Maruti Suzuki India Ltd : Safe Drive

March 17, 2015 . Equities Desk

Maruti Suzuki India Limited is an India-based company engaged in the business of manufacture, purchase and sale of motor vehicles, auto mobile components and spare parts (auto mobiles). The other activities of the Company consist of facilitation of pre-owned car sales, fleet management and car financing.

Valuation and View

We continue to remain bullish on the long-term growth prospects of MSIL, given its leadership position coupled with a strong product pipeline in the next few years. We expect MSIL’s revenue to grow at ~16% CAGR in FY14-16E on demand recovery and new launches, which is expected to boost volumes. Further, the rationalisation of diesel-petrol price gap would provide a fillip to the company’s petrol-dominated product portfolio. A strong product brand with an extensive distribution network places the company ahead of its peers.

At a current market price of Rs.3,650.6, the stock trades at P/E of 25.0x FY16E. We recommend ‘BUY’ with a target price of Rs.4,229, which implies potential upside of ~15.8% to the CMP from a long term perspective.

Research Report Maruti Suzuki India Ltd

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