Maruti Suzuki has posted a strong set of numbers with the fourth quarter profit rising a whopping 60.5 percent to Rs 1,284 crore compared to Rs 800 crore in the year-ago period. Revenues increased by 12.6 percent to Rs 13,625 crore in the quarter ended March 2015 from Rs 12,101.4 crore in the same quarter last year.
In an interview to CNBC-TV18, Bharat Gianani of Angel Broking, and Prayesh Jain of IIFL analyse the numbers and discuss their view on the stock.
Below is the transcript of Bharat Gianani and Prayesh Jain's interview with Reema Tendulkar and Sonia Shenoy on CNBC-TV18.
Sonia: The topline growth is largely inline with estimates, it is a growth of 10 percent. However, we just have the bottomline figure which is more than 40 percent growth at about Rs 1284 crore. What are your initial comments?
Gianani: If you see on the topline front, the numbers as you rightly pointed out have been inline with what we are estimating. However, if you see the net profit figure, that is slightly above our estimates. We were expecting a profit of about Rs 1220 crore. The company has delivered a profit of Rs 1284 crore which is 5 percent above our estimates. So, we have to see whether it is on account of the operating performance or whether it is due to a surge in the other items.
Reema: The numbers look good but the stock isn't racing away, it is up close to about 1.5 percent. Do you think it is already trading at fair values and it is factoring in such good numbers, a profit jump of close to about 60 percent?
Gianani: As I said, if you see the numbers purely from the earnings perspective, then there has been just a marginal beat as I earlier pointed out. So, it is just 5 percent above the estimates.
Sonia: The margins this time have come in at 15.8 percent so this is the highest we have seen in the last couple of years for Maruti Suzuki. What would your own estimate be on whether this margin level is sustainable going ahead and how would you react to the stock now?
Jain: This number is real exceptional one for us. We were expecting a bump up in EBITDA margins but our estimate was somewhere in the vicinity of 13.50 percent but this one is definitely a big surprise. A chunk of this could be from the currency benefits that would have come under the royalty payment that comes towards the end of the year. So, in that sense we will have to see as to what is the portion of that.
Definitely the raw material prices have also cooled off. More importantly, it has to come from the management about the discounting levels, whether they have started declining especially in the light that the contribution of cost restructuring is increasing to their volumes which is a no discount model. So in that sense discounts could also have played some role in this quarter. That is the broad analysis of the margins.
Sonia: Do you think these earnings justify a higher valuation to the stock and would you change any of your earnings estimates in FY16 based on what you saw today?
Jain: In a quarter where you just see a 6 percent volume growth and you see such a large EBITDA margin expansion and if these are for sustainable reasons then definitely this calls for a earnings upgrade from hereon. The volume estimates will have to be toned down a bit given that second half of FY15 sees a similar H1FY16.
Monsoons would be critical factor for Maruti given that high proportion of rural sales. So that will have to be as to now how monsoons pan out. We will slightly lower our volume growth estimates but margin could see some upsides and that should even out on earnings estimate staying steady or slightly on the higher side.
via Business - Google News http://ift.tt/1DPrJny
Put the internet to work for you.
0 comments:
Post a Comment