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First Cut Analysis: Maruti Suzuki India Ltd Q4FY20 Results - HDFC Securities

Posted On: 2020-05-13 20:49:07

Weak Qtr as expected, MSIL's strong balance sheet / broad based portfolio to benefit

Mr. Aditya Makharia, Institutional Research Analyst, HDFC Securities

MSIL (Add) 4QFY20: Weak Qtr as expected, MSIL's strong balance sheet / broad based portfolio to benefit

Maruti reported 4QFY20 PAT of Rs.12.9bn, a decline of -28% YoY. Volumes for the quarter declined by 16% YoY to 385k units. However, realisations were flattish YoY / QoQ. Revenue declined by 15% YoY to Rs.182bn.

EBITDA margin at 8.5% contracted 205bps YoY owing to negative op lev. Other expenses were higher +330bps YoY (due to higher advertisement expenses and one-time impact related to BS4 discontinuation), which was partially offset by lower RM expense (-220bp YoY).

Higher other income (+2%YoY) and lower corporate tax rate at 18% (vs. 22.3% YoY) cushioned the performance.

Our View: Maruti has a robust balance sheet with cash reserves in excess of Rs.350bn, which is ~25% of the current market cap. Further, the OEM enjoys market dominance with 50% market share, which it has sustained through the past decade. In a downturn, the industry leader benefits due to its scale and healthy balance sheet. We believe Maruti will also benefit from its entry level portfolio as consumers downtrade. Further, MSIL's collaboration with the world's leading OEM - Toyota will benefit in these uncertain times.

Shares of MARUTI SUZUKI INDIA LTD. was last trading in BSE at Rs.5035.25 as compared to the previous close of Rs. 4950.15. The total number of shares traded during the day was 107990 in over 19560 trades.

The stock hit an intraday high of Rs. 5321.3 and intraday low of 4987.8. The net turnover during the day was Rs. 557546695.

Source: Equity Bulls

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