Result Update

April 30, 2012

Rating matrix
Rating Target Target Period Potential Upside : : : : Buy | 1591 12 months 14%

Maruti Suzuki India Ltd (MARUTI)

WHATS CHANGED
FY14E 47,566.4 4,857.0 3,065.0 106.1

| 1397

Key Financials
| Crore Net Sales EBITDA Net Profit EPS (|) FY11 36,128 3,499.6 2,288.6 79.2 FY12 35,007.3 2,584.2 1,636.1 56.6 FY13E 39,551.5 3,607.6 2,274.3 78.7

PRICE TARGET................................................................... Changed from | 1275 to | 1590 EPS (FY13E).......................................................................... Changed from | 85.0 to |78.7 EPS (FY14E)........................................................................................Introduced at | 106.1 RATING.....................................................................................Changed from HOLD to BUY

Uptrend to continue on price & margins

Maruti Suzuki Indias (MSIL) reported its Q4FY12 numbers, which were slightly above our expectations primarily on account of one-offs. The top line came in at |11727 crore (I-direct estimate: |11317 crore) reflecting a 16.2% YoY increase and a 48.8% QoQ jump. The average realisations (ASP) jumped 11% YoY in domestic market to |297,836 and rose 17% YoY to |319,000 in export markets. However, discounts jumped sequentially to ~|13,490 (up 12% QoQ) on account of increased discounts on petrol variants to attract customers. On the volume front, the company reported a 4.9% YoY rise and 50.4% QoQ jump to ~3.6 lakh units. The EBITDA margins witnessed sequential improvement of 203bps to 7.3% despite vendor compensation of ~|200 crore for currency fluctuation paid with a quarter lag. The PAT came in at ~640 crore (down ~2% YoY) and was boosted by other income of ~296 crore pertaining to capital gain arising from maturity of FMP investment and mark to market reversal of |50 crore on the royalty front. Highlights of the quarter The quarter witnessed higher ASPs owing to higher diesel mix (~23% of sales) and with diesel engine capacity expanding to ~4 lakh units in FY13E ( 3 lakh units from Suzuki Powertrain and 1 lakh units sourced from FIAT) from current levels of 2.5 lakh units the ASPs are expected to remain firm. The capex incurred for FY12 was |2700 crore and is guided to be ~|3000 crore in FY13E with R&D spend expected to rise to |500 crore. The profitability was enhanced by currency reversal of ~50 crore on royalty and higher other income due to maturity of FMP investment. The vendor compensation of ~|200 crore remained a drag. On the export front, the focus remains on non-European geographies.

Valuation summary
P/E Target P/E EV / EBITDA P/BV RoNW RoCE FY11 17.6 20.1 9.4 2.9 16.5 17.5 FY12 24.7 28.1 12.8 2.7 10.8 8.8 FY13E 17.8 20.2 9.1 2.3 13.2 13.2 FY14E 13.2 15.0 6.4 2.0 15.3 16.4

Stock data
Market Capitalization Total Debt (FY12) Cash and Investments (FY12) EV 52 week H/L Equity capital Face value MF Holding (%) FII Holding (%) | 40373.3 Crore | 1175 Crore | 8583.5 Crore | 32964.8 Crore 1391 / 916 | 144.5 Crore |5 15.8 21.5

Price movement
6,000 5,500 5,000 4,500 4,000 3,500 3,000 May-11 Aug-11
Price (R.H.S)

1,650 1,500 1,350 1,200 1,050 900 750 600 Nov-11 Jan-12 Apr-12
Nifty (L.H.S)

Valuation

We believe the stock has bottomed out in terms of profitability in previous quarter and expect interest rate cut to improve consumer sentiment. At the CMP of 1397, the stock is trading at 13.2x FY14E EPS. We value the stock at 15x FY14E EPS to arrive at target price of |1591 reflecting a potential upside of 15%. We change our rating from HOLD to BUY.
Exhibit 1: Valuation Metrics
(| Crore) Net Sales EBITDA EBITDA Margin (%) Depreciation Interest Other Income Reported PAT EPS (|) Q4FY12 11727.0 858.5 7.3 330.6 20.8 296.9 639.8 22.1 Q4FY12E 11316.5 761.8 6.7 295.7 12.0 186.0 480.1 16.6 Q4FY11 10092.2 1009.8 10.0 296.7 6.4 119.9 659.9 22.8 Q3FY12 7882.4 417.2 5.3 298.9 17.4 160.4 205.6 7.1 QoQ (Chg %) 48.8 105.8 203 bps 10.6 19.8 85.1 211.2 211.2 YoY (Chg %) 16.2 -15.0 -268 bps 11.4 227.4 147.6 -3.0 -3.0

