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MOSL: Morning India (26/October/18): 1. Maruti Suzuki; 2. Bharti Airtel; 3. JSW Steel; 4. Bajaj Auto; 5. Yes Bank; 6. Bharti Infratel; 7. Piramal Enterprises; 8. Biocon; 9. L&T Infotech; 10. BHEL

MOrning India (26/October/18): 1. Maruti Suzuki; 2. Bharti Airtel; 3. JSW Steel; 4. Bajaj Auto; 5. Yes Bank; 6. Bharti Infratel; 7. Piramal Enterprises; 8. Biocon; 9. L&T Infotech; 10. BHEL

 

Today’s top research idea

Maruti Suzuki: Mix dilutes impact of higher discounts; FX impact to come in 2H

• revenue grew 2% YoY to INR222.3b (in-line) in 2QFY19, led by a 3.7% increase in realizations to INR458.6k (our estimate: ~INR455.6k). Volumes, however, declined 1.5% YoY.
• EBITDA margin came in at 14.5% (-40bp QoQ, -240bp YoY; our estimate: 14.2%), as the impact of higher discounts (+80bp QoQ) was offset by mix.
• PAT declined ~15% YoY to INR21b (our estimate: INR20.1b).
• MSIL remains committed to double-digit growth in FY19, but sees challenges in the form of higher fuel prices and an increase in insurance costs. Retails in rural grew 13% in 1HFY19, but urban volumes were flat.
• Expect impact of RM (Steel led) and FX (indirect imports) to come through in 2HFY19.
• We cut our FY19/20E consol. EPS by 4-6% to factor in lower volumes and a higher tax rate. Maintain Buy with a TP of INR8,484 (22.5x Sep’20 EPS).

Piping hot news

RBI plan to move from wholesale cash cycle to a retail-based model

• The Reserve Bank of India (RBI) is in discussions with Cash Logistics Companies (CLCs) on a road map for changing the cash management cycle of the economy, in the coming years. The plan to move from a wholesale cash cycle, in place at present, to a retail-based model will increase the velocity of cash circulation, which will boost economic activity, industry sources said.