th january 2019 sector: automobiles buy...msil’s financial metrics such as margins are far...

Way2Wealth Brokers Pvt. Ltd. (CIN U67120KA2000PTC027628) SEBI Rgn. No. : INH200002739No. 14, Frontline Granduer, Walton Road, Bangalore-560001; Website: www.way2wealth.com Email: [email protected]

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SECTOR: AUTOMOBILES

INITIATING COVERAGECMP: `7,466/-

9th January 2019

BUY

Green LiGhts AheAd…

Chintan Gupta

Tel: +9122-66638972

[email protected]

http://www.way2wealth.com/

mailto:[email protected]



Key Stock Data

CMP `7,466Market Cap (`Bn) 2255.252W High/Low 9,923/6,502Shares o/s (Mn) 302.0

Bloomberg MSIL:ISNSE Code MARUTIBSE Code 532500

Company Details

Shareholding Pattern (Sep-18)

Promoters 56.21

FIIs & DIIs 36.15

Public & Others 7.64

210 January 2019

Comparison Chart

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Maruti Suzuki Nifty 50




Way2wealth Research is also available on Bloomberg WTWL <GO> 310 January 2019

Investment Theme

BUY with Target Price of `8,829 (upside potential of 18% over 12-18 months).Key themes and analysis in this report include:

Competitive intensity (as indicated by the Herfindahl-Hirschman Index (HHI)) has been declining for passenger vehicles(PV’s) in India. This is due to the fact that most global OEM’s continue to struggle in India due to lack of focus and researchand development on the small car segment.

Rising industry capacity utilization due to higher penetration of PV’s in India and insignificant capacity expansion plans overthe next 2-3 years can further lower discounts and improve the margin profile of the listed players.

On the back of aforementioned positive industry dynamics, we prefer Maruti Suzuki India Ltd. (MSIL) as our top pick inthe passenger vehicle space as it is the only pure-play listed PV OEM in India. We believe MSIL is well poised to enter along term structural growth phase due to vehicle penetration (28 four-wheelers per 1000 people) close to inflexion point asseen in other markets such as Japan, South Korea and China, significant premiumisation as customers upgrade and morefeatures get added, levers for margin expansion in the form of lower royalty payments and increasing contribution fromGujarat plant (though margins would be lower in the near term due to initial start-up costs for the plant) and strong productpipeline over the next 2-3 years.

Other growth drivers include Suzuki’s partnership with Toyota which is steadily gathering momentum with an agreementreached on a number of issues including sharing of EV technology with Suzuki by Toyota. This agreement is likely to play acrucial role in the long term for MSIL as EV penetration gradually scales up in India over the long term.

At CMP of `7,466, MSIL is currently trading at FY20E and FY21E EV/EBITDA of 14.8x and 12.8x respectively. We valueMSIL at `8,829 per share by applying 15.1x EV/EBITDA, at a premium of 20% to its 3 year average EV/EBITDA of12.6x. We believe MSIL deserves a premium EV/EBITDA multiple compared to its historical 3 year average due to thefollowing reasons:





Why MSIL deserves a premium compared to its historical EV/EBITDA multiple

Scarcity premium: MSIL deserves a scarcity premium as it is the only pure-play listed PV player. Seeing through nearterm challenges, we believe fundamentals around penetration, rising urban discretionary spends and demographicsare attractive. PV industry and MSIL offer reasonable growth potential over an extended period of time.

Limited competition risk: We believe MSIL’s dominance is difficult to challenge given it is far ahead of its competitionin terms of its scale, cost structure and distribution. India is of utmost strategic importance to Suzuki unlike globalpeers.

Superior financial metrics: MSIL’s financial metrics such as margins are far superior, market share has jumped to 52%in YTDFY19 compared to 44% four years ago and product portfolio is far more diversified. RoE, both core and ex-cash are better than the past. Balance sheet has more than $5bn in cash.

MSIL is more of an urban discretionary play. Benchmarking to consumer discretionary companies, all the belowmentioned stocks are trading at higher valuation multiples than MSIL, and we see scope for re-rating here for MSIL.

P/E EV/EBITDA ROEM. Cap (`Bn)

EPS Growth (%) CAGR-FY18-21E) PEG FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E

Titan Company 845 24.8% 3.0 58.5 46.5 38.4 40.9 32.6 26.6 25.4 27.0 27.9Avenue Supermarts 1003 27.5% 4.4 98.5 75.7 59.6 57.7 44.7 35.6 19.6 20.9 21.7Asian Paints 1348 16.4% 4.2 59.4 49.7 41.5 37.5 31.4 26.3 25.3 26.6 27.6Pidilite 558 12.7% 4.6 57.3 47.5 40.5 37.9 32.0 27.5 25.0 26.2 26.5Havells India 426 21.3% 3.0 50.1 41.7 35.9 32.7 27.6 23.8 21.3 22.3 23.2Crompton Greaves 143 18.8% 2.4 38.1 31.2 26.7 23.7 20.0 17.5 41.1 38.9 36.2Voltas 177 11.4% 2.7 29.6 25.5 22.5 25.2 21.7 19.0 14.6 15.2 15.4Jubilant Foodworks 165 35.4% 2.4 54.3 42.6 33.5 26.6 22.2 18.1 26.7 27.4 28.3Maruti Suzuki 2255 12.8% 2.2 27.6 23.4 20.0 17.6 14.8 12.8 18.2 19.3 20.1Source : Bloomberg, Way2Wealth Institutional Equity





Financial Highlights

Particulars FY17 FY18 FY19E FY20E FY21E

Volumes ('000s) 1569 1780 1922 2112 2334

Growth (%) 9.9% 13.4% 8.0% 9.9% 10.5%

Avg. Realizations (`/car) 3,84,920 3,98,313 4,04,288 4,12,373 4,22,683

Growth (%) 8.5% 3.5% 1.5% 2.0% 2.5%

Net Sales (`mn) 6,80,850 7,98,094 8,73,146 9,79,684 11,08,066

Growth (%) 18.2% 17.2% 9.4% 12.2% 13.1%

EBITDA (`mn) 1,03,581 1,20,634 1,27,335 1,51,732 1,75,795

EBITDA Margin (%) 15.2% 15.1% 14.6% 15.5% 15.9%

PAT (`mn) 75,110 78,807 81,681 96,492 1,13,020

Growth (%) 36.6% 4.9% 3.6% 18.1% 17.1%

EPS (`/share) 249 261 270 319 374

Dividend/Share 75 80 95 112 131

Dividend Payout Ratio (%) 38% 37% 35% 35% 35%

RoE 22% 20% 18% 19% 20%

RoCE 23% 23% 21% 23% 24%

P/E 28.6 27.6 23.4 20.0

EV/EBITDA 18.6 17.6 14.8 12.8





Company Overview

Maruti Suzuki India Ltd. (MSIL) is India’s largest passenger vehicle company commanding a market share of 50% in domestic marketwith ~1.65mn vehicles sold in FY18. It is a subsidiary of Suzuki Motor Corporation, Japan. MSIL has two manufacturing plants with aninstalled capacity of 1.56mn vehicles per year. In addition, with strong demand outlook, MSIL has set up a plant in Gujarat with acapacity of 7.5L to be commissioned gradually over FY18-21 in order to achieve its target of selling 2mn vehicles by 2020. MSIL hasone of the largest sales network with 3,426 sales outlets (including NEXA) and has 3,570 service workshops as on 1st January 2019.