Analysts name
Karan Mittal karan.mittal@icicisecurities.com Nishant Vass nishant.vass@icicisecurities.com Aman Daga aman.daga@icicisecurities.com

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Segmental analysis

FY12E a forgettable year Outlook promising for FY13E & FY14E For MSIL, FY12E was a lacklustre year on account of multiple problems ranging from industrial disputes to currency fluctuation impact to demand slowdown etc leading to 10.8% YoY volume decline. However, Q4FY12 showed signs of trend reversal with the company reporting highest ever volumes at ~3.6 lakh units (up 4.9% YoY). FY12 saw preference of customers shifting towards diesel vehicles on account of huge differential between petrol and diesel fuel prices (~|26). In the PV industry, the diesel vehicle demand rose ~37% YoY while the petrol variants witnessed a ~14% de-growth. MSIL is expanding its diesel engine capacity to ~4 lakh units in FY13E to cater to burgeoning demand in the segment and is also setting up 3 lakh unit plant for a total outlay of |1700 crore (Phase 1: 1.5 lakh units to be completed by FY13E and Phase 2 to be completed in FY14E). The management is planning to increase its R&D spend to ~|500 crore in the ongoing Rohtak facility whose total outlay remains at ~| 2000 crore till FY14E. The discounts offered on petrol variants are expected to remain high with customers willing to pay higher for diesel variants while diesel car demand is expected to remain robust. The company has received the nod from RBI to hedge currency movement on behalf of its vendors, thereby, mitigating forex impact to a higher extent. Also, the benefit of increased localisation of components is expected to enhance margin performance from FY14E onwards. The company has managed to expand its service network significantly to ~2950 touch points in 140 cities in FY12E.
Exhibit 2: Trends in domestic market share
The domestic market share for FY12 has shrunk to 38.4% from 45.3% last year on account of labour issues faced by the company impacting volumes.
GM M&M Tata motors Hyundai Maruti 0 5 10 15 20 25 30 35 Others 4.2 4.3 4.3 7.2 9.4 9.5 14.2 14.1 14.0 14.8 15.0 14.4 38.4 38.4 40 45 45.3 50 14.9 19.0 18.7 Mar-11 Feb-12 Mar-12

(%)

Source: Company, ICICIdirect.com Research

Volume outlook remains upbeat

The Society of Indian Automobile Manufacturers (SIAM) has projected a 10-12% growth for the passenger vehicle segment for FY13E. However, we have factored in ~13% YoY growth for FY13E and ~15% YoY growth for FY14E primarily on account of lower base of current fiscal, higher diesel capacity and interest rate cut by RBI reducing the cost of ownership. The recently launched Ertiga has already received bookings of ~22,000 units and we expect a run-rate of ~4000 units for the same which could go higher if exports to countries like Indonesia rise meaningfully.

ICICI Securities Ltd | Retail Equity Research

Page 2

Exhibit 3: Volumes back on track

The company has witnessed volume rebound since Oct11post labour issues and clocked its highest ever monthly sales in Mar12.
Volume (000's) 140 120 100 80 60 40 20 0 Apr'11 Sep'11 Aug'11 Mar'11 Nov'11 Dec'11 Jun'11 Jan'12 Feb'12 Oct'11 Jul'11 May'11 Mar'12
9.9 6.3

122 97 104 80 91 75 86 56 92 92

115

119

126

Source: ICICIdirect.com Research

Currency outlook and margin expectations MSIL witnessed a sequential margin improvement of 203 bps to 7.3% although on a YoY basis the performance still remains subdued. The margin performance was dented by vendor compensation of ~|200 crore on account of currency fluctuation impact. Going ahead in FY13E and FY14E we have factored in a margin expansion to ~9% and ~10% respectively owing to higher operational leverage and stable outlook of Yen. The company benefited from royalty MTM reversal of ~|50 crore for this quarter, going ahead has hedged ~40% of its net exposure of USD/JPY (direct & indirect) which implies complete hedge for Q1 while Q2 remains ~65% hedged while Q3 royalty payments remain hedged. The company would continue to look for fresh hedges on a rolling basis going ahead. On ASPs we believe higher mix of diesel variants (at present ~23% of sales) to reach ~32% is expected to improve ASPs pushing EBITDA margins in FY13-14E as both currency and operating leverage is expected to help.
Exhibit 4: EBITDA margin trend
12 10 8 (%) 6 4 2 0 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 PAT margin FY13E FY14E 6.7 6.6 6.6 5.3 3.2 2.7 10.2 9.8 7.3 5.5 5.6 8.9

