For private circulation only

Volume No. IX Issue No. 03 December 8, 2017

Munjal Showa Rs 273 Signs of growth revival BSE Sensex: 33,250 Nifty-50: 10,266

FINANCIALS SALES OPM (%) OP OTHER INC. PBIDT INTEREST PBDT DEP. PBT TOTAL TAX PAT EPS (RS) * 1403 (12) 1598.59 6.6 105.83 5.46 111.29 2.7 108.59 28.41 80.18 10.48 69.7 17.4 1503 (12) 1643.26 7.9 129.71 5.72 135.43 0.45 134.98 28.67 106.31 30.68 75.63 18.9 1603 (12) 1501.84 7.5 111.97 5.3 117.27 0.12 117.15 29.3 87.85 26.7 61.15 15.3 1703 (12) 1459.66 6.5 94.61 16.1 110.71 0.05 110.66 29.06 81.6 25.05 56.55 14.2 1803 (12P) & 1566.61 6.6 103.16 19.8 122.96 0.13 122.83 28.34 94.48 28.93 65.56 16.4 1903 (P) & 1785.93 7.0 125.02 20.19 145.21 0.2 145.01 28.91 116.1 38.31 77.78 19.5 *Annualised on current equity of Rs 7.99: Face value of Rs 2 each. (P) Projections. &: As per new accounting standards. EO: Extraordinary items. EPS is adjusted for EO and relevant tax . Source: Capitaline Databases

Established in 1985, in technical and financial collaboration with Showa Corporation of Japan (having 26% stake in the company), the pioneering global leaders in the manufacture of shock absorbers, Munjal Showa is a member of Hero Group (flagship listed company Hero MotoCorp). The Hero Group, a major player in the manufacturing sector in India, comprises of 15 active companies with complete backward integration for automotive manufacturing. Munjal Showa designs and manufacturers shock absorbers and struts for leading two- wheelers and four-wheelers. Its manufacturing plant is spread over an area of 24075 sq mt in the industrial area of Gurgaon, Haryana, on the outskirts of the National Capital Territory of Delhi, India. STOCK DATA One of the leading suppliers of shock absorbers BSE Code : 520043 Today Munjal Showa is one of the leading suppliers of shock absorbers to major auto BSE Group : B giants in India, Japan, Germany, the United States and the United Kingdom, amongst NSE Code : MUNJALSHOW other developed markets. The Company’s products conform to the highest standards Bloomberg : MJS IN of quality, safety, comfort and dependability and are QS 9000, ISO 14001 and ISO Reuters : MNJL.BO 9001 compliant. Par Value : Rs 2 52-week High/Low : Rs 302 / Rs 157 Serves leading two and four wheeler OEMs Sector : Auto Ancillaries The company supplies to both two-wheeler and four-wheeler industries. For the two wheeler industry it manufactures rear shock absorber and front shock absorber. For the four wheeler industry it manufactures Struts and Gas Springs. Munjal Showa products serve as original equipment to a wide range of Maruti SHAREHOLDING PATTERN* upper end cars and export models, City car, complete range of Hero , Category % of equity Kawasaki Bajaj Motorcycles, Kinetic Scooters and Hero range of mini-motorcycles and mopeds and Honda Motorcycles and Scooters India (Pvt) Limited. In over a decade the Foreign : 0.03 company’s state-of-the-art Shock Absorbers, Front Fork, Struts and Window Balancers/ Institutions : 0.11 Gas Springs have become symbols of reliability and quality for popular two and four Promoters : 74.81 wheeled vehicles. Public & Others : 25.06 Total : 100 Will ride piggy back on Hero MotoCorp, its biggest client * as on 30/9/2017. Its largest client, Hero MotoCorp is a leading Two-wheeler company in the world. Hero Source: Capitaline Databases enjoys 36.9% market share in the domestic two-wheeler market and a whopping 51% in market share in the domestic market. Munjal Showa is one of the Hero MotoCorp is the dominant market leader in the 100cc and 125cc segments - with more than 65% and 55% market share in these respective segments. leading suppliers of shock The company’s largest client, Hero MotoCorp sold a record 2 million units in retail absorbers to major auto sales in the domestic market in the just-concluded festive season. giants in India, Japan, Carrying on the momentum of robust sales during the festive period, Hero MotoCorp Germany, the United States despatched 631,105 units of two-wheelers in October, clocking its 6th consecutive month of six-lakh plus sales. and the United Kingdom, The robust sales of Hero MotoCorp have been driven by popular demand for its amongst other developed iconic brands, including the Splendor, Glamour, Passion and HF Deluxe motorcycles markets as well as the Duet, Maestro Edge and Pleasure scooters. By the year 2020, Hero MotoCorp aims to surpass 100 million units in cumulative production with annual bike and scooter sales of 12 million units. It also plans to have more than 20 manufacturing and assembly plants globally with sales in more than 50 countries by that year.