MSIL’s change in volume mix as well as its dominance as reflected in its market share over the years in passenger vehicle market isshown below:

610 January 2019

44

1610

6

6

52 4

9

Market share trend across players (%)(FY14)

Maruti Suzuki HyundaiMahindra Tata MotorsHonda ToyotaRenault FordOthers

50

16

86

54

3 34


Maruti Suzuki HyundaiMahindra Tata MotorsHonda ToyotaRenault FordOthers

18%

14%

12%16%

6%3%

4%4%

0%

0%

13%

9%Volume mix of MSIL (FY16)

Alto SwiftWagon-R DzireCelerio BalenoCiaz ErtigaBrezza LCVOthers Exports

15%10%

9%

13%

5%11%3%

4%8%

1% 14%

7%Volume mix of MSIL (FY18)

Alto Swift

Wagon-R Dzire

Celerio Baleno

Ciaz Ertiga

Brezza LCV

Others Exports

Source : Industry, Way2Wealth Institutional Equity

Source : Company, Way2Wealth Institutional Equity





Industry Overview

710 January 2019





Industry Overview

2010 -2011 2014 2015

810 January 2019

Benign competitive intensity Our analysis of the competitiveness of India’s automotive industry, as indicated by the Herfindahl Hirschman Index (HHI)

indicates high consolidation across segments.

The Herfindahl-Hirschman Index is an index that measures the market competitiveness of a certain industry. A highlyconcentrated industry would mean a high degree of concentration, whereby only a few players in the industry hold a largepercentage of the market share, leading to a near monopolistic situation. A low degree of concentration would mean that theindustry is close to a perfect competition scenario, whereby there are many firms of more or less equal size that share themarket. HHI ranges from 1(least concentrated) to 10,000 (most concentrated). According to the U.S. Department of Justice, anHHI of less than 1,500 represents an industry with low market concentration, an HHI ranging between 1,500 to 2,500represents moderate concentration and an HHI of more than 2,500 represents a highly concentrated industry.

The HHI Index for the Indian passenger vehicle market stands at ~2900, indicating a highly concentrated industry. This is ledby MSIL, which has further increased its market share to 52% in YTDFY19. In our view, the consolidation is likely to remainhigh in the future due to dominant performance by MSIL and weak performance by global players as they are not likely tobe aggressive in the small car segment.

In the Indian automobile industry, HHI Index is highest for the commercial vehicle sector followed by passengervehicles, tractors and two-wheelers. Notably, while consolidation is increasing for PVs, it has been decreasing for commercialvehicles and tractors.

Similar analysis for other consumer categories in India indicates that paints, adhesives and toothpaste category are highlyconsolidated and markets tend to assign higher valuation multiples to companies where consolidation is high.





Industry Overview

2010 -2011 2014 2015

910 January 2019


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Maruti Suzuki Hyundai

Mahindra Tata Motors

Honda Toyota

Renault Ford

Others

50

16

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65

43 3

4


Maruti Suzuki Hyundai

Mahindra Tata Motors

Honda Toyota

Renault Ford

Others

India’s 4W segment remains highly consolidated in both PVs and CVs

HHI across consumer segments in India & TTM P/E

Source : Industry, Way2Wealth Institutional Equity Source : Industry, Way2Wealth Institutional Equity


Pidilite

Asian Paints

Colgate

Maruti

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Industry Overview

2010 -2011 2014 2015

1010 January 2019

Tepid Capacity Expansion plans to keep utilization levels high and discounts low The combined capacity utilization of all OEM’s in the passenger vehicle industry stood at ~75% in FY18. While MSIL and

Hyundai operated at close to 100% capacity utilization, their peers operated at much lower (50-60%) utilization levels.With higher penetration in coming years and no significant capacity expansion plans over the next 2-3 years, we believethe overall capacity utilization could inch closer to 80% in the coming years which would lower the risk of pricingindiscipline and improve the profitability of most players.

Apart from MSIL adding capacity of 2.5L units each in Jan-19 and Jan-20 and Hyundai adding capacity of 50k units in2019, there are no capacity expansion plans announced by other OEM’s as they’re running at lower capacity utilizationlevels. However, we also learn from media reports plans of MG Motor India (link) and Kia Motors (link) of entering Indiaover the next 2 years.

MG Motor India has acquired a car manufacturing unit in Halol from General Motors and plans to invest `50bn in Indiaover the next 6 years and launch one new car in India every year. The Halol plant is expected to have an initial capacityof `80,000-85,000 units. MG Motor India has also confirmed that the first product will be an SUV which will be rolled outahead of the planned schedule of second quarter of 2019.

Kia Motors, the South Korean automotive company, is in the process of setting up its plant in Andhra Pradesh at aninvestment of $2bn after witnessing Hyundai’s strong presence in the market, considering it could also leverage HMC’ssupply chain/distribution network and production facilities. The capacity of the said plant is expected to be 300,000 carsannually. Vehicle production is earmarked to begin later in 2019. Also, it is likely to utilize 50% of its capacity for contractmanufacturing for Hyundai. We believe this can raise the competitive intensity in the small car segment (~35-40% ofindustry) and can pose a threat to MSIL’s dominance in the segment (~55-60% share) in future, if executed well.

