Maruti Suzuki: As the sun rose over the busy streets of India, there was a lot of excitement in the stock market. Maruti Suzuki India Limited is India’s biggest car manufacturer and passenger vehicle. The stock recently reached its new high. This caught the attention of not just car lovers but investors. The big jump in Maruti Suzuki’s stock price wasn’t just by chance. It happened because of Maruti Suzuki’s smart decisions, new car models, and more people wanting to buy cars.
The streets were filled with the sound of Maruti Suzuki vehicles, showing how strong the company was becoming in the market. Investors are wondering if this upward trend will keep going. Let’s look at the inside of the article, What is the reason behind Maruti Suzuki India Limited’s rise so much? Financial analysis, expansion of segments, and future plans of the company.
Company Overview of Maruthi Suzuki India
Maruti Suzuki was established on February 24, 1981. It is also known as Maruti Udyog Limited and is a subsidiary of Japanese automaker Suzuki Motor Corporation (SMC). SMC signed a joint venture agreement with the Government of India. The company has one subsidiary, which is Suzuki Motor Gujarat Private Limited. Maruti Suzuki is identified as having participated in the automobile revolution in the country. The company is engaged in the business of manufacturing and selling passenger vehicles in India
Maruthi Suzuki is the leader in the passenger vehicle segment in India. It is also the largest exporter of passenger vehicles in India, with a share of nearly 40%. It has exported to almost 100 countries and some of the top 5 export destinations are Saudi Arabia, Ethiopia, South Africa, Ivory Coast, and Chile. Maruti Suzuki India Limited has continued to be the top exporter of passenger vehicles in India for the third consecutive year, with a 10% increase in exports despite a nearly 4% decline in the rest of the industry.
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Segment Analysis of Maruti Suzuki India
Maruti Suzuki India Limited has a wide range of sales and service channels in India. The company’s sales channels include Maruti Suzuki Arena, which will have 2801 outlets in 2349 cities, NEXA, which will have 460 outlets in 286 cities, commercial vehicles, which will have 379 outlets in 270 cities, and true value pre-owned car dealerships, which will have 2256 outlets in 278 cities. In service channels, the company has 781 vehicles deployed for quick response, 348 mobile workshops, and 4564 touchpoints in 2304 cities.
Production Capacity
Maruti Suzuki India Limited has two state-of-the-art manufacturing units located in Gurugram and Manesar in Haryana, which are capable of producing almost 1.5 million units per year. Suzuki Motor Gujarat Private Limited has an annual production capacity of 0.75 million units. In FY23, the company’s total production capacity will be 2.25 million units per year. In FY24, Maruti Suzuki crossed the cumulative production milestone of 30 million units since its incorporation.
Sales and Export Capacity
In FY23, Maruti Suzuki India Limited’s sales volume increased by 18.97% as compared to the previous year. Furthermore, the total sales volume of the company is 19,66,164 units as of FY23, which includes 17,06,831 units of domestic sales and 2,59,333 units of export sales volume. The company outperformed 2 million units in sales volume of passenger vehicles in India. It will be recorded as the highest-ever annual sales of 21,35,323 vehicles, including 283,067 vehicles exported, marking the highest-ever export volume as well.
The reason behind Maruti Suzuki India’s all-time high
UP Government Action on Hybrid Electric Vehicles
Recently, the Uttar Pradesh government announced it was offering a 100% waiver on registration fees for hybrid electric vehicles and plug-in hybrid electric vehicles. However, customers have to pay only a nominal amount for hybrid car registration in Uttar Pradesh. The announcement will help to increase the sales of hybrid electric vehicles and plug-in hybrid electric vehicles in UP. This will reflect the sales unit of hybrid electronic vehicle manufacturing companies.
In India, Maruti Suzuki will be the leading player in passenger vehicles, with a market share of 42.79% in FY23. Uttar Pradesh is one of the prominent markets for passenger vehicles. UP’s passenger vehicle sales increased by 13.5%, which is 2.36 lakh units in the first half of 2024. This will significantly impact the sale of passenger vehicles, which means it will largely impact sales growth at Maruti Suzuki India because it is the market leader in India.
