* Volume grew by ~15% YoY (+7% QoQ) in 4QFY17 to ~414,439 units, led by continuous better performance from Baleno and Brezza, with ongoing high waiting period.
* Net realization is likely to improve 6% YoY (+3.3% QoQ) to INR449,769 per unit, boosting net revenue by ~22% YoY (+10.5% QoQ) to INR186.4b. Growth in realization is likely to be driven by improvement in product mix due to compact UV, Vitarra Brezza, and premium hatchback, Baleno.
* We expect margin to decline 80 bp YoY (-20bp QoQ) to 14.6% led by impact of commissioning of Gujarat plant and higher fixed cost due to same. Higher commodity prices are likely to be offset by hike in prices.
* EBITDA is estimated to grow by 15% YoY (+9% QoQ) at INR27.2b.
* We expect PAT to grow ~17% YoY (+5% QoQ) to INR18.2b led by pre- operative expenses of Gujarat plant taken as extraordinary item and lower other income due to higher yield.
* The stock trades at 16.8x FY18E and 14.7x FY19E EPS. Maintain Buy
Key issues to watch
* Update on demand scenario, channel inventory, discounting trends and new launches.
* Gujarat plant product pipeline.
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