We also note that ~14% of the industry capacity is currently exported, thus it has room for utilizing the capacity more forsatisfying the domestic demand. General Motors has exited the domestic market and is only focused on exports at present.



https://www.financialexpress.com/auto/car-news/mg-motors-india-to-launch-one-new-vehicle-every-year-from-2019-know-the-big-make-in-india-plan/1103712/

https://www.thehindubusinessline.com/companies/kia-motors-to-roll-out-first-car-from-india-plant/article22823220.ece



Industry Overview

2010 -2011 2014 2015

1110 January 2019

Domestic Exports Total Capacity (end Mar-18) Current Capacity Utilisation Capacity (end Mar-20)Maruti Suzuki 16,43,467 1,23,903 17,67,370 18,00,000 98% 22,50,000 Hyundai 5,36,241 1,53,942 6,90,183 7,00,000 99% 7,50,000 Mahindra 2,48,859 6,769 2,55,628 4,00,000 64% 4,00,000 Renault Nissan 1,55,192 78,536 2,33,728 4,80,000 49% 4,80,000 Toyota 1,40,645 14,389 1,55,034 3,10,000 50% 3,10,000 Tata Motors 2,10,200 2,587 2,12,787 5,50,000 39% 5,50,000 Ford 90,061 1,81,148 2,71,209 4,40,000 62% 4,40,000 Honda 1,70,026 5,611 1,75,637 2,80,000 63% 2,80,000 VW+ Skoda 45,239 90,382 1,35,621 2,00,000 68% 2,00,000 GM 2,500 83,140 85,640 1,30,000 66% 1,30,000 Kia Motors - - - - NA 85,000 MG Motor - - - - NA 3,00,000 Total 32,42,430 7,40,407 39,82,837 52,90,000 75% 61,75,000

Exports % of capacity (FY18)

1 GM 64%

2 VW+Skoda 45%

3 Ford 41%

4 Hyundai 22%

5 Renault Nissan 16%

Source : Industry, Way2Wealth Institutional Equity Source : Industry, Way2Wealth Institutional Equity






Investment Rationale

1210 January 2019






Low penetration to aid robust long term growth Vehicle penetration in India currently stands close to 28 four-wheelers per 1,000 people, as per estimates. The total four-wheeler

population was considered while making these estimates due to i) share of CV to vehicle population is very low, ii) there is a very thinline of distinction between passenger vehicles and commercial vehicles globally, iii) too much granularity is not available for very olddata. In any case for markets where purely PV data is available, the results are largely similar.

Historically, vehicle sales in some of the key global markets have shown an inflexion point at a similar level of penetration. In countriessuch as South Korea, Japan and China, CAGR of car sales were in excess of 20% over the next 5 years once this level of penetrationwas achieved. This was supported by strong growth in GDP per capita. GDP per capita registered a growth of over 8% over the sameperiod. India’s GDP per capita is expected to register a growth of 6-7%, and we expect car sales could keep growing at 12-14%. Thegrowth rates could be higher if the GDP per capita growth picks up.

The Indian passenger vehicle industry has registered a meagre volume CAGR of ~4.3% over FY13-18. This is primarily due to a cyclicalslowdown over the past few years as the period was marked by a sharp slowdown in GDP and industrial growth. As per IMFForecasts, GDP is expected to growth at 7.3% in FY19 and 7.4% in FY20 which should accelerate car sales going forward.

We believe MSIL would be a key beneficiary of an uptick in passenger vehicle sales as it occupies more than 50% of the market sharein this space. MSIL’s unparalled distribution network creates a business moat while serving the hinterland. As on 31st March, 2018, MSIL’ssales network stood at 2,627 including 316 NEXA channels and 190 commercial channels. Hyundai, having the second largest dealernetwork, has ~490 dealers and is nowhere close to Maruti. Further, most global OEM’s have been unable to materially improve theirmarket share or profitability despite their presence in India since quite some time as ~75% of passenger vehicle volumes consist of smallcars due to the difference in tax structure and low per capita income prevailing in India. Global OEM’s have limited products in thisspace due to limited exposure to India and lack of India focused R&D. These are the reasons why they have not been able to challengethe market incumbents.

In view of the above, we believe Maruti, having a deep entrenched rural network and lack of competition in the small carsegment, stands to gain the most from an underpenetrated passenger vehicle market which is close to an inflexion point as observedglobally and well poised to register double digit growth for many years to come.

1310 January 2019






CAGR GDP per capita CAGRCountry Year 4W Sales 2 Yr 5Yr 10Yr 2 Yr 5Yr 10YrS. Korea 1985 3,69,392 61.70% 28.60% 15.50% 11.1 9.4 8.1

Penetration 27 39 79 188

Japan 1962 9,32,991 26.60% 23.80% 16.70% 8.9 8.5 7.3Penetration 28 51 99 209

China 2006 71,83,558 14.20% 20.90% 14.50% 11.4 10.1 8.5Penetration 28 38 69 138

India 2018 41,44,418Penetration 28

1410 January 2019

Source : World Bank Report, Way2Wealth Inst. Equities

0

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MSIL sales network

Existing Channel Nexa Commercial Channel

Source : Company Annual Report

Vehicle penetration trend till date for key countries







Premiumization to boost ASP’s going forward The PV industry mix has been steadily improving with more Utility Vehicles (UV’s) at approximately 30% market share, while the share

of the entry/hatchback/compact sedan segments have been declining marginally over the last 5 years. The share of entry/hatchbackhas fallen from 20%/22% in FY13 to 16%/19% in FY18, the share of utility vehicles has improved steadily by 600bps from 22% inFY13 to 28% in FY18.

This phenomenon is also due to the fact that customers are willing to pay a premium for additional features such as Bluetoothconnectivity, reverse parking cameras, navigation systems, projector headlamps and automatic transmissions, which is leading to a sharpimprovement in ASP’s for original equipment manufacturers (OEM’s). For example, MSIL has seen a 4% CAGR jump in its averagerealizations over the past 5 years following new launches in the utility vehicles segment though its absolute sales realization is still thelowest among OEM’s in India. However, we expect a meagre 2% CAGR in ASP’s over the next few years due to new launches at thelower end of the price spectrum.

A comparison of ASP’s across OEM’s indicates that most OEM’s have seen healthy improvement in ASP’s corroborating our thesis.However, Nissan and Renault have seen a sharp dip in ASP’s primarily due to adverse model mix, as they had new launches in thelower priced segments. Amongst peers, MSIL has the lowest ASP’s, highlighting scope of improvement in the years to come. Thus, weexpect MSIL’s ASP’s to materially improve over the next few years on account of improving share in the premium segments.