EBITDA margin

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 3

Exhibit 5: Currency volatility

Currency remains a key monitorable for MSIL as it has ~23% exposure to direct and indirect measures coupled with ~5.2% royalty exposure that is yen denominated. MSIL has direct exposure of 10% and vendor exposure of ~13%, which through enhanced localisation initiatives would be reduced to ~9% by FY13E-14E. For FY13E MSIL has hedged its exposure for H1 and is looking at active hedges in coming periods if rates remain favourable
120 115 110 105 100 95 90 85 80 75 Dec-09 Dec-10 Aug-10 Aug-11 Dec-11 Feb-10 Feb-11 Jun-10 Jun-11 Feb-12
RoNW (%) 16.5 10.8 13.2 15.3

Apr-10

Apr-11

USDINR

USDJPY

USDEUR

Source: Company, ICICIdirect.com Research The quotes of each currency have been indexed with October 2009 as base equal to 100

Outlook
MSIL has underperformed in FY12E owing to various factors like volume growth/margins/stock price relative to industry. The reasons for the same have been discussed above, however going ahead, we believe some of the headwinds have started to subside paving the way for improved performance. The interest rates have started to ease bringing cost of ownership lower. The diesel capacity augmentation to ~4 lakh units will result in lower waiting periods and higher ASPs. We believe FY13E would be a complete reversal of trend from FY12 and have factored in volume growth of ~13%/15% for MSIL in FY13E/FY14E respectively. On the earnings front, MSIL is expected to capitalise on both operational and localisation levers as it continues to limit forex related vagaries.

Valuation
We believe the stock has bottomed out in terms of profitability in previous quarter and expect interest rate cut to improve consumer sentiment from H2FY13E onwards. At the CMP of 1397, the stock is trading at 13.2x FY14E EPS of |106.1. We value the stock at 15x FY14E EPS to arrive at target price of |1591 reflecting a potential upside of 15%. We change our rating from HOLD to BUY.
Exhibit 6: Revised financials
Particulars (| crore) Volumes (000's) Revenue EBITDA EBITDA Margin % PAT EPS (|) FY13E Old 1322.5 40687.4 3835.3 9.4 2457.0 85.0 New 1276.8 40738.1 3607.6 8.9 2274.3 78.7 % Change (3.5) 0.1 (5.9) -54 bps (7.4) (7.4) FY14E Introduced 1471.8 48945.8 4857.0 9.9 3065.0 106.1

Source: Company, ICICIdirect.com Research

Exhibit 7: Financial metrics

Sales (| cr) 36128.2 35007.3 39551.5 47566.4 Growth (%) -3.1 13.0 20.3 EPS (|) 79.2 56.6 78.7 106.1 Growth (%) -28.5 39.0 34.8 PE (x) 17.6 24.7 17.8 13.2 EV/EBITDA (x) 9.4 12.8 9.1 6.4 RoCE (%) 17.5 8.8 13.2 16.4

FY11 FY12 FY13E FY14E

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

Apr-12

Oct-10

Oct-11

Oct-09

Financial summary
Profit and loss statement
(Year-end March) Total operating Income Growth (%) Raw Material Expenses Employee Expenses Marketing Expenses Administrative Expenses Other expenses Total Operating Expenditure EBITDA Growth (%) Depreciation Interest Other Income PBT Others Total Tax PAT Growth (%) EPS (|) FY11 36,901.0 24.8 28,490.2 703.6 960.0 0.0 0.0 33,401.4 3,499.6 -10.9 1,013.5 24.4 558.4 3,088.6 0.0 800.0 2,288.6 -10.2 79.2 FY12 35,970.3 -2.5 28,424.4 843.9 1,027.2 0.0 0.0 33,386.1 2,584.2 -26.2 1,137.2 54.8 755.0 2,147.2 0.0 511.0 1,636.1 -28.5 56.6 FY13E 40,738.1 13.3 31,334.7 1,052.9 1,134.5 0.0 0.0 37,130.4 3,607.6 39.6 1,181.8 117.5 805.9 3,114.3 0.0 840.0 2,274.3 39.0 78.7 (| Crore) FY14E 48,945.8 20.1 37,274.8 1,211.1 1,377.9 0.0 0.0 44,088.8 4,857.0 34.6 1,371.8 105.7 819.2 4,198.7 0.0 1,133.6 3,065.0 34.8 106.1

