Oct-13
Jan-14
Mar-14
Oct-14
Apr-15
May-15
Jun-15
Jul-15
Event
Largest recall in Maruti's history for 1 lakh A-star's for faulty parts. Maruti plans to double petrol capacity and investments to ~| 2,500 crore
Q1FY10 marks the change in royalty rates for Maruti from 3.3% to 5.9%, market disappointed
Auto stocks rebound as Union Budget witnesses no change of excise duties. Manesar workers go on strike for first time in May for two weeks
Labour trouble again brews up, production halted. Maruti Q2FY12 skids due to labour problems and high forex impacts as JPY unfavourable
Maruti witnesses strong valuation based bargain hunting as management expects worst to be over
Maruti launches the much awaited MPV product "Ertiga". Maruti announces merger with SPIL to consolidate business on the diesel side
Maruti stock tumbles as workers in Manersar facility turn violent, causes tragic death of HR manager Awanish Kumar Dev
Management lifts lockout post violence receding; production starts albeit slowly
Yen moving beyond 100 vis-à-vis US$ aids Q4FY13 profits as EBIDTA margins rise to 10.4%
Localisation and cost reduction initiatives Maruti surprise on Q2FY14 financials as margins surprise
MSIL board approves Gujarat plant expansion by way of 100% subsidiary of Suzuki Motor Corporation; institutional investors perturbed; stock falls
Management alleviates concerns of minority shareholders and removes uncertainty over the "mark-up" issue
Maruti launches a new product in the sedan segment "Ciaz"
MSIL reports bumper margins of 15.9% in Q4FY15. Announces dividend of | 25 per share
Maruti Suzuki 'Swift' completed 10 years of debut. The company has sold over 1.3 million car over the last 10 years
Company launches Celerio's diesel variant at |4.65 lakh
Maruti opens booking for premium crossover S-CROSS which is likely to to sold through its NEXA (premium) showrooms
Source: Company, ICICIdirect.com Research
Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10
Shareholding Pattern
Name
Suzuki Motor Corp
Life Insurance Corporation of India
HDFC Asset Management Co., Ltd.
ICICI Prudential Life Insurance Company Ltd.
UTI Asset Management Co. Ltd.
Reliance Capital Asset Management Ltd.
Norges Bank Investment Management (NBIM)
HSBC Global Asset Management (Hong Kong) Limited
ICICI Prudential Asset Management Co. Ltd.
Schroder Investment Management Ltd. (SIM)
Latest Filing Date
31-Mar-15
31-Mar-15
31-May-15
31-Mar-15
31-May-15
31-May-15
31-Dec-14
30-Apr-15
31-May-15
31-May-15
% O/S Position (m) Change (m)
56.21
169.8
0.00
5.94
17.9
-2.52
1.88
5.7
-0.19
1.22
3.7
-0.04
0.89
2.7
0.10
0.87
2.6
-0.14
0.78
2.4
2.35
0.75
2.3
-0.19
0.71
2.2
0.27
0.71
2.1
0.01
(in %)
Promoter
FII
DII
Others
Jun-14 Sep-14 Dec-14 Mar-15
56.2
56.2
56.2
56.2
22.0
21.7
22.0
21.8
14.0
14.5
14.9
14.7
7.8
7.6
6.9
7.3
Jun-15
56.2
21.8
14.6
7.5
Source: Reuters, ICICIdirect.com Research
Recent Activity
Buys
Investor name
William Blair & Company, L.L.C.
ICICI Prudential Asset Management Co. Ltd.
Fidelity Management & Research Company
Principal Global Investors (Equity)
SBI Funds Management Pvt. Ltd.
Sells
Value
19.54m
15.95m
15.84m
15.10m
11.07m
Shares
0.33m
0.27m
0.25m
0.25m
0.19m
Investor name
Life Insurance Corporation of India
APG Asset Management
Investec Asset Management Ltd.