1510 January 2019

69% 65% 52% 52% 47% 44% 40% 36%

19% 22%23% 24% 26% 23% 20% 17%

10% 11% 23% 24% 23% 26% 34% 40%

2% 2% 1% 0% 3% 6% 6% 6%

0%

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150%

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

MSIL's price mix

Upto 400k Price 400-600k Price 600k-800k Price 800k and above

8%14%

26% 30%

0%10%20%30%40%

FY15 FY16 FY17 FY18

MSIL's contribution of premium segment (Ciaz, Baleno, Brezza, Ertiga, S-Cross)

Source : Company, Way2Wealth Institutional Equity Source : Company, Way2Wealth Institutional Equity






1610 January 2019

Source : Capitaline, Company Reports, Way2Wealth Institutional Equity

35% 29% 25% 22% 24% 23% 20% 18% 16% 16% 16% 16%

24% 28% 32% 35% 33% 27% 22% 21% 20% 19% 20% 19%

5% 7% 9% 11% 13% 15%16% 15% 15% 19% 18% 19%

3% 2% 3% 3% 3% 5% 9% 13% 15% 14% 12% 13%17% 17% 16% 14% 13% 14% 22% 23% 22% 22% 26% 28%16% 16% 16% 15% 14% 16% 11% 9% 10% 10% 8% 7%

0%

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FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

Segmental Market Share

Entry Hatchback Premium Hatchback Compact Sedan Utility Vehicles Large Sedans

0

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1000000

1500000

FY13 FY14 FY15 FY16 FY17

Overall ASP change over 4 year period for key OEM's

Toyota Renault Honda NissanFord VW Hyundai MSIL

Source : Capitaline, Company Reports, Way2Wealth Institutional Equity

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Average realization per vehicle across key OEM's (FY17)







Multiple levers for margin expansion The MSIL Board approved a revision in the method of calculating royalty in January 2018 which would result in lower royalty

payments for all new model agreements starting the Ignis (January 2017 onwards). Under the new agreement, royalty on new modelswill be (i) denominated in INR, reducing currency volatility and improving margins as JPY appreciation has weighed on margins over thepast few years, (ii) Rate paid will come down as volumes reach a certain threshold. As of now, 5 new models are covered under theagreement but this will rise as new models get rolled out. Overall, we expect royalty as a % of sales to come down below 5% in 2-3years and even lower beyond that.

As the Gujarat plant ramps up starts contributing more to revenues (~8% of volumes in FY18 to ~24% of volumes by FY20), marginsfor MSIL will improve significantly from the current blended margins due to (i) fiscal incentives at Gujarat plant, (ii) better operationalefficiencies, (iii) lower labour cost and (iv) improving localisation at Gujarat plant from current 15% to 60-70% by FY21-22e. TheGujarat plant is eligible for SGST refund from the Gujarat Govt. for cars sold in Gujarat. Gujarat contributes ~7-8% of MSIL’s totalvolumes and could potentially improve MSIL’s margin by 15-20bps over the next 2 years. Further, overall staff cost would be lower atGujarat plant than the Haryana plant due to (i) younger age profile at Gujarat, (ii) location (Haryana plants are located in the city)and (iii) lower minimum wages (15% lower in Gujarat than Haryana). Improving localisation at Gujarat plant would result in reduceddependence on foreign exchange, savings on inward freight and better cost efficiencies for MSIL going forward.

Platform consolidation led benefits will gradually start flowing in as most of the new launches are based on Suzuki’s fifth generationHEARTECH platform. HEARTECH platform offers improved safety, improved rigidness (10% higher) and lowered model weight (15%)which ensures smooth migration to stricter safety/environment norms. New Swift, Dzire and Ertiga have been launched from thisplatform by MSIL. Platform consolidation also leads to increasing common parts and allows a faster time to market for newlaunches/refreshes. Overall MSIL has a cost efficiency program under way with a tight control on production processes, materialprocurement and vendor ramp/efficiencies. Operating leverage benefits should continue to be positive as plants operate at aboverated utilisation levels.

On the basis of the above levers for margin expansion, we expect MSIL’s EBITDA margin to improve by 80bps to 15.9% over the next 3years.

1710 January 2019






1810 January 2019


280

300

320

340

360

Gujarat Haryana

Minimum Daily Wage Rates are 15% lower in Gujarat


0%10%20%30%40%50%60%70%

FY18 FY21E

Localisation level at Gujarat plant

0.00%1.00%2.00%3.00%4.00%5.00%6.00%

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

E

FY20

E

Royalty (% of Sales)

Source : Company, Way2Wealth Institutional Equity Source : Company, Way2Wealth Institutional Equity

0.0%5.0%10.0%15.0%20.0%25.0%30.0%

0100000200000300000400000500000600000

FY17 FY18 FY19E FY20E

Gujarat plant to ramp up gradually

Gujarat plant production % of total volume






New launches to support market share In 2015, Suzuki had set a target to introduce 20 new models in five years globally- this included five new models in the mini car

segment, six new models in the ‘A‘ segment and three new models in B, C and SUV segments each (nine in total) to aid its arm MarutiSuzuki achieve its target of selling two million units annually by 2020. Out of these 20 models, except for the Kei Jidosha (minicars), rest would be launched in India.

MSIL’s product pipeline remains strong, with at least two new launches over the next 3 years. New launches over the next 2 yearsinclude Wagon-R and Alto (Mini segment) and Ertiga (MPV) in full upgrades and Future S Concept (Micro SUV) and Vitara (SUV) innew launches.

With tepid new launches by Maruti in 2018 (new Swift, new Ciaz and Next Gen Ertiga), the discounts were consequently increasing topush sales of older variants. With contribution of new products to start increasing CY19 onwards, the discounts should moderate fromcurrent levels. Also, the product mix should start improving which should aid realizations going forward.

1910 January 2019

Source : Company Filings, Way2Wealth Institutional Equity






2010 January 2019

Category Company 2019 2020 2021

Mini

Maruti Wagon-R (Q4FY19)Maruti Alto (H2CY19)

Hyundai Grand i10 (Oct-19)Hyundai i20Renault Kwid (H2CY19)

Premium Hatchback Tata 45X (End CY19)

Micro SUV Maruti Future S Concept (H2FY20)

Compact SUV

Mahindra XUV300 (Jan-19)Hyundai Carlino (QXI) (Apr-19)Datsun End CY19

Kia End CY19

Compact Sedan Hyundai Elantra (H1CY19) Xcent (H1CY20)

SUV

Tata Harrier (Early 2019)Kia SP Concept (Apr-19)

Maruti Vitara (H1CY19)Nissan Kicks (Q1CY19)Renault Duster (Mid CY19)Hyundai Santa Fe (Mid CY19) Creta

MPV Renault RBC (Mid CY19)

New launch pipeline across OEM's

New Launches- Blue, Full Upgrades- BrownSource : Industry, Way2Wealth Institutional Equity






Short term headwind receding Demand for passenger vehicles is negatively correlated to crude oil prices and consequently MSIL stock is negatively correlated to

crude oil prices as people prefer to postpone/defer their purchases in a high fuel price environment. Crude oil prices fell sharply by~70% from June-14 to Jan-16 thereby aiding demand for passenger vehicles. However, crude oil prices rebounded subsequently from~$34/bbl to touch a high of ~$85/bbl in early Oct-2018 dampening demand for passenger vehicles. However, from its peak of$85/bbl, crude oil prices have slumped close to ~30%.