Cash flow statement

(Year-end March) Profit after Tax Add: Depreciation (Inc)/dec in Current Assets Inc/(dec) in CL and Provisions Others CF from operating activities (Inc)/dec in Investments (Inc)/dec in Fixed Assets Others CF from investing activities Issue/(Buy back) of Equity Inc/(dec) in loan funds Dividend paid & dividend tax Inc/(dec) in Sec. premium Others CF from financing activities Net Cash flow Opening Cash Closing Cash FY11 2,288.6 1,013.5 -173.7 512.0 3,640.4 2,070.0 -2,559.2 27.4 -461.8 0.0 -512.1 -252.7 0.0 -3.5 -768.3 2,410.3 98.2 2,508.5 FY12 1,636.1 1,137.2 -934.5 754.0 2,592.9 -1,040.6 -2,312.0 137.9 -3,214.7 0.0 865.7 -252.7 0.0 -63.5 549.5 -72.3 2,508.5 2,436.2 FY13E 2,274.3 1,181.8 -589.8 372.9 3,239.2 -300.0 -3,000.0 6.8 -3,293.2 0.0 0.0 -252.7 0.0 63.5 -189.2 -243.3 2,436.2 2,192.9 (| Crore) FY14E 3,065.0 1,371.8 -733.1 445.8 4,149.5 -1,000.0 -2,000.0 6.8 -2,993.2 0.0 0.0 -269.6 0.0 0.0 -269.6 886.7 2,192.9 3,079.6

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet
(Year-end March) Liabilities Equity Capital Reserve and Surplus Total Shareholders funds Total Debt Deferred Tax Liability Minority Interest / Others Total Liabilities Assets Gross Block Less: Acc Depreciation Net Block Capital WIP Total Fixed Assets Investments Inventory Debtors Loans and Advances Other Current Assets Cash Total Current Assets Creditors Provisions Total Current Liabilities Net Current Assets Deferred Tax Asset Application of Funds FY11 144.5 13,723.0 13,867.5 309.3 251.2 0.0 14,428.0 FY12 144.5 15,042.9 15,187.4 1,175.0 392.3 0.0 16,754.7 FY13E 144.5 17,127.9 17,272.4 1,175.0 402.3 0.0 18,849.7 (| Crore) FY14E 144.5 19,923.4 20,067.9 1,175.0 412.3 0.0 21,655.2

Key ratios
(Year-end March) Per share data (|) EPS Cash EPS BV DPS Cash Per Share Operating Ratios EBITDA Margin (%) PBT / Net sales (%) PAT Margin (%) Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Debt/EBITDA Debt / Equity Current Ratio Quick Ratio FY11 79.2 114.3 479.8 7.5 86.8 9.7 8.5 8.6 13.3 9.0 35.9 16.5 17.5 15.6 17.6 9.4 0.9 1.1 2.9 0.1 0.0 1.6 0.9 FY12 56.6 96.0 525.5 7.5 84.3 7.4 6.1 6.2 16.7 9.8 43.1 10.8 8.8 7.7 24.7 12.8 0.9 1.2 2.7 0.5 0.1 1.5 1.0 FY13E 78.7 119.6 597.7 7.5 75.9 9.1 7.9 4.5 17.0 10.0 41.1 13.2 13.2 10.7 17.8 9.1 0.8 1.0 2.3 0.3 0.1 1.5 1.0 FY14E 106.1 153.5 694.4 8.0 106.6 10.2 8.8 5.6 18.0 10.0 37.1 15.3 16.4 13.8 13.2 6.4 0.7 0.8 2.0 0.2 0.1 1.6 1.1

11,737.7 6,208.3 5,529.4 1,428.6 6,958.0 5,106.7 1,415.0 893.3 1,372.2 167.3 2,508.5 6,356.3 3,554.0 525.8 4,079.8 2,276.5 86.8 14,428.0

