Maruti Suzuki market cap crosses Rs 4 trillion; stock jumps 4%

The stock has zoomed 31 per cent in the last two months after Suzuki Motor Corporation said it plans to invest up to Rs 35,000 crore to set up its second manufacturing facility in Gujarat.

Maruti Suzuki India (MSIL) became the first automobile firm to touch Rs 4 trillion market capitalisation (market cap), as the stock price of the company hit a new high of Rs 12,724.95 on rallying 4 per cent on the BSE in Wednesday's intra-day trade.

MSIL’s market-cap hit Rs 400,076 crore (Rs 4.0 trillion) on the BSE in intra-day trade. At 11:53 am; the stock was trading 3.5 per cent higher at Rs 12,680.35, with a market cap of Rs 3.99 trillion, the BSE data shows.

Thus far in the month of March, the stock outperformed the market by surging 13 per cent on a healthy business outlook. In comparison, the S&P BSE Sensex was up 1 per cent, and the S&P BSE Auto index gained 4.6 per cent during the period.

Last week, global brokerage CLSA, said Maruti Suzuki could be among the key beneficiaries of increasing adoption of CNG vehicles in India.

"CNG passenger vehicle sales are on a rise. The market share of CNG PVs is expected to rise from 15 per cent in FY24 to 22 per cent in FY30 aided by lower running costs. We expect Maruti Suzuki to benefit from the introduction of new models," it said in a Auto sector report.

Meanwhile, MSIL wholesale volume growth (YoY) in January and February 2024 has been better as compared with volume growth witnessed in 9MFY24. Within the passenger vehicle industry, the SUV segment is expected to continue to outperform the industry growth, said Arun Agarwal, VP & Analyst-Fundamental Research, Kotak Securities. However, competitive intensity remains high in the SUV segment. Further, demand trends remain weak in the hatchback segment, said Agarwal.

On the back of its aggressive launch spree over the last few quarters, MSIL continues to be the market leader in the UV segment. While its order backlog has reduced to 215k units, it is on expected lines given the improved supply. The success of GV (9-10k units per month) is a case in point that customers are considering Maruti’s products as “worthy contenders” even in the >Rs 1500k segment, where a few investors were so far doubting the company’s “right to win”. With exports picking up and higher utilization across plants (Manesar, SMG Gujarat) we expect the EBITDA margin to expand 240 bps over FY23-26E, HDFC Securities had said in Q3FY24 result review.

Meanwhile, since January 20, the stock price MSIL has zoomed 31 per cent after Suzuki Motor Corporation President Toshihiro Suzuki said that the company will invest Rs 35,000 crore to set up its second manufacturing facility in Gujarat. The plant would have an installed production capacity of 1 million units per annum. This new plant in Gujarat is aimed to start operation in FY2028-29.

MSIL plans to secure a production capacity of approximately 4 million units in India by FY2030-31 to prepare for future expansion of the automobile market in India. The new plant in Kharkhoda, Haryana which is planned to start operation in 2025, the new plant in Gujarat and the fourth production line of SMG will help achieve the milestone of 4 million, the company said.