The increase in crude oil prices witnessed over the past two and a half years was the first inflationary period witnessed after the fuelprice deregulation era, which resulted in near perfect transmission of higher crude oil prices to fuel prices, denting auto sentiment. Theimpact of higher crude oil prices was witnessed far earlier on consumer sentiment, where we have seen stagnant passenger vehiclesales in the current financial year compared to last year.

A cool-off in the crude oil prices as witnessed recently should prompt prospective/first time buyers to consider buying a passengervehicle, thereby boosting passenger vehicle sales in the coming future.

2110 January 2019

Source : Bloomberg, Way2Wealth Institutional Equity

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2007 2009 2011 2013 2015 2017

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2210 January 2019

Source : Way2Wealth Institutional Equity

Increasing Crude Oil Prices

Higher Inflation

Increase in Interest Rates Weakening Demand

Higher Discounts

Weak Margins Pressure on Earnings

Valuation De-rating

Stock Under performance





Other Key Additional Trigger

2310 January 2019

Suzuki’s partnership with Toyota gradually evolving Suzuki’s partnership with Toyota is steadily gathering momentum with an agreement reached on the following issues (i)

sharing of EV technology, (ii) technological support (by Denso and Toyota to Suzuki), (iii) production (by Toyota) and (iv)supply of models developed by Suzuki and Toyota from India to Africa and other markets.

This partnership will provide Suzuki much needed access to EV technology, an area where Suzuki was lacking. On the otherhand, Suzuki will provide access to low cost manufacturing by providing popular models such as Baleno and Vitara Brezza.

Date Development

Feb-17Toyota and Suzuki conclude a memorandum towards business partnership that will enable both sides explore possibility ofco-operation in areas including environment and safety, information technology and mutual supply of products andcomponents.

Nov-17 Consider a co-operative structure for introducing battery electric vehicles in India by around 2020.

Mar-18Suzuki will supply Baleno and Vitara Brezza vehicle models to Toyota, while Toyota will supply Corolla vehicle model toSuzuki, to be sold in India through their sales networks.

May-18

1) Denso Corporation and Toyota to provide Suzuki with technological support for a compact, ultrahigh-efficiency power-train to be developed by Suzuki.

2) Toyota to produce models developed by Suzuki for sale in India through each of Toyota and Suzuki brand network.

3) Supply of models developed by Suzuki and Toyota from India to Africa and other markets by Toyota and Suzuki, andadvancing co-operation in the domain of logistics and services.

Source : Company Filings,Way2Wealth Institutional Equity





Financial Performance

Sales to post 12% CAGR over FY18-21E – We expect sales to post 12% CAGR over FY18-21E on the back of 10% volume growthover FY18-21E and better product mix leading to ASP CAGR of 2% over the same period. We expect revenue from spare parts togrow at a CAGR of 10% over FY18-21E.

2410 January 2019

Operating Margins to expand by 80bps over FY19-21E – We expect EBITDA Margins to expand by 80bps over FY18-21E on theback of ramp up of Gujarat plant, lower royalty payments and platform consolidation.

Source : Company Reports, Way2Wealth Institutional Equity

Source : Company Reports, Way2Wealth Institutional Equity

5,75,890 6,80,850 7,98,094 8,73,146 9,79,684 11,08,066

0

5,00,000

10,00,000

15,00,000

FY16 FY17 FY18 FY19E FY20E FY21E

Net Sales (`mn)

15.4%15.2% 15.1%

14.6%

15.5%15.9%

13.5%14.0%14.5%15.0%15.5%16.0%


EBITDA Margins





Financial Performance

PAT to post 13% CAGR over FY18-21E – We expect PAT to post 13% CAGR over FY18-21E on the back of ~9% volume mix boostedby increase in ASP’s of 2% CAGR over FY18-21E, cost control measures and various levers for margin expansion as envisaged earlier.

2510 January 2019

Avg. Selling Price/Vehicle to continue improving – We expect Avg. Selling Price/Vehicle to continue improving driven by portfoliopremiumisation and increasing preference of customers to pay a premium for additional features. ASP’s for MSIL have grown at aCAGR of 4% over the last 5 years and we expect ASP’s to grow at a CAGR of 2% over the next 3 years.


3,54,9063,84,920 3,98,313 4,04,288 4,12,373 4,22,683

3,00,000

3,50,000

4,00,000

4,50,000


Average Selling Price/Vehicle

54,97275,110 78,807 81,681

96,4921,13,020

0

50,000

1,00,000

1,50,000


Consolidated PAT (`mn)






Story in Charts

2610 January 2019


37887

6334472704 80700

58533

96861

122134

020000400006000080000

100000120000140000

FY15 FY16 FY17 FY18 FY19E FY20E FY21E

Robust Free Cash Flows to continue going forward

18%22% 23% 23% 21% 23% 24%

17%20% 22% 20% 18% 19% 20%

0%5%

10%15%20%25%30%


Improving Return Ratios...

ROCE ROE

2535

75 8095

112131

0

20

40

60

80

100

120

140


Dividend per share

4.3 4.65.3

6.0 5.9 5.8 6.1

0.01.02.03.04.05.06.07.0


Improving Fixed Asset Turnover Ratio

Source : Company, Way2Wealth Institutional EquitySource : Company, Way2Wealth Institutional Equity






Management Team

2010 -2011 2014 2015

2710 January 2019

R.C. Bhargava (Chairman)

R.C. Bhargava is the chairman of MSIL since 2007 and holds directorships in Dabur India Ltd., IL&FS Ltd. and Taj Asia Ltdamong others. He stood 1st in his IAS batch, completed Masters of Science in Mathematics from Allahabad University andMaster of Arts in Developmental Economics from Williams College, USA. Mr. Bhargava has earlier been associated withMaruti Udyog Ltd. as Director (Marketing) (1981-83), Joint Managing Director (1984-85), Managing Director (1985-90, 92-97), Chairman and Managing Director (1990-92) and Director (2003).

Kenichi Ayukawa (Managing Director & CEO)

Kenichi Ayukawa holds directorship in various group companies such as SKH Metals Ltd., Subros Ltd., Krishna Maruti Ltd. andDenso India Pvt. Ltd. He is a law graduate from Osaka University, Japan and joined Suzuki Motor Corporation in 1980. Mr.Ayukawa has handled several key assignments at Suzuki Motor Corporation, Japan and in the Group’s overseas operations.He served as a director on the board of Maruti Suzuki from July 2008 to March 2013.

Osamu Suzuki (Director)

Osamu Suzuki is a director of MSIL since 2002, apart from holding board membership in Suzuki Motor Corporation, ThaiSuzuki Motor Co. Ltd. and Omaezaki Futo Co. Ltd., among others. He is a graduate from the faculty of Law, Chuo Universityand has been associated with Suzuki Motor Corporation since 1958 in various roles until he became Chairman & CEO of thecompany in 2000.