14,049.7 7,345.5 6,704.2 1,428.6 8,132.8 6,147.3 1,796.5 937.7 1,911.5 136.6 2,436.2 7,218.4 4,135.2 698.6 4,833.8 2,384.6 90.0 16,754.7

17,049.7 8,527.3 8,522.4 1,428.6 9,951.0 6,447.3 1,887.8 1,083.6 2,194.0 206.7 2,192.9 7,565.0 4,454.2 752.5 5,206.8 2,358.2 93.2 18,849.7

19,049.7 9,899.1 9,150.6 1,428.6 10,579.2 7,447.3 2,803.7 1,303.2 1,792.2 206.1 3,079.6 9,184.8 4,835.6 817.0 5,652.5 3,532.3 96.4 21,655.2

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

ICICIdirect.com Research coverage universe (Auto OEMs)

Ashok Leyland Idirect Code Mcap (|cr) Tata Motors Idirect Code Mcap (|cr) Maruti Suzuki Idirect Code Mcap (|cr) M&M Idirect Code Mcap (|cr) Bajaj Auto Idirect Code Mcap (|cr) Eicher Motors Idirect Code Mcap (|cr) Escorts Idirect Code Mcap (|cr) Hero MotoCorp Idirect Code Mcap (|cr) ASHLEY 8422 CMP(|) Target(|) % Upside 32 36 12.8 FY11 FY12E FY13E FY14E FY10 FY11 FY12E FY13E FY11 FY12E FY13E FY14E FY10 FY11 FY12E FY13E FY10 FY11 FY12E FY13E CY10 CY11E CY12E CY13E SY10 SY11 SY12E SY13E FY10 FY11 FY12E FY13E Sales (| cr) 11107.4 12689.3 14539.3 16732.2 90563.0 120958.0 157878.1 177469.0 36,128.2 35,007.3 39,551.5 47,566.4 18602.1 23351.1 30565.7 35229.0 12,043.5 16,975.0 20,238.4 22,208.1 4,397.1 5,677.6 6,721.4 8,944.6 2,764.7 3,252.1 3,518.3 3,918.9 19,669.3 19,401.2 23,604.2 25,775.6 EPS (|) 2.4 1.9 2.3 3.0 9.0 29.1 34.5 38.7 79.2 56.6 78.7 106.1 36.9 45.4 43.9 49.8 58.8 115.4 103.6 112.3 70.1 110.2 136.7 177.9 13.4 11.8 6.6 11.7 111.8 96.5 120.2 130.3 PE(x) 13.3 16.4 14.0 10.5 31.8 9.9 8.3 7.4 17.6 24.7 17.8 13.2 19.4 15.8 16.3 14.3 27.0 13.8 15.4 14.2 31.0 19.7 15.9 12.2 5.5 6.2 11.2 6.3 19.5 22.6 18.2 16.8 EV/E (x) 7.3 7.8 6.9 5.6 13.4 6.2 4.9 4.0 9.4 12.8 9.1 6.4 12.0 9.6 8.3 6.8 17.0 12.4 9.4 8.6 15.4 9.6 7.1 4.8 2.2 2.7 2.8 2.1 12.4 12.9 9.0 8.2 RoNW (%) 15.9 12.8 15.0 19.2 31.3 48.4 38.4 31.2 16.5 10.8 13.2 15.3 26.7 25.8 21.3 20.6 58.1 68.0 47.1 42.9 15.3 20.1 20.5 21.5 7.9 6.7 3.6 6.1 64.4 65.2 86.1 92.4 RoCE (%) 14.5 11.2 12.6 15.3 10.9 25.1 26.9 26.5 17.5 8.8 13.2 16.4 24.1 23.9 22.5 22.6 55.0 59.1 58.0 52.1 16.1 21.4 21.8 23.3 8.9 6.3 5.7 8.4 70.0 74.1 90.1 97.0

