VALUATION & RECOMMENDATION Maruti

VALUATION & RECOMMENDATION

The company has maintained more than 50% market share from last 20 years in passenger car segment which we think will be maintained going forward. The key positives for the company are: 1) Rise in disposable income – sixth pay commission & increased tax slab. 2) India becoming global hub for car manufacturers and Suzuki plans of one third of total production from Maruti by 2010. 3) Export targets set at 100000 units in FY 09 (which currently 53000 units) with launch of new model A-star. We expect the company will post healthy volume growth in export segment as it has taken and shift towards high end A3 segment to improve realisation. Avaibility of finance for four wheelers has been stringent once it improves volumes will pick up domestically.

At current market price the company trades at P/E of 5.3x its H1FY09 annualised EPS of Rs.105.8. We remain “Neutral” on the stock.