Kazunari Yamaguchi (Director- Production)

Kazunari Yamaguchi graduated from Department of Agricultural Engineering, Faculty of Agriculture, Kagoshima University inMarch-1986 and joined Suzuki Motor Corporation in April-1986 in the production engineering department. Subsequently, hewas appointed as the Deputy Manager of Production Engineering Department in April 2002 and General Manager ofProduction Engineering Department in April 2011.





Relative Valuation

Source : Bloomberg Estimates, Way2Wealth Institutional Equity. Valuations as per closing price on 09.01.19.

Company Sales (`mn) EBITDA (`mn) PAT (`mn) EPS CAGR (%) (FY18-21)FY19E FY20E FY19E FY20E FY19E FY20E

Maruti Suzuki 8,73,146 9,79,684 1,27,335 1,51,732 81,681 96,492 12.8Mahindra & Mahindra 5,47,549 6,16,855 74,960 85,720 48,480 55,030 11.9Escorts 59,852 66,187 7,250 8,370 4,719 5,475 20.0Ashok Leyland 2,99,025 3,45,526 31,430 37,397 18,590 22,546 12.0Tata Motors 3,169,100 3,475,633 327,501 415,959 29,711 76,924 5.4Bajaj Auto 295,535 327,319 52,082 58,581 44,096 49,120 6.1Hero Motocorp 353,060 384,723 54,613 60,210 36,482 39,680 1.6TVS Motor Co. 185,439 210,717 16,879 20,070 7,974 10,034 19.5

Company P/E EV/EBITDA P/B ROE (%)FY19E FY20E FY19E FY20E FY19E FY20E FY19E FY20E

Maruti Suzuki 27.6 23.4 17.6 14.8 4.8 4.3 18.2 19.3Mahindra & Mahindra 18.1 15.8 11.6 10.2 2.5 2.3 15.0 15.2Escorts 15.2 13.2 11.9 10.3 2.4 2.1 16.5 16.3Ashok Leyland 14.9 12.3 8.5 7.2 3.3 2.9 23.8 25.0Tata Motors 21.7 8.1 3.6 2.9 0.6 0.6 3.2 7.7Bajaj Auto 17.5 15.8 14.1 12.6 3.5 3.1 20.4 20.2Hero Motocorp 16.2 15.5 9.7 8.8 4.6 4.5 28.8 29.2TVS Motor Co. 31.4 24.5 18.5 15.5 7.9 6.3 28.1 29.4Average (ex. MSIL) 19.4 15.1 11.1 9.6 3.6 3.2 19.8 20.8

Financials

Valuations and Return on Equity





Valuation & Recommendation

BUY with Target Price of `8,829 (upside potential of 18% over 12-18 months) Competitive intensity (as indicated by the Herfindahl-Hirschman Index (HHI)) has been declining for passenger vehicles (PV’s)

in India. This is due to the fact that most global OEM’s continue to struggle in India due to lack of focus and research anddevelopment on the small car segment.

Rising industry capacity utilization due to higher penetration of PV’s in India and insignificant capacity expansion plans overthe next 2-3 years can further lower discounts and improve the margin profile of the listed players.

On the back of aforementioned positive industry dynamics, we prefer Maruti Suzuki India Ltd. (MSIL) as our top pick inthe passenger vehicle space as it is the only pure-play listed PV OEM in India. We believe MSIL is well poised to enter along term structural growth phase due to vehicle penetration (28 four-wheelers per 1000 people) close to inflexion point asseen in other markets such as Japan, South Korea and China, significant premiumisation as customers upgrade and morefeatures get added, levers for margin expansion in the form of lower royalty payments and increasing contribution fromGujarat plant (though margins would be lower in the near term due to initial start-up costs for the plant) and strong productpipeline over the next 2-3 years.

Other growth drivers include Suzuki’s partnership with Toyota which is steadily gathering momentum with an agreementreached on a number of issues including sharing of EV technology with Suzuki by Toyota. This agreement is likely to play acrucial role in the long term for MSIL as EV penetration gradually scales up in India over the long term.

At CMP of `7,466, MSIL is currently trading at FY20E and FY21E EV/EBITDA of 14.8x and 12.8x respectively. We valueMSIL at `8,829 per share by applying 15.1x EV/EBITDA, at a premium of 20% to its 3 year average EV/EBITDA of 12.6x.Reasons for ascribing a premium valuation compared to its past 5 year average include scarcity premium (being the onlypure-play listed PV OEM in India), limited competition risk (far ahead of its competition in terms of scale, cost structureand distribution) and superior financial metrics.





Slower than expected industry growth – We have built in a volume CAGR of 9% over FY18-21E in the domesticsegment. If industry volumes remain weak or if new launches fail, there could be a downside risk to our earningsestimates.

Significant increase in raw material costs – If commodity costs increase significantly, there could be downside risksto our EBITDA margin estimates.

Risk of production disruption – MSIL is expected to operate at greater than 90% capacity utilisation over the next2-3 years. Thus, any disruption in production for MSIL or vendors could affect its volumes and market share, andscope to cover up could be quite limited.

Delay in new capacity addition for its Gujarat plant – We expect Phase 2 and Phase 3 of the Gujarat plant tocome on stream by H2FY19 and H2FY20 respectively. Any delay in adding new capacity could lead to a shortfall involumes.

Risks & Concerns





Financials

3110 January 2019





Income Statement

3210 January 2019

(` mn)

Income Statement FY16 FY17 FY18 FY19E FY20E FY21ENet sales 5,75,890 6,80,850 7,98,094 8,73,146 9,79,684 11,08,066YoY (%) 13.4 18.2 17.2 9.4 12.2 13.1

Raw material cost 3,87,060 4,67,422 5,49,861 6,00,696 6,64,194 7,45,693Employee Cost 20,003 23,603 28,634 32,200 36,129 38,647Admin Expenses 79,940 86,244 98,965 1,12,915 1,27,629 1,47,931Total expenses 4,87,003 5,77,269 6,77,460 7,45,811 8,27,952 9,32,270

EBIDTA 88,887 1,03,581 1,20,634 1,27,335 1,51,732 1,75,795(%) 15.4% 15.2% 15.1% 14.6% 15.5% 15.9%Growth (%) 30% 17% 16% 6% 19% 16%

Depreciation 28,218 26,039 27,598 31,172 35,621 39,665EBIT 60,669 77,542 93,036 96,162 1,16,111 1,36,130

Interest 817 894 3,458 966 966 966Other income 15,995 24,624 22,091 21,538 21,778 25,212PBT 75,847 1,01,272 1,11,669 1,16,734 1,36,923 1,60,376

