Maruti Suzuki India (BOM:532500)

The Economic Times  Jun 13  Comment 
Buy Maruti Suzuki India Ltd. at a price target of Rs 9170 and a stoploss at Rs 8930 from entry point.
The Hindu Business Line  Jun 11  Comment 
As part of its corporate social responsibility activity and community development efforts, Maruti Suzuki India (MSIL) on Monday inaugurated a water A
The Hindu Business Line  Jun 5  Comment 
The country’s largest carmaker Maruti Suzuki India (MSI) today said it is investing in new technologies to further reduce carbon dioxide (CO2) emiss
The Economic Times  Jun 4  Comment 
Buy Maruti Suzuki India Ltd. at a price target of Rs 9145 and a stoploss at Rs 8640 from entry point.
The Economic Times  Mar 9  Comment 
Buy Maruti Suzuki India Ltd. at a price target of Rs 10619.0 .
The Economic Times  Feb 27  Comment 
Buy Maruti Suzuki India Ltd. at a price target of Rs 9250.0 and a stop loss at Rs 8900 from entry point.
The Economic Times  Feb 21  Comment 
Buy Maruti Suzuki India Ltd. at a price target of Rs 8900.0 and a stop loss at Rs 8650 from entry point.
The Economic Times  Feb 8  Comment 
Electric vehicles are the defining theme of the auto expo this year, said Kenichi Ayukawa, MD at the country’s largest carmaker Maruti Suzuki India.
The Hindu Business Line  Feb 7  Comment 
Maruti Suzuki India unveils mostly homegrown ‘ConceptFutureS’
The Economic Times  Feb 4  Comment 
Maruti Suzuki India could tie up with new-age technology firms to gear up for a future in which EVs, alternative fuels and other innovations shape the industry.


Maruti Suzuki India (NSE: MARUTI), a subsidiary of Suzuki Motor Corporation, is India's largest automobile company by volume.[1] The company has over 7 million cars on the Indian roads.[2] It has two fully-integrated production facilities in Gurgaon, Haryana.[2] The company has the best distribution reach in the country with 681 sales outlets in 454 cities.[2] And with 2767 companies authorized service centers in 1314 cities, the company offers a complete package of automotive services. [2] Despite the economic downturn, the company has been able to achieve a sales growth of around 14% during FY2008-09. This is due to the strong presence of the company in the small car market in India.[3]

Although the competition in the passenger cars market is increasing in India, the company still manages to maintain a market share of over 50% through timely launch of new models in different sub segments. The company has also developed a strategy to sell not just a car but a complete package along with after sales service and used car outlets. Increasing share of exports has made the company vulnerable to Rupee/USD volatility.

Company Overview

Maruti Suzuki India has four plants, three located in Palam Gurgaon Road, Gurgaon, Haryana and one located at Manesar Industrial Town, Gurgaon, Haryana. During the fiscal year ended March 31, 2009, the Company produced and sold over seven million cars, and exported more than 500,000 cars. The Company's subsidiaries include Maruti Insurance Business Agency Limited, Maruti Insurance Distribution Services Limited, Maruti Insurance Agency Solutions Limited, Maruti Insurance Agency Network Limited, Maruti Insurance Agency Services Limited and Maruti Insurance Agency Logistics Limited. The Company’s subsidiaries are engaged in the business of selling motor insurance policies to owners of Maruti Suzuki vehicles.[4]

With 500,000 units exported, exports constitute around 7% of Maruti suzuki's annual sales. The export volume for the company grew by over 32% in FY2008-09.[5] The company through a joint venture with Suzuki Powertrain India has begun to manufacture diesel engines, petrol engines and transmission assemblies for four-wheelers with an investment of Rs 175 crore.[6] It is planned to scaled up the capacity to 300,000 engines/annum by 2010.[6]

Business and Financial Metrics

From FY2004 to FY 2009, sales revenues have grown from Rs 9,081 crore to Rs 20,358 crore, at average annual rate of over 20%.[7] In the same period, net profit grew from Rs 542 crore to Rs 1,218 crore by over 20% average annual growth rate.[7]. Despite the general economic slowdown, the sales of Maruti Suzuki increased from Rs 17,860 Crore to Rs 20358 Crore.[3] This was mainly due to the strong presence of the company in the small car segment, which was not affected by the downturn. But due to the increase in the material cost on account of increased commodity prices and adverse foreign exchange fluctuations, the EBITDA fell from 17.5% to 12% and net profit margin fell from 9.7% to 8.2%.[3]

The company plans to continue with its Rs. 9,000 Crore expansion plan which is to be completed by Dec 2010.[8] Under the same expansion plans the company increased the capacity of its Manesar plant by 70% in January 2009.[8]

Shareholding Details

Suzuki Motor (SZKMF) owns 38.61% of Maruti Suzuki India. Financial institutions and insurance companies own another 20.73% and 15.83% of the company, respectively. Reliance Vision Fund, Reliance Growth Fund, Reliance Equity Fund are the mutual funds invested in the firm, with 0.31%, 0.30% and 0.28% ownership respectively.[9]

Maruti Suzuki revenues and net profit
Maruti Suzuki revenues and net profit[10]
Maruti Suzuki revenues and net profit
Maruti Suzuki revenues and net profit[10]

Business segments

Passenger car (98.96% of sales)

The Passenger car segment has been the sole focus of Maruti Suzuki India. This segment contributed to more than 98.96% of the sales in FY2008-09. [11] Through timely launch of new models