Genesis Investment Management, LLP
T. Rowe Price Hong Kong Limited
Value
-149.71m
-75.99m
-75.88m
-43.41m
-39.06m
Shares
-2.52m
-1.44m
-1.28m
-0.81m
-0.74m
Source: Reuters, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 9
Financial summary
Profit and loss statement
(Year-end March)
Total operating Income
Growth (%)
Raw Material Expenses
Employee Expenses
Marketing Expenses
Administrative Expenses
Other expenses
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
PBT
Others
Total Tax
PAT
Growth (%)
EPS (|)
| Crore
FY14
43,701
0
31,310
1,368
0
0
5,933
38,611
5,090
20
2,084
176
829
3,659
0
876
2,783
16
92
FY15E
49,874
14
35,008
1,607
0
0
6,654
43,268
6,606
30
2,470
206
939
4,868
0
1,157
3,711
33
123
FY16E
57,350
15
38,607
1,876
0
0
7,720
48,202
9,148
38
2,567
34
933
7,479
0
2,046
5,433
46
180
FY17E
67,649
18
45,399
2,242
0
0
9,175
56,815
10,833
18
2,896
27
1,226
9,137
0
2,467
6,670
23
221
Source: Company, ICICIdirect.com Research
(Year-end March)
Profit after Tax
Add: Depreciation
(Inc)/dec in Current Assets
Inc/(dec) in CL and Provisions
Others
CF from operating activities
(Inc)/dec in Investments
(Inc)/dec in Fixed Assets
Others
CF from investing activities
Issue/(Buy back) of Equity
Inc/(dec) in loan funds
Dividend paid & dividend tax
Inc/(dec) in Sec. premium
Others
CF from financing activities
Net Cash flow
Opening Cash
Closing Cash
| Crore
FY14
2,783
2,084
191
868
5,926
-3,583
-3,756
1,355
-5,985
0
0
-424
0
336
-88
-147
776
630
FY15E
3,711
2,470
-453
1,939
7,668
5,817
-3,201
-8,403
-5,787
0
0
-881
0
-1,505
-2,385
-505
630
125
FY16E
5,433
2,567
-133
161
8,028
-1,000
-4,000
-1,290
-6,290
0
0
-1,233
0
100
-1,133
606
125
731
FY17E
6,670
2,896
-2,287
2,019
9,298
-1,000
-3,000
-1,033
-5,033
0
0
-1,479
0
100
-1,379
2,885
731
3,616
FY14
FY15E
FY16E
FY17E
92.1
161.1
694.4
12.0
20.8
122.9
204.6
788.2
25.0
4.1
179.9
264.8
927.2
35.0
24.2
220.8
316.7
1,099.0
42.0
119.7
11.6
8.6
6.4
15.2
12.1
41.9
13.2
10.0
7.4
16.2
8.0
41.8
16.0
13.4
9.5
14.0
12.5
37.5
16.0
13.9
9.9
14.0
12.5
37.0
13.3
13.3
25.9
15.6
17.2
21.6
19.4
23.3
29.7
20.1
23.6
33.6
46.6
24.0
2.9
3.0
6.2
35.0
19.2
2.6
2.7
5.5
23.9
13.7
2.2
2.3
4.6
19.5
11.2
1.8
2.0
3.9
0.3
0.1
0.8
0.7
0.0
0.0
0.6
0.6
0.0
0.0
0.7
0.6
0.0
0.0
1.0
0.7
Source: Company, ICICIdirect.com Research
Balance sheet
(Year-end March)
Liabilities
Equity Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Others Liabilties
Total Liabilities
Assets
Gross Block
Less: Acc Depreciation
Net Block
Capital WIP
Total Fixed Assets
Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Creditors
Provisions
Other current Liabilities
Total Current Liabilities
Net Current Assets
Other Assets
Application of Funds
Cash flow statement
| Crore
FY14
FY15E
FY16E
FY17E
151
20,827
20,978
1,685
587
437
23,686
151
23,658
23,809
180
481
398
24,868
151
27,858
28,009
280
491
438
29,218
151
33,048
33,199
380
501
478
34,558
22,702
11,912
10,790
2,621
13,412
10,118
1,706
1,414
1,251
358
630
5,359
4,898
678
1,274
6,849
-1,491
1,647
23,686
25,636
14,115
11,521
2,621
14,142
12,814
2,615
1,069
1,172
326
125
5,307
5,561
1,361
1,867
8,789
-3,481
1,393
24,868
29,936
16,682
13,253
2,321
15,575
14,814
1,672
1,914
1,167
561
731
6,046
5,742
1,462
1,745
8,949
-2,904
1,733
29,218
32,936
19,578
13,357
2,321
15,679
16,814
3,386
2,258
1,460
498
3,616
11,218
6,684
1,769
2,516
10,969
249
1,816
34,558
Source: Company, ICICIdirect.com Research
Key ratios
(Year-end March)
Per share data (|)
EPS
Cash EPS
BV
DPS
Cash Per Share
Operating Ratios
EBITDA Margin (%)
PBT / Net sales (%)
PAT Margin (%)
Inventory days
Debtor days
Creditor days
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt/EBITDA
Debt / Equity
Current Ratio
Quick Ratio
Source: Company, ICICIdirect.com Research
.