(-) Tax 20,875 26,162 32,862 35,053 40,431 47,356Tax/ PBT 27.5 25.8 29.4 30.0 29.5 29.5 PAT 54,972 75,110 78,807 81,681 96,492 1,13,020YoY (%) 45.0 36.6 4.9 3.6 18.1 17.1 PAT(%) 9.5% 11.0% 9.9% 9.4% 9.8% 10.2%





Balance Sheet

3310 January 2019

(` mn)Balance Sheet FY16 FY17 FY18 FY19E FY20E FY21EEquity capital 1,510 1,510 1,510 1,510 1,510 1,510Reserves 3,04,650 3,69,241 4,24,084 4,71,302 5,27,080 5,92,414Minority Interest 144 154 161 166 170 176Net worth 3,06,304 3,70,905 4,25,755 4,72,978 5,28,760 5,94,100Total borrowings 2,309 4,836 1,208 1,208 1,208 1,208Other Long Term Liabilities 8,223 11,274 16,124 16,124 16,124 16,124Deferred Tax 2,287 5,058 6,020 6,020 6,020 6,020Total Liabilities 3,19,123 3,92,073 4,49,107 4,96,330 5,52,112 6,17,452

Gross block 2,93,157 3,27,007 3,55,386 4,15,386 4,65,386 5,15,386Less: Acc. depreciation 1,67,861 1,93,900 2,21,498 2,52,670 2,88,291 3,27,957Net block 1,25,296 1,33,107 1,33,888 1,62,716 1,77,095 1,87,429Work in progress 10,069 12,523 21,321 12,000 12,000 12,000

Investments 2,06,758 2,91,506 3,61,231 3,85,731 4,41,731 5,15,731Other non-current assets 17,034 16,277 18,917 18,917 18,917 18,917Inventories 31,326 32,637 31,602 38,380 44,257 45,602Debtors 13,234 12,026 14,654 16,969 18,993 24,416Cash 507 235 740 320 476 935Loans and advances 17,975 16,818 15,283 15,283 15,283 15,283Other current assets 5,056 4,476 4,848 5,304 5,951 6,731Current assets 68,098 66,192 67,127 76,256 84,960 92,967

Current liabilities 96,182 1,14,998 1,39,227 1,43,809 1,65,221 1,89,947Provisions 11,950 12,534 14,150 15,481 17,370 19,646Net current assets -40,034 -61,340 -86,250 -83,034 -97,630 -1,16,626Total Assets 3,19,123 3,92,073 4,49,107 4,96,330 5,52,112 6,17,452





Cash Flow Statement

3410 January 2019

Cash Flow FY16 FY17 FY18 FY19E FY20E FY21E

Net profit 46,400 59,142 65,507 81,676 96,488 1,13,014Depreciation 28,218 26,039 27,598 31,172 35,621 39,665

Deferred tax 444 2,793 -643 0 0 0

Change in W/C 8,069 21,034 25,415 -3,636 14,752 19,455

Operating cash flow 83,131 1,09,008 1,17,877 1,09,212 1,46,861 1,72,134

Capex -19,787 -36,304 -37,177 -50,679 -50,000 -50,000Investments -75,614 -86,447 -71,424 -26,199 -57,699 -75,699Investing cash flow -95,401 -1,22,751 -1,08,601 -76,878 -1,07,699 -1,25,699

Free Cash Flow 63,344 72,704 80,700 58,533 96,861 1,22,134

Dividend and other -12,747 -21,783 -23,620 -32,764 -39,014 -45,987

Equity 29,445 32,727 18,477 10 8 12Debt -4,353 2,527 -3,628 0 0 0Financing cash flow 12,345 13,471 -8,771 -32,754 -39,007 -45,976

Net change in cash 75 -272 505 -420 156 459

Opening cash 432 507 235 740 320 476Closing cash 507 235 740 320 476 935





Ratio Analysis

3510 January 2019

(` mn)

Key Ratios FY16 FY17 FY18 FY19E FY20E FY21E

EPS 182 249 261 270 319 374Book value 1,014 1,228 1,409 1,566 1,750 1,967

Cash /Share 641 899 1,127 1,314 1,500 1,747

P/E (x) 28.6 27.6 23.4 20.0

EV/EBITDA (x) 18.6 17.6 14.8 12.8

P/B (x) 5.3 4.8 4.3 3.8

ROCE 22% 23% 23% 21% 23% 24%ROE 20% 22% 20% 18% 19% 20%

Free cash/Share 210 241 267 194 321 404Dividend/Share 35 75 80 95 112 131Dividend Yield 0.5% 1.0% 1.1% 1.3% 1.5% 1.8%

Net Fixed Asset Turnover 4.6 5.3 6.0 5.9 5.8 6.1

Avg Net WC Days -23 -27 -34 -36 -34 -36

Net W/C (% of sales) -7.0% -9.0% -10.9% -9.5% -10.0% -10.6%

Revenue/Day 1,577.8 1,865.3 2,186.6 2,392.2 2,684.1 3,035.8 Other Income (%PBT) 21% 24% 20% 18% 16% 16%





Quarterly Performance

3610 January 2019

(` mn) ` Mn Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19Sales / Income from Operations Gross Sales 1,93,641 2,14,381 1,89,400 2,05,943 2,18,107 2,15,519Excise Duty on Sales 22,317 0 0 0 - -Net Sales 1,71,324 2,14,381 1,89,400 2,05,943 2,18,107 2,15,519Other operating income 4,133 3,301 3,432 5,713 6,487 8,813Net Sales 1,75,457 2,17,682 1,92,832 2,11,656 2,24,594 2,24,332

Cost of material consumed 1,04,983 1,18,638 1,06,494 1,19,298 1,20,033 1,25,445Purchases of stock-in-trade 21,465 23,271 24,364 30,830 34,383 35,209Changes in inventories (3,564) 7,871 2,465 -6365 604 -7,805Raw Material cost 1,22,884 1,49,780 1,33,323 1,43,763 1,55,020 1,52,849Staff Cost 6,521 6,666 6,869 8,282 7,652 7,917Other expenditure 22,740 24,461 22,262 29,461 28,411 29,253Total Expenditure 1,52,145 1,80,907 1,62,454 1,81,506 1,91,083 1,90,019

