About 10 years ago, Maruti Suzuki was around half the size of its Japanese parent, Suzuki Motor Corp., but not only has it surpassed its parent in terms of market valuation, but it has also doubled in size.
According to Bloomberg data: as of Friday, Maruti Suzuki, the biggest carmaker in the nation, had a market capitalization of $46.9 billion, compared to Suzuki’s $22.1 billion market cap. In January 2015, Maruti’s market capitalization first surpassed that of its parent company.
Not surprise, strong fundamentals have supported the Maruti Suzuki stock surge. Over the previous five years, Maruti Suzuki’s net revenue has grown at a compound annual growth rate of 7.6% to ₹1.13 lakh crore, while its parent company’s sales climbed by 4.3% over the same period.
Comparably, between FY19 and FY23, Maruti Suzuki’s net profit increased at a compound annual rate of 1%, whereas Suzuki Motor’s bottom line increased by just 0.5 percent in the same time frame. As of December 2023, Suzuki Motor owned 58.2% of Maruti Suzuki.
“Maruti Suzuki will benefit significantly from a 12% GST reduction on hybrid vehicles, as many of its competitors are not making the same technological investments.”
Morgan Stanley
Maruti Suzuki’s stock increased by 4% on Friday, bringing its year-to-date gain to 20%. Suzuki Motor’s stock, on the other hand, has increased 13% so far this year. As of now in 2024, the benchmark Nifty50 has gained merely 2%.
Several variables propelled the most recent Maruti Suzuki rally. CLSA noted in a recent report that the corporation will probably profit from the increase of CNG cars.
The brokerage projects that CNG passenger car sales would increase from 15% in FY24 to 22% in FY30. It goes on to say that the corporation will gain from the release of new models.
Furthermore, Minister of Road, Transport & Highways Nitin Gadkari suggested lowering the tax on hybrid vehicles to 12% from 28% for sub-4 meter vehicles and from 43% for vehicles over 4 meter vehicles in an effort to promote the use of hybrid and electric vehicles.
The overall cost of ownership of hybrid cars would be more alluring due to the tax cut.
