tips to buy best maruti suzuki auto shares buying and selling shares in India

Maruti Suzuki India Ltd (updated - 25 April 2009)
Significantly higher realisations and higher exports have helped the Rs 20,455 crore Maruti Suzuki post astrong top line growth of 32 per cent in the March 2009 quarter. While volumes were up just 17 per cent during the period, India’s biggest car company has managed to sell more of its bigger models, which have fetched it better prices.

Exports of the Astar also contributed to the revenues, though currency fluctuations resulted in a forex loss of around Rs 120 crore. If one was to ignore the losses, the company’s operating profit margin has risen 190 basis points sequentially to 8.1 per cent — the OPM was 8.2 per cent in the September 2008 quarter.

Also, the net profits for the quarter would not have fallen had the forex losses not been incurred. With prices of commodities easing, it’s possible operating margins will improve in the current year to around over 9 per cent.

However, it’s the top line that could be under pressure because although demand in the rural areas remains fairly buoyant, consumer spends are likely to remain subdued and it’s unlikely that the momentum in volumes seen in the March quarter will sustain. The Swift and the Dzire should continue to do well because they will be available in larger numbers in their diesel versions - Maruti will have access to more diesel engines this year. However, the Swift could face some competition from the Honda Jazz, which is slated to be launched in June, and possibly from the diesel version of the Hyundai i10, while the Dzire could see some competition from the i20.
Maruti of course, will unveil the Ritz, in both petrol and diesel versions, sometime in the next few months. Industry watchers believe Maruti’s volumes could grow by about 10 per cent in the current year, driving up sales by about 15 per cent. The stock has rallied by about 46 per cent since the start of the year but at the current price of Rs 803 trades at a somewhat expensive 14 times the estimated 2009-10 earnings.
source - BS

Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but does not warrant or guarantee their accuracy or date.
Our site takes no responsibility for any investment decisions based on recommendations provided on website.

Maruti Suzuki India Ltd (updated - 03 April 2009)
March has been a good month for Maruti but it would be surprising if India’s biggest car maker is able to sustain the last quarter’s momentum, of around 70,000 cars a month, this year.

For one, a fair part of the spurt in volumes in the March 2009 quarter is the result of pent up demand in the previous quarter — there were those who wanted to wait for the news flow to get more encouraging before they took the plunge. No doubt, the news is better to the extent that the environment may not be showing signs of further deterioration and demand appears to have picked up in some sectors.

However, the macro economic environment isn’t showing signs of any major improvement either — the State Bank of India chairman himself has admitted that the pick up in credit growth hasn’t been up to expectations —so it seems unlikely that prospective buyers will take the plunge very soon.

In other words, even though fuel prices may be lower and interest rates come down further customers aren’t really expected to rush to buy big ticket items because they’re only slightly more comfortable with the economic outlook than they were three or four months back.
It’s true that Maruti has come up with a couple of winners in the Swift and the Dzire and their diesel versions will sell in bigger volumes this year since the engines will be more easily available. Also the Star should be able to clock reasonably good volumes in overseas markets. Despite this, however, it doesn’t seem like Maruti will be able to grow volumes by more than 1011 per cent this year.

The Maruti stock has rallied by about 45 per cent since January and the stock is a no doubt a great play on the rising incomes and aspirations of middleclass Indians. At the current price of Rs 795 though, it trades at around 14 times estimated 2009-10 earnings. That’s not too expensive except that there isn’t enough of a cushion in case demand doesn’t come through.
source - BS

Maruti Suzuki India Ltd (updated - 24 July 2009)
Given the strong turnaround in profitability, it wasn’t surprising that the Maruti Suzuki stock surged 6 per cent on Thursday. A better product-mix with a good share of diesel vehicles and higher exports have resulted in India’s biggest car company turning in a strong revenue growth of 34 per cent to Rs 6,340 crore in the June 2009 quarter.

The Rs 20,455crore firm’s vehicles have clearly fetched it good realisations though volumes were up just under 18 per cent. With costs under control, the operating profit margin, at 12.2 per cent, is back to the levels where it was a year back, while there has been a jump in the margin of nearly 400 basis points sequentially. With a panIndia presence and more than a 50 per cent market share, it’s possible Maruti’s volumes could increase by about 11-12 per cent in the current year, driven by models such as the Ritz and the Swift in the home market and the A Star in the export market.

While there is no doubt competition from multinationals across segments, the company enjoys strong brand loyalty and has managed to cash in on the growing demand in semi-urban markets.

In the process, it has gained market share in the passenger car segment of over 250 basis points in the last few months. Since Maruti is clearly able to earn good realisations, especially on diesel cars, it’s possible, its revenues could grow by about 20 per cent in the current year. With raw material costs expected to stabilise, it should not be too difficult for the company to sustain operating profit margins at levels of 12 per cent though adverse movements in the currency could hurt. The stock has run up sharply in the past few months gaining 66 per cent since April. At the current price of Rs 1,296, it trades at just over 20 estimated 2009-10 earnings and is not cheap.
source - BS

Maruti Suzuki India Ltd (updated - 04 Sept 2009)
Driven by demand for Swift and D’zire models, Maruti’s sales in the home market rose 29 per cent year-on-year in August and were way ahead of expectations. It’s possible that a fair share of the demand is emanating from urban markets. Sales from the top ten cities, which fell in 2008-09, had risen some 10 per cent in July and it’s likely the trend has sustained in August.

