Fundamental Analysis of Maruti Suzuki – industry, Financials & More

Owning a car in India is a significant milestone, particularly for the burgeoning middle class. In this article, we delve into the fundamental analysis of Maruti Suzuki, a key player in the Indian automobile industry.

Fundamental Analysis of Maruti Suzuki- ABOUT COMPANY 

 

Established in February 1981 as Maruti Udyog Limited, Maruti Suzuki India Limited (MSIL) is now the largest passenger car manufacturer in India. A joint venture between the Government of India and Suzuki Motor Corporation of Japan, the latter currently holds a 58.19% stake in the company. With a diverse portfolio of 16 car models and over 150 variants, Maruti Suzuki caters to various consumer segments, from entry-level small cars like the Alto to the luxury sedan Ciaz.

 

Sales and Industry Trends

 

  • Indian passenger vehicle industry saw record sales of 4.1 million units in 2023, becoming the third largest market globally
  • Share of utility vehicles in the industry increased to 53% in Q3, with SUVs contributing to about 63%
  • CNG vehicles saw a share increase to about 16.5% in the industry, with CNG sales reaching an all-time high of ~30%
  • Company crossed annual sales milestone of 2 million units in 2023 and had highest ever exports of about 270,000 units
  • Q3 FY23-24 saw total sales of 501,207 vehicles, with net profit rising over 33% year-on-year
  • Retail sales in Q3 were higher than wholesales, with discounts of INR 23,300 per vehicle

 

Maruti Suzuki Financials

 

Revenue and Net Profit: In FY23, Maruti Suzuki witnessed a YoY increase of 33.10% in revenue, reaching Rs. 1,17,571.30 crore, with a net profit of Rs. 8,211 crore, marking a 111.65% YoY increase.

Profit Margins: Operating Profit Margin (OPM) and Net Profit Margin (NPM) improved in FY23, standing at 9% and 6.83%, respectively.

Return Ratios: Return on Equity (RoE) and Return on Capital Employed (RoCE) showed improvements in FY23, reaching 13.28% and 16.02%, respectively.

Debt Analysis: The Debt to Equity ratio slightly increased to 0.02 in FY23, with a healthy Interest Coverage ratio of 70.37.

 

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Maruti Suzuki highlights-

 

Parameter Value Parameter Value
Market Cap ₹ 3,59,131 Cr. Current Price ₹ 11,423
High / Low ₹ 11,720 / 8,127 Stock P/E 29.4
Book Value ₹ 2,093 Dividend Yield 0.78%
ROCE 14.5% ROE 11.5%
Face Value ₹ 5.00 EPS ₹ 399
Sales growth 5Years 8.06% Sales growth 3Years 15.8%

 

Export Strategy:

 

  • Export strategy includes increasing annual exports to at least 750,000 units by the end of the decade, with a focus on Africa, Middle East, and Latin America

 

Product Strategy:

 

  • Maruti Suzuki aims to grow faster than the industry, with a focus on small car segment demand revival
  • Future product launches to reflect consumer preferences, with plans for 28 models by the end of the decade and focus on EV segment and all key volume segments

 

Future Plans:

 

Maruti Suzuki aims to meet growing demand by commencing operations in a new plant in Kharkhoda, Haryana, by the first half of 2025. The company plans to enhance its manufacturing capacity, targeting 1 million units by FY 2030-31. Additionally, Maruti Suzuki is set to launch electric vehicle models, with a goal of constituting 15-20% of total sales by FY30-31.

 

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Disclaimer-The content presented here is intended solely for analytical and educational purposes. If you consider investing, it is strongly advised to conduct your own thorough research. We do not endorse or recommend any specific stocks or initial public offerings (IPOs).

 

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