With reports of Hyundai‘s Indian unit Hyundai Motor India, the second largest passenger vehicle maker with 14.9 per cent market share in FY24 gaining ground, many investors wonder what influence it would have on share price of Maruti Suzuki India, the largest car maker in India.
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As per reports, Hyundai’s domestic arm may seek $22-28 billion valuation. If one goes by Emkay Global, such valuation offers up to 50 per cent upside risk to its Maruti Suzuki share price target, based on various scenarios for valuations and discounts (at par or at 20 per cent discount to Hyundai).
Emkay Global in a note suggested that Maruti Suzuki could trade at similar valuations as Hyundai, amid Suzuki’s large India dependence and Toyota’s support/alliance, offset by Hyundai’s strong global standing and premium positioning.
“Potential small-car recovery (akin to commuter motorcycles) and Maruti Suzuki’s E-SUV launch in October 2024 (industry’s firstborn EV launch) are added upside risks.
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Post recent run-up, we assign REDUCE (vs. ADD earlier) with unchanged target of Rs 10,700/share (25 times core FY26E PER),” Emkay Global said.
Emkay Global noted that the growth in the PV industry over the past 5-7 years has been entirely driven by new launches. Auto makers with a strong product cycle have gained market share with healthy volume growth, while those with fewer launches have suffered loss in market share, it noted.
During the past 12-18 months, led by healthy response to its SUV launches (particularly the new Brezza, Grand Vitara and Fronx), Maruti Suzuki has reported 40 basis points market-share gains YoY in FY24YTD.
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“While we expect share gains to continue over FY24E-26E by virtue of the freshness of MSIL’s recent product actions combined with major competition launches now largely behind, we believe emerging trends need to be monitored, e.g. slowing retails, rising inventory, rapid run-down in the orderbook (215K units in Q3 vs. 288K/355K units in Q2/Q1), and rising discounts even in SUV,” Emkay Global said in a February 16 note.
