Maruti now valued more than State Bank of India
Shares of India’s largest car maker Maruti Suzuki India Ltd jumped 2.11% to an alltime high of ₹9,072 apiece on Friday, making the automaker the sixth most valued firm on BSE, ahead of State Bank of India.
The list of the most valued companies on the BSE is led by Reliance Industries Ltd, TCS Ltd, HDFC Bank, ITC Ltd and Hindustan Unilever Ltd.
Maruti Suzuki’s market capitalisation on Friday stood at ₹2.74 lakh crore, marginally ahead of SBI’s ₹2.71 lakh crore. In terms of valuation, the Indian unit of Japanese automaker Suzuki Motor Corp. is ahead of companies such as Housing Development Finance Corp. (HDFC), Oil and Natural Gas Corp. (ONGC) and Infosys Ltd.
The reason for this appreciation in stock price can be attributed to the continuous increase in the firm’s market share in the passenger vehicle segment, said Aswin Patil, sector analyst at Mumbai-based brokerage firm LKP Securities Pvt Ltd.
“Maruti Suzuki has guided for a volume growth of 10-12% in FY 18 and 12-14% in FY19. Hence most of the brokerages have a bullish view on the stock. Also on the margin front, there is further room for improvement and the realisation per unit of the company has also been improving.
NEWDELHI:
The November wholesale numbers have also been good. So, this has all contributed to the growth in the stock price,” Patil said.
“We have a target price of ₹10,000 for stock by FY19,” he added. Maruti shares have risen 73% in the last one year.
The market capitalisation of Tata Motors stood at ₹1.18 lakh crore on Friday.
Maruti is riding a wave of an extremely successful product cycle that has seen the introduction of models such as Baleno hatchback, Vitara Brezza SUV and Dzire sedan. Since July 2012, the firm has gained more than 12 percentage points in market share to control more than 50% of the car market, where above 3 million cars are sold every year.
Over the last year all the manufacturers in the passenger vehicles market have struggled to generate volumes due to the adverse impact of demonetisation and the introduction of the goods and services tax (GST).
Maruti’s wholesale volumes touched an all-time high of 1.5 lakh units in July. Between April and September, the company’s revenue grew by 10.91% to ₹40,402.2 crore from the same period last year, while its net profit rose 3.8% to ₹4,040.7 crore.
“MSIL’s revenue is expected to grow at a CAGR of 19.7% in FY17-19E, on the back of volume and realisation CAGR of 13.3% & 5.4% respectively,” said Nishit Zota and Vidhum Mehta, analysts at ICICI securities.