Given the unfolding post-Covid scenario, along with recent volumetric growth, we believe that Pak Suzuki (PSMC) still has some upside on offer. We apprise investors regarding the same in this piece and Recommend ‘Hold’ with a revised TP of Rs325.
The revision is based on stronger-than-anticipated volumetric outlook for CY21 (high demand for the Alto, Wagon-R and LCV variants), where we expect ~48% YoY growth for the year.
Moreover, gross margins for 4QCY20 and CY21 are anticipated to recover to 7-9% on the back of relatively stable outlook of the local currency, coupled with price increases in Oct-2020.
Additionally, the company’s finance costs are expected to decline by 83% YoY in CY21 (EPS impact ~Rs18/sh).
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