Prabhudas Lilladher is bullish on Maruti Suzuki and has recommended accumulate rating on the stock with a target of Rs 1313 in its September 7, 2011 research report.
“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”....
Prabhudas Lilladher is bullish on Maruti Suzuki and has recommended accumulate rating on the stock with a target of Rs 1313 in its September 7, 2011 research report.
“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”
“The strongest indicator that rates have peaked, or are near peak, is seen in the trends in the OIS (Overnight Indexed Swaps) curve. The OIS curve has turned sharply inverted in the last 60 days with longer tenor swaps yielding 100-150bps lower than near-term swaps. This indicates that the bond market now expects rates to come down in the not-toodistant future. With interest rate cycle nearing its peak, we believe the four wheeler space will be the most likely beneficiary of the same. Assuming a 10% discount to the average 1-Yr fwd P/E of 15.2x (last 5 years average) i.e. 13.7x, we arrive at a target price of Rs1,313 based on FY13E EPS a potential upside of 18.8%.”
“We have been maintaining our ‘Reduce’ rating since Feb’10 on account of capacity constraints, competition and appreciating yen. However, at the CMP, the stock is trading at 13.9x FY12E EPS and 11.5x FY13E EPS, which is attractive, given the 20.6% YoY growth in earnings for FY13E. Given the limited downside from the current level and attractive valuations, we are upgrading our recommendation to ‘Accumulate’ from ‘Reduce’ earlier,” says Prabhudas Lilladher research report.
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“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”....
Prabhudas Lilladher is bullish on Maruti Suzuki and has recommended accumulate rating on the stock with a target of Rs 1313 in its September 7, 2011 research report.
“Maruti Suzuki’s (MSIL) stock price has declined by 15.2% in last 6 months underperforming the broader markets by 6.0%. Increased competition, negative currency impact (Yen appreciated by ~8%) coupled with higher commodity prices led to a severe underperformance. However, given the current valuation of 11.5x FY13E EPS, which is well below the 5yr average of 15.2x 1yr fwd PE, and the expected recovery in volumes in FY13E, we believe the risk: reward ratio for Maruti Suzuki is turning favorable.”
“The strongest indicator that rates have peaked, or are near peak, is seen in the trends in the OIS (Overnight Indexed Swaps) curve. The OIS curve has turned sharply inverted in the last 60 days with longer tenor swaps yielding 100-150bps lower than near-term swaps. This indicates that the bond market now expects rates to come down in the not-toodistant future. With interest rate cycle nearing its peak, we believe the four wheeler space will be the most likely beneficiary of the same. Assuming a 10% discount to the average 1-Yr fwd P/E of 15.2x (last 5 years average) i.e. 13.7x, we arrive at a target price of Rs1,313 based on FY13E EPS a potential upside of 18.8%.”
“We have been maintaining our ‘Reduce’ rating since Feb’10 on account of capacity constraints, competition and appreciating yen. However, at the CMP, the stock is trading at 13.9x FY12E EPS and 11.5x FY13E EPS, which is attractive, given the 20.6% YoY growth in earnings for FY13E. Given the limited downside from the current level and attractive valuations, we are upgrading our recommendation to ‘Accumulate’ from ‘Reduce’ earlier,” says Prabhudas Lilladher research report.
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