ICICI Securities Ltd | Retail Equity Research
Page 10
ICICIdirect.com coverage universe (Auto & Auto Ancillary)
CMP
Sector / Company
(|)
TP(|) Rating
800
932 Hold
Amara Raja (AMARAJ)
173
228 Buy
Apollo Tyre (APOTYR)
68
68 Hold
Ashok Leyland (ASHLEY)
1,990 2,833 Buy
Bajaj Auto (BAAUTO)
739
750 Hold
Balkrishna Ind. (BALIND)
1,216 1,178 Hold
Bharat Forge (BHAFOR)
21,723 24,000 Hold
Bosch (MICO)
15,175 18,800 Buy
Eicher Motors (EICMOT)
123
131 Hold
Escorts (ESCORT)
176
220 Buy
Exide Industries (EXIIND)
2,356 3,036 Hold
Hero Mototcorp (HERHON)
108
171 Buy
JK Tyre & Ind (JKIND)
1,182 1,457 Buy
M&M (MAHMAH)
200
260 Buy
Mahindra CIE (MAHAUT)
Maruti Suzuki (MARUTI)
3822.6 4266 Buy
Motherson (MOTSUM)
463
512 Buy
Wabco India (WABTVS)
5284.8 5999.6 Buy
Source: Company, ICICIdirect.com Research
M Cap
(| Cr)
13,666
8,718
19,337
57,589
7,143
28,322
68,209
40,988
1,463
14,969
47,040
2,457
69,788
6,445
115519
40872
10041
ICICI Securities Ltd | Retail Equity Research
FY15E
25.1
19.5
1.2
111.8
48.0
33.9
341.2
228.0
6.9
6.0
128.8
15.2
53.2
5.3
122.9
9.1
67.2
EPS (|)
FY16E
34.0
21.4
2.1
155.5
52.7
43.3
463.0
393.8
12.9
8.4
166.2
22.9
67.8
9.9
176.4
16.9
117.8
P/E (x)
EV/EBITDA (x)
RoCE (%)
RoE (%)
FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E
42.3 31.9 23.5 18.9 20.9 16.5 13.1 33.9 34.0 33.0 25.0 26.4 25.6
22.8
8.9
8.1
7.6
5.5
5.5
5.3 19.3 16.6 15.3 17.9 16.5 15.1
3.5 55.4 32.6 19.8 21.9 15.3 11.6
6.7 11.0 14.9
6.6 10.8 16.0
180.0 17.8 12.8 11.1 11.8
9.1
7.3 38.0 39.4 40.4 29.9 34.8 33.7
62.5 13.8 12.5 10.6
8.6
7.4
6.1 15.6 16.4 19.2 20.0 15.6 16.4
52.9 35.8 28.0 23.0 16.5 13.6 11.5 25.2 25.8 26.7 24.5 25.0 25.1
600.0 73.0 53.8 41.5 49.6 36.2 27.9 15.0 17.5 19.1 15.7 18.8 21.2
703.9 66.6 38.5 21.6 40.7 25.5 14.6 23.9 31.0 38.6 24.2 30.8 36.8
22.4 18.5
9.8
5.7
9.0
6.6
3.7
5.3
8.1 12.7
4.3
7.6 11.8
11.4 29.2 20.9 15.4 18.8 14.0 10.4 17.8 21.9 25.8 12.7 15.8 18.6
202.4 18.3 14.2 11.6 14.6 16.3 15.1 46.8 52.5 52.4 39.4 42.8 42.8
26.3
7.1
4.7
4.1
5.3
4.1
3.4 19.9 22.8 24.1 26.7 30.9 28.1
83.8 22.2 17.4 14.1 15.8
9.4
7.5 14.9 18.2 20.7 18.1 18.2 19.3
13.2 37.6 20.2 15.2 13.5 10.1
8.2
6.9 12.6 15.7
6.9 11.4 15.3
213.3 31.1 21.7 17.9 17.1 13.5 11.2 17.2 20.1 20.3 15.6 19.1 19.6
27.3 50.9 27.4 17.0 14.5 10.7
7.3 22.2 27.6 35.8 24.8 36.3 41.6
166.7 78.6 44.9 31.7 47.0 31.1 22.1 14.7 20.9 23.2 18.5 24.3 27.6
Page 11
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns
ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey
Head – Research
pankaj.pandey@icicisecurities.com
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com
ICICI Securities Ltd | Retail Equity Research
Page 12
ANALYST CERTIFICATION
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views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
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ICICI Securities Ltd | Retail Equity Research
Page 13