With over 40 per cent of Maruti’s customers located in urban markets, a further revival in consumer sentiment in these areas can only mean more business for India’s biggest car maker. The company’s position in the compact car segment is now even stronger with the refreshed Estilo, which followed the launch of the A Star in January and the Ritz in May.

This segment, which also includes the Swift, saw sales grow over 39 per cent in August; the petrol version of the Ritz has been popular, which works well for Maruti because it qualifies as a small car and attracts a lower excise duty. The sedans, D’zire and SX4, also fared extremely well, clocking a growth of 44 per cent, albeit on a lower base.

Going by the current momentum, the company should grow at least 15 per cent in the home market this year, though the management has indicated amore conservative number of 10 per cent. The outlook for exports is also bright - in August, exports were up 156 per cent yearon-year, with the A Star doing particularly well.

In the current year, the company is expected to turn in revenues of close to Rs 26,000 crore over the Rs 20,455 crore reported in 2008-09, an increase of over 25 per cent. The combination of a better product mix, better operating leverage and lower royalty costs should result in an operating profit margin of around 11 per cent, which means the net profit could grow as much as 60 per cent over the Rs 1,219 crore posted last year. At the current price of Rs 1,507, the stock trades at 21 times estimated 2009-10 earnings.
source - BS

Maruti Suzuki India Ltd (updated - 27 Oct 2009)
India’s biggest car maker has sold a bigger share of more profitable cars and also exported more in the September 2009 quarter. This has pushed the operating profit margin (opm) up by 70 basis points sequentially to 11.9 per cent. With governments offering scrappage incentives, the demand for small cars in the overseas markets was strong and Maruti’s exports increased 109 per cent year-on-year. That drove the company’s top line up by a smart 47 per cent year-on-year.

While the export story should continue to fetch profit with about 70 per cent of export revenues now earned from the European markets, the company’s focus on rural markets too is paying off. With rural spends less affected by the slowdown in the economy, Maruti was able to sell more cars in the hinterland raising the sales volume in the home market by20 per cent year-on-year. Compared with 12 per cent in 2008-09, analysts estimate that the rural markets now fetch the company approximately 16 per cent of revenues.
Business is clearly looking up in urban markets too - volumes in the top 10 cities were up 8 per cent in the September quarter, compared with a marginal fall in the June quarter. That apart, consumers are now able to access loans more easily.Currently, about 70 per cent of the sales come through financing schemes, compared with 66 per cent at the end of the June quarter.

With the macroeconomic environment now improving, industry watchers estimate that volumes in the home market can grow by about 16-17 per cent in the current year, though the momentum may slow down next year with volumes growing at 12-13 per cent.

While there was some concern relating to the sales during the month of September, which were a tad disappointing especially in the home market, some of that was because of production constraints. Nevertheless, models such as SX4, D’zire and Ritz continue to be extremely popular. Also, with the economy now recovering, sales will pick up in the second half of the year.

Maruti is expected to grow its earnings per share by about 20-25 per cent in 2010-11. At Rs 1,502, the stock trades at 16 times estimated 2010-11 earnings.
source - BS

Maruti Suzuki India Ltd (updated - 15 Dec 2009)
Volkswagen (VW), the largest carmaker in Europe, purchased 19.9 per cent stake in Maruti Suzuki’s parent, Suzuki Motors, for $2.5 billion. While Suzuki will use these funds for R&D with a focus on environment and gen-next technology and reducing interest burden, does the deal have any significance for Maruti?

In terms of a global presence, while Suzuki is stronger in India and Japan (a fourth of sales mix in 2008-09 comprises Asia), 57 per cent of Volkswagen’s sales mix is from Europe. The noteworthy point is that Volkswagen does not have a significant presence in the entry level ($4,000-10,000) car segment (a domain where Suzuki has proven track-record), but is very strong in diesel engine technology (an area where Suzuki lags far behind).

For Maruti Suzuki, it has already achieved 100,000 cumulative export of its compact car A-Star since its first shipment to Europe in January 2009, making it a major export destination for the company. “Export benefits (on account of the global deal) may not be reflected into numbers in the immediate future, but visibility for longterm export development will definitely improve,” states an MF Global report.

Analysts believe there is not going to be any immediate structural change in Maruti’s business model. However, going forward, it can have access to better technology and can strengthen its position globally. The deal will also help Maruti to compete with Honda and Toyota who plan to enter India with their respective small cars.

Meanwhile, analysts’ estimates domestic sales of Maruti to grow 16 per cent and 13 per cent in 2009-10 and 2010-11 respectively, while its Ebitda margin is expected to improve 379 basis points and 28 basis points, respectively. However, costs pressures due to rising inputs prices may impact profitability going ahead.

The stock has run up 8.4 per cent in the last one month and trades at 15 times its 200910 and 13 times its 2010-11 cash EPS. BRICS Securities expects it to trade at 14 times its cash EPS (its long-term average multiple). Analysts suggest that one can stay invested for the long-term.
source - BS