Revival in the domestic market to sustain The domestic market for two-wheelers has seen a revival due to positive consumer sentiment. The trend is expected to continue through the year due to near-normal monsoon and payoffs from recommendations of Pay Commission. Lower interest rates should also help. The industry is likely to clock double-digit growth for the year after flat to negative growth for the past couple of years.

Steady performance In quarter ended September 2017, sales grew 7% to Rs 415.27 crore. OPM fell 50 basis points and stood at 7.5% against 8.0% as a result OP was stagnant at Rs 31.12 crore. Other income grew 24% to Rs 4.16 crore and depreciation fell 2% to Rs 7.28 crore. PBT grew 4% to Rs 27.99 crore. After providing for taxation (down 2% to Rs 8.01 crore), PAT grew 6% to Rs 19.98 crore. For the six months ended September 2016, sales grew 5% to Rs 810.35 crore. OP grew 2% to Rs 57.79 crore. PBT grew 10% to Rs 52.98 crore and PAT went up 11% to Rs 37.62 crore.

Valuation For FY’18, we expect the company to register sales and PAT of Rs 1566.61 crore and For the six months ended Rs 65.56 crore respectively. On a small equity of Rs 7.99 crore (promoter stake: 65%) and face value of Rs 2 per share, EPS works out to Rs 16.4 for FY18. The EPS September 2016, sales grew is likely to rise to Rs 19.5 in FY19. At current market price of Rs 273, the scrip trades 5% to Rs 810.35 crore at 13.9 times expected FY19 earnings.

December 8, 2017 2 MUNJAL SHOWA: RESULTS 1709 (3) & 1609 (3) & VAR. (%) 1709 (6) & 1609 (6) & VAR. (%) 1703 (12) 1603 (12) VAR. (%)

Sales 415.27 389.19 7 810.35 774.65 5 1459.66 1501.84 -3

OPM (%) 7.5 8.0 7.1 7.3 6.5 7.5

OP 31.12 31.10 0 57.79 56.90 2 94.61 111.97 -16

Other inc. 4.16 3.35 24 9.70 6.20 56 16.10 5.30 204

PBIDT 35.29 34.45 2 67.49 63.10 7 110.71 117.27 -6

Interest 0.01 0.00 227 0.08 0.01 548 0.05 0.12 -58

PBDT 35.28 34.45 2 67.40 63.08 7 110.66 117.15 -6

Dep. 7.28 7.44 -2 14.42 14.86 -3 29.06 29.30 -1

PBT 27.99 27.01 4 52.98 48.23 10 81.60 87.85 -7

Total Tax 8.01 8.17 -2 15.35 14.40 7 25.05 26.70 -6

PAT 19.98 18.84 6 37.62 33.83 11 56.55 61.15 -8

EPS (Rs) * 20.0 18.9 18.8 16.9 14.2 15.3

*Annualised on current equity of Rs 7.99: Face value of Rs 2 each. &: As per new accounting standards. EO: Extraordinary items. EPS is adjusted for EO and relevant tax. Source: Capitaline Databases

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