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Launches new Brezza loaded with features

Garners bookings of 45k units in just eight days

* MSIL launched its all new Brezza, with the latest advanced features, at an ex-showroom price of INR0.8m for the manual variants (INR1.1m for the automatic variants). While the base variant of the new Brezza is dearer by ~INR15k, the price of premium variants has risen by INR119-232k. Prices for the AT variants are dearer by INR84-247k.

* It has already garnered more than 45k bookings in the first eight days since bookings were opened.

* Brezza will only sport a petrol engine (despite competition offering a diesel engine), mated with both a manual and automatic transmission. It offers a 1.5l petrol engine, even as its competitors offer a 1.2l petrol and 1.5l diesel engine.

* The new Brezza will be competing with the likes of Hyundai Venue, Kia Sonet, Tata Nexon, M&M XUV300, etc. in the UVC category. The UVC segment constitutes 54% of SUV volumes for the industry (~40% including MPVs) for FY22.

* The Brezza is built on Suzuki’s improved TECT platform and sports a new gen K-series engine, with a mild hybrid system. The company is claiming a mileage of 20.15kmpl – the highest in its category (v/s 17kmpl for the old Brezza).

* MSIL sold 113.7k units of the old Brezza sold in FY22 (v/s peak volumes of 157.9k units in FY19). It commanded a market share of 18.6% in FY22 (v/s 40% in FY19). Export volumes have started picking up for the Brezza, with exports of 21.5k units (v/s 4.4k units in FY21).

* The company, along with its vendor partners, have Invested INR7.6b on the development of the new Brezza.

* The management indicated changing consumer buying behavior towards vehicle purchase. These include: 1) FTB stood at 38% in FY22 (v/s 27% in FY16); 2) customers under 35 years at 44% v/s 35% in FY16; and 3) around 48% of customers are looking at the exterior design and 49% at features.

* Speaking at the launch of the new Brezza, Mr. Hisashi Takeuchi, MD & CEO, MSIL, said, “Conceptualized, designed, and developed in India, the Brezza, with its stylish design, bold stance, and unmistakable road presence, has redefined the Compact SUV segment in India. The Brezza is the most loved Compact SUV, with over 7,50,000 delighted customers. It has ruled the sales charts by consistently being among the top 10 bestselling Passenger Vehicles. The Brezza has captured the imagination of customers looking for a stylish SUV to match their personality. We are delighted to present the ‘all new hot and techy Brezza’ with energetic new design, packed with next-gen features, and superior performance, which will surely surpass customer expectations. We are confident that the all new Brezza will be a blockbuster once again.”

* Our take: Brezza is the first of many new platforms and SUV launches planned over the next two years. Considering that the Brezza was the oldest model in the hyper-competitive UVC segment, this platform upgrade was timely. It will help MSIL recover part of its lost market share in this important SUV segment. We are building in average monthly domestic volumes (including supplies to Toyota) of ~15k units in FY24 v/s 11.7k units in FY22.

* Valuations and view: Strong demand, improving semiconductor supplies, moderating commodity inflation, and a favorable forex rate will aid a margin recovery. Robust demand and strong recoveries in both market share (+600bp) and margin (+550bp) over FY22-24E, will drive a 66% CAGR in EPS. The stock trades at 36.9x/23.9x FY23E/FY24E consolidated EPS. We maintain our Buy rating with a TP of INR10,000 per share (premised on 27x Jun'24E consolidated EPS).

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