EBITDA 23,312 36,775 30,378 30,150 33,511 34,313Depreciation 6,839 6,825 6,890 7,025 7,198 7,212EBIT 16,473 29,950 23,488 23,125 26,313 27,101Interest 313 150 263 2,731 207 257Other Income 6,827 5,229 2,449 5,950 2,718 5,266PBT 22,987 35,029 25,674 26,344 28,824 32,110Current Tax 5,578 9,704 8,131 10,082 8,355 9,719Deferred tax 1,845 482 -447 -2,559 716 -13Tax 7,423 10,186 7,684 7,523 9,071 9,706PAT 15,564 24,843 17,990 18,821 19,753 22,404 Extraordinary Reported PAT 15,564 24,843 17,990 18,821 19,753 22,404Other Comprehensive Income 3,845 717 -139 -1111

Equity 1,510 1,510 1,510 1,510 1,510 1,510 EPS 51.5 82.3 59.6 62.3 65.4 74.2





Quarterly Performance

3710 January 2019

(` mn) Margins Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19

Gross margins 30.0% 31.2% 30.9% 32.1% 31.0% 31.9%EBITDA 13.3% 16.9% 15.8% 14.2% 14.9% 15.3%PAT 8.9% 11.4% 9.3% 8.9% 8.8% 10.0%Tax Rate 32% 29% 30% 29% 31% 30%GrowthSales 18% 22% 14% 15% 28% 3%EBITDA 5% 21% 22% 18% 44% -7%EBIT 4% 24% 27% 24% 60% -10%PAT 5% 4% 3% 10% 27% -10%

Geographical Sales Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19

Domestic Sales 3,68,431 4,57,401 4,00,586 4,27,082 4,63,840 4,55,400Export Sales 26,140 34,717 30,526 34,691 26,639 29,448 Total 3,94,571 4,92,118 4,31,112 4,61,773 4,90,479 4,84,848

GrowthDomestic Sales 14% 19% 12% 12% 26% 0%Export Sales 0% -2% -1% 9% 2% -15%Total Sales 13.2% 17.6% 11.3% 11.4% 24.3% -1.5%ContributionDomestic Sales 93% 93% 93% 92% 95% 94%Export Sales 7% 7% 7% 8% 5% 6%Total Sales 100% 100% 100% 100% 100% 100%





Team

Analyst Designation Sector Email Telephone

Alok Ranjan Head – Research [email protected] +9122-6146 2902

Srinath Sridhar, CFA Research Analyst Chemicals [email protected] +9122-6146 2991

Chintan Gupta Research Associate Auto & Auto Ancillary [email protected] +9122-6663 8972

Ashwini Sonawane Research Associate FMCG, Consumer Durables [email protected] +9122-4019 2956

Tausif Shaikh Research Associate Pharma [email protected] +9122-6146 2974

Institutions Designation Email Telephone

Kaushal Jaini Vice President [email protected] +9122-40278919Neelam Vivek Nagvekar Institutional Sales Trader [email protected] +9122-2575 8931

Manisha Panchal Institutional Dealer [email protected] +9122-40278984





DisclaimerAnalyst Certification: I, Chintan Gupta the research analyst and author of this report, hereby certify that the views expressed in this research report accurately reflect our personal views about the subjectsecurities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in thisresearch. The analyst(s), principally responsible for the preparation of this research report, receives compensation based on overall revenues of the company (Way2Wealth Brokers Private Limited, hereinafter referred to asWay2Wealth) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.It is confirmed that Chintan Gupta the author of this report has not received any compensation from the companies mentioned in the report in the preceding 12 months. Our research professionals are paid in part based on theprofitability of Way2Wealth, which include earnings from other business. Neither Way2Wealth nor its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special orconsequential including lost revenue or lost profits that may arise from or in connection with the use of the information contained in this report.This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Way2Wealth is not soliciting any action based upon it. Nothing in this research shall beconstrued as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any such transaction. The contents of this material are general and are neither comprehensive nor appropriate for everyindividual and are solely for the informational purposes of the readers. This material does not take into account the specific objectives, financial situation or needs of an individual/s or a Corporate/s or any entity/s.This research has been prepared for the general use of the clients of the Way2Wealth and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. If you are not the intendedrecipient you must not use or disclose the information in this research in any way. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. Way2Wealth will not treatrecipients as customers by virtue of their receiving this report. The distribution of this document in other jurisdictions may be restricted by the law applicable in the relevant jurisdictions and persons into whose possession thisdocument comes should inform themselves about, and observe any such restrictions.The report is based upon information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up to date and it should not be relied upon as such. Way2Wealthor any of its affiliates or employees makes no warranties, either express or implied of any kind regarding any matter pertaining to this report, including, but not limited to warranties of suitability, fitness for a particularpurpose, accuracy, timeliness, completeness or non-infringement. We accept no obligation to correct or update the information or opinions in it. Way2Wealth or any of its affiliates or employees shall not be in any way responsible forany loss or damage that may arise to any person from any inadvertent error in the information contained in this report. The recipients of this report should rely on their own investigations. In no event shall Way2Wealth be liable for anydamages of any kind, including, but not limited to, indirect, special, incidental, consequential, punitive, lost profits, or lost opportunity, whether or not Way2Wealth has advised of the possibility of such damages.This material contains statements that are forward-looking; such statements are based upon the current beliefs and expectations and are subject to significant risks and uncertainties. Actual results may differ from those set forth inthe forward-looking statements. These uncertainties include but are not limited to: the risk of adverse movements or volatility in the securities markets or in interest or foreign exchange rates or indices; adverse impact from aneconomic slowdown; downturn in domestic or foreign securities and trading conditions or markets; increased competition; unfavorable political and diplomatic developments; change in the governmental or regulatory policies; failure ofa corporate event and such others. This is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. No part of this material may be copied orduplicated in any form by any means or redistributed without the written consent of Way2Wealth. In no event shall any reader publish, retransmit, redistribute or otherwise reproduce any information provided by Way2Wealth in anyformat to anyone. Way2Wealth and its affiliates, officers, directors and employees including persons involved in the preparation or issuance of this report may from time to time have interest in securities / positions, financial orotherwise in the securities related to the information contained in this report.To enhance transparency, Way2Wealth has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.Disclosure of Interest Statement in Bajaj Auto Ltd. as on January 09, 2019

Name of the Security Maruti Suzuki India Ltd.Name of the analyst Chintan GuptaAnalysts’ ownership of any stock related to the information contained

Financial Interest Analyst : Analyst’s Relative : Yes / NoAnalyst’s Associate/Firm : Yes/No

NIL

NoNoNo

Conflict of Interest NoReceipt of Compensation NoWay2Wealth ownership of any stock related to the information contained

NIL

Broking relationship with company covered NIL

Investment Banking relationship with company covered NIL

This information is subject to change without any prior notice. Way2Wealth reserves at its absolute discretion the right to make or refrain from making modifications and alterations to this statement from time to time.Nevertheless, Way2Wealth is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries.

3910 January 2019



th january 2019 sector: automobiles buy...msil’s financial metrics such as margins are far...

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