Strong Expansion Plans and Record Sales
Maruti Suzuki Limited is planning to establish new manufacturing units, which will produce 10 lakh vehicles per unit. Although the company recorded the highest-ever sales units of 21,35,323 vehicles and total cumulative production units of 3 crores in the financial year 2024. Maruti Suzuki India Limited will launch the new products module of introducing 6 battery electric vehicles (BEVs) by 2030.
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Financial Analysis of Maruti Suzuki India
Coming into the financial analysis of Maruti Suzuki India Limited, the company’s revenue increased from ₹1,17,571 crore in FY23 to ₹1,41,858 crore in FY24. which has grown by 20.66%. The company’s revenue increased over the last 4 years. It has had a compound annual growth rate (CAGR) of 17.02% for the last four years.
The net profit of the company has decreased from FY20 to FY22 because sales units dropped. In FY23, it was doubled by 111.62%, which is 8211 crore. The net profit of the company has surged by 64.27%, reaching 13,488 crore in FY24. The net profit growth rate has had a CAGR of 24.15% over the last four years.
In COVID, the company’s sales units dropped from 1.86 million in FY19 to 1.56 million in FY20 and 1.46 million in FY21. That is the reason for the decrease in revenue and net profit for the company. Recently, Maruti Suzuki achieved a record sales milestone of 2.14 million units in FY24, significantly boosting its revenue, net profit, and overall sales growth.
Maruti Suzuki India Limited’s operating profit margin has improved from 8.78% to 12.24% in FY24. The net profit margin has increased over the last three years, which is to be 9.32% in FY24. The ROE and ROCE of the company were 15.75% and 19.42%, respectively. The debt-to-equity ratio of Maruti Suzuki India Limited has reduced from 0.2x in FY23 to a debt-free company in FY24.
Future Plans of Maruti Suzuki India
- Maruti Suzuki India Limited is planning to increase capacity from 2.25 million units per annum to almost 4 million units per annum in the fiscal year 2030-31, nearly doubling current production levels.
- The company is establishing new manufacturing facilities in Kharkoda, Haryana, India. It will help to scale its manufacturing units up to 1 million vehicles per year.
- The company will expand its new product segments across the Indian market by introducing 6 battery electric vehicles (BEVs) in the financial year 2030-31.
- In 2030-31, Maruti Suzuki India Limited will diversify production into 3 categories. Which includes battery electric vehicles (15%), hybrid electric vehicles (25%), and highly fuel-efficient internal combustion engines (60%).
- The company plans to increase its SUV model launches, considering SUVs make up more than 50% of the market and there is a significant push towards green vehicles like CNG, hybrids, and EVs.
- The company increased its solar power generation capacity by 43.2 MWp in FY2023-24, and by targeting to reach 48.15 MWp in FY2024-25.
Target Price
- ICICI Direct Securities is given a target price of Rs. 14,000. The securities say that Maruti Suzuki has a stable margin performance of 12.3% in Q4 FY24. It also has CNG growth and low car penetration. The company also announced that it had set up a greenfield PV plant in Gujarat.
- Motilal Oswal has announced a target price of Rs. 14,700. According to the broker, Maruti Suzuki India Limited has reported that consolidated total income was up by 14.91% as compared to the last quarter of FY24 and by 20.89% up compared to last year’s same quarter.
- KR Choksey has given a buy target price of Rs. 14975. According to Choksey, the company had the highest-ever sales, domestic sales, exports, net sales, and net profit in both Q4 FY24 and FY24. The company is planning to have strong capex plans in the medium term and focuses on high-demand spaces such as SUVs, CNG, and hybrids.
Conclusion
We are at the conclusion of Maruti Suzuki India Limited, Maruti Suzuki’s future looks promising as it continues the rally of all-time highs. The company will have the strategic goal to double production to 4 million vehicles annually by FY 2030-3. It also achieved record-breaking annual sales and exports, along with sustainability initiatives like expanded solar power capacity.
The company highlights its commitment to innovation and environmental responsibility. Maruti’s strategic vision and operational excellence position it to maintain its market leadership and provide great value to both investors and customers. What do you think about the Maruti Suzuki India Limited? Will It continue its rally after the all-time high? Let us know in the comments below.
Written By, Nikhil Naik
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