As the earning season has concluded, investors are taking stock about the auto sector’s FY24 Q2 results and updated guidance numbers. Analyst Julie Boote reviews the key developments in the industry, and how these could affect automakers’ earnings in the second half of the fiscal year.
A director at Maruti Suzuki India Ltd bought 345,200 shares at 8,569.665INR and the significance rating of the trade was 67/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two...
Good traction from recent launches; RM/FX benefits to accrue in 2QFY23 Maruti Suzuki (MSIL) reported an in-line operating quarter driven by higher realization. Favorable product lifecycle is likely to drive volumes, market share and margins, whereas moderating commodity prices and favorable FX are expected to boost margins. We maintain our FY23E/FY24E EPS. Reiterate BUY with a TP of INR10,700 (premised on ~27x Jun'24E consolidated EPS). Higher RM/staff costs hurt margins MSIL's re...
The general evaluation of MARUTI SUZUKI INDIA (IN), a company active in the Automobiles industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 3 out of 4 possible stars while its market behaviour can be considered as moderately risky. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Slightly Positive. As of the analysis date January 4, 2022, the closing price was...
(MSIL IN, Mkt Cap USD27.8b, CMP INR6848, TP INR8200, 20% Upside, Buy) MSIL’s FY21 annual report highlights the initiatives (digitization, online financing, subscription service, etc.) it took to emerge stronger from the COVID-19 pandemic. The management has shared its thought process on the path to attaining net zero emissions. It lays down the strategy to meet CAFÉ-2 norms from Apr’22. Key highlights from the annual report: Net zero emissions – many paths to green mobility: MSIL bel...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
MARUTI SUZUKI: Weak performance in a tough quarter; Good demand recovery | RM cost inflation to persist in 2QFY22 (MSIL IN, Mkt Cap USD29b, CMP INR7150, TP INR8200, 15% Upside, Buy) Maruti Suzuki (MSIL) reported a weak performance in 1QFY22, weighed by the impact of the lockdowns on volumes as well as commodity cost inflation. While commodity inflation would persist in 2Q, there are drivers in place for sustained volume and margin recovery from 2HFY22E. We lower our FY22E/FY23E EPS by 13...
Julie Boote has written her 2020 look ahead for Japan's auto assemblers. Intended to serve as a reference document throughout the year, the report discusses the global auto sales trends in 2019 and the outlook for 2020, with separate discussions on USA, Japan, Europe, China and RoW, providing an overview of assemblers' sales activities and their economic backdrop.
Maruti Suzuki: Miss on higher discounts; demand outlook improving (MSIL IN, Mkt Cap USD29.6b, CMP INR6997, TP INR8000, 14% Upside, Buy) Performance bottoms out; Buy into weakness MSIL’s 3QFY20 results are a reflection of the company’s efforts to revive demand through discounts during the festive season and ahead of year change/BS6 transition. We believe MSIL’s operating performance has bottomed out and recovery is expected from 1QFY21. Our FY20/FY21 EPS estimates remain unchanged and we...
Q2FY20 results Operating performance surprises: Maruti Suzuki’s Q2FY20 PAT at Rs13.6bn (-39% yoy) was 28% above our estimates. The variance was on account of higher than expected gross margins and a tax reversal. Gross margin stable: Revenues declined to Rs 170 bn (-20% yoy) on account of a volume decline of 30%. Revenues benefitted from higher realisations (up ~2% qoq). The sequential realisation increase despite higher discounts largely reflects price hikes on account of the transition...
Breakout probability on the rise The probability for a breakout for global equities (MSCI ACWI) has increased in the past week based on several positive technical developments which we highlight below. Still, there are several indicators that continue to tell us we are not yet out of the woods. • Emerging Markets. The MSCI EM index exhibits bullish price and RS reversals -- add exposure/market weight. This is a major positive for both EM and global equities as it is a characteristic consist...
Maruti Suzuki | Annual Report Update: FY20 – an unpredictable year, but expect normalcy in FY21; EV launch in 2020 | CNG & hybrids to compensate for diesel discontinuance (MSIL IN, Mkt Cap USD24.6b, CMP INR5779, TP INR6950, 20% Upside, Buy) Our analysis of MSIL FY19 annual report revealed the company’s take on (a) the current demand environment and outlook, (b) its Toyota alliance, (c) its strategy on EVs and other alternate fuels, and (d) plans for cost reduction. Key insights highlighted ...
Q1FY20 results Operating performance inline: Maruti Suzuki’s Q1FY20 PAT at Rs14.4bn (-27% yoy) was 17% above our estimates. The variance was on account of high other income, lower than expected tax rate and improved realisation. However, operating EBIT met expectations. Margins drop sharply: Revenues declined Rs 196.7 bn (-12% yoy) on account of a volume decline of 17%. Revenues benefitted from an accounting policy related to freight (increased revenue and other expenses by ~Rs2.3bn) as well...
Q1FY20 results Operating performance inline: Maruti Suzuki’s Q1FY20 PAT at Rs14.4bn (-27% yoy) was 17% above our estimates. The variance was on account of high other income, lower than expected tax rate and improved realisation. However, operating EBIT met expectations. Margins drop sharply: Revenues declined Rs 196.7 bn (-12% yoy) on account of a volume decline of 17%. Revenues benefitted from an accounting policy related to freight (increased revenue and other expenses by ~Rs2.3bn) as well...
Maruti Suzuki: In-line performance; demand outlook uncertain (MSIL IN, Mkt Cap USD25.4b, CMP INR5806, TP INR6950, 20% Upside, Buy) In-line EBIT margin: Net realization increased 7% YoY (+4.6% QoQ) to ~INR489.8k (our estimate: ~INR475k). Net sales were down ~12% YoY (-8% QoQ) to ~INR197.2b (our estimate: ~INR191.3b) due to ~18% YoY volume decline. EBIT margin shrank 5pp YoY (-110bp QoQ) to 5.7% (our estimate: 5.9%) owing to higher depreciation, although the impact of operating deleverage w...
Q4FY19 results Weak operating performance: Maruti Suzuki’s Q4FY19 PAT at Rs18bn (-5% yoy) was 2% above our estimates. A weak operating performance (EBITDA margins were ~190bps below expectations) was offset by higher other income/lower tax rate. Margins drop sharply: Revenues at Rs 215bn grew by 2% yoy with realizations improving by ~2% qoq on lower discounts. EBITDA margins came in at 10.5% (down 380bps yoy, up 70bps qoq; est: 12.4%) with gross margins declining by 50bps qoq. While discount...
MARUTI SUZUKI: Margins hurt by several headwinds; Inventory under control (MSIL IN, Mkt Cap USD29.7b, CMP INR6903, TP INR8047, 17% Upside, Buy) Margins below estimates at 10.5%: Revenues grew 1.4% YoY to INR214.6b (v/s est. of INR207.5b), led by 2.1% increase in realizations to INR468.1k (v/s est. of INR452.6k); but, volumes declined 0.7%. EBITDA margins at 10.5% (v/s est. of 12.1%, +70bp QoQ, -370bp YoY) were impacted by (a) inventory de-stocking, (b) fixed cost/depreciation at Gujarat's...
While specifics of the Toyota-Suzuki alliance are still unclear, emergent details suggest a quid-pro-quo arrangement between the partners, Toyota and Suzuki. At a broader level, while Toyota is clearly seeking to enhance access to the Indian market, Suzuki is looking to gain access to new age technologies (including Toyota’s hybrid system). Although the swap seems beneficial (and ‘win-win’), from MSIL’s shareholder perspective, the question arises if the swap is worth the cost? What is MSIL of...
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