TELCO 93018

CMP(|) Target(|) % Upside

313 316 1.0

MARUTI 40386

CMP(|) Target(|) % Upside

1397 1591 13.8

MAHMAH 43805

CMP(|) Target(|) % Upside

715 714 -0.1

BAAUTO 46040

CMP(|) Target(|) % Upside

1,591 1,460 -8.3

EICMOT 5859

CMP(|) Target(|) % Upside

2,170 2,050 -5.5

ESCORT 752

CMP(|) Target(|) % Upside

74 73 -0.5

HERHON 43681

CMP(|) Target(|) % Upside

2184 1824 -16.5

Source: Company, ICICIdirect.com Research

The in-house raw material index reflects the combination of various input materials (steel, rubber, aluminium, plastics) for OEMs, which have been rebased with February 2009 as base year to 100. The chart shows the increasing trend in raw material prices causing concern for the industry
200 180 160 140 120 100 80 Feb-09 Feb-10 Feb-11 Aug-09 Aug-10 May-09 May-10 May-11 Aug-11 Nov-09 Nov-10 Nov-11 Feb-12

Exhibit 8: Auto raw material Index

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

Exhibit 9: Recommendation History

1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 May-11 Jun-11 Aug-11 Sep-11
Price

Nov-11

Dec-11
Target Price

Jan-12

Mar-12

Apr-12

Source: Company, ICICIdirect.com Research

Exhibit 10: Recent Releases

Date 5-Jul-11 25-Jul-11 19-Sep-11 5-Oct-11 31-Oct-11 5-Jan-12 24-Jan-12 4-Apr-12 Event Q1FY12 Preview Q1FY12 Result Update Event Update Q2FY12 Preview Q2FY12 Result Update Q3FY12 Preview Q3FY12 Result Update Q4FY12 Preview CMP 1166 1181 1141 1086 1125 933 1158 1316 Target Price 1482 1364 1286 1286 1286 1140 1275 1275 Rating BUY BUY BUY BUY BUY BUY BUY HOLD

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

ICICIdirect.com Universe price movement vis--vis BSE Auto index Exhibit 11: OEM comparison with BSE Auto
The chart compares the movement of OEM stocks in the ICICIdirect.com Universe with the BSE Auto index, thereby reflecting the degree of mimicking of the index Since January 2011, Tata Motors and Hero MotoCorp have outperformed while M&M and Escorts have underperformed in comparison to the index by being divergent on the upside and downside, respectively
BSE Auto Escorts

Mar-11

May-11 BSE Auto M&M

Jul-11 Bajaj Escorts

Sep-11

Nov-11 Maruti Hero MotoCorp

Jan-12 Mar-12 Tata Motors

Source:ICICIdirect.com Research

Exhibit 12: Ancillaries comparison with BSE Auto

The chart compares the movement of auto ancillary stocks in the ICICIdirect.com universe with the BSE Auto index The volatile nature of smaller ancillary companies is reflected. These have met with numerous fluctuations with the exception of larger market capitalisation companies like Exide Industries, which mimic the index greatly. JK tyre and Subros have underperformed due to the intense rubber price overhang and production disruption at Maruti respectively.
Mar-11 May-11 BSE Auto Apollo Tyres Jul-11 Auto Axl Subros Sep-11 Subros JK Tyres Nov-11 Jan-12 Balkrishna Exide Inds Mar-12 JK Tyres Amara raja BSE Auto Balkrishna Industries

Bharat Forge Motherson

Source: ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps / midcaps, respectively, with high conviction; Buy: >10%/15% for large caps / midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 400 093 research@icicidirect.com ANALYST CERTIFICATION
We /I, Karan Mittal MBA(FINANCE), Nishant Vass MBA (FINANCE) Aman Daga MBA research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.

pankaj.pandey@icicisecurities.com

Disclosures:
ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service, integrated investment banking, investment management and brokerage and financing group. We along with affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their dependent family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities, its subsidiaries and associated companies, their directors and employees (ICICI Securities and affiliates) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities is acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return of investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities and its affiliates might have managed or co-managed a public offering for the subject company in the preceding twelve months. ICICI Securities and affiliates might have received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of public offerings, corporate finance, investment banking or other advisory services in a merger or specific transaction. It is confirmed that Karan Mittal MBA,, Nishant Vass MBA(FINANCE) Aman Daga MBA research analysts and the authors of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Our research professionals are paid in part based on the profitability of ICICI Securities, which include earnings from Investment Banking and other business. ICICI Securities or its subsidiaries collectively do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. It is confirmed that Karan Mittal MBA, Nishant Vass MBA (FINANCE) Aman Daga MBA research analysts and the authors of this report or any of their family members does not serve as an officer, director or advisory board member of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. ICICI Securities and affiliates may act upon or make use of information contained in the report prior to the publication thereof. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

ICICI Securities Ltd | Retail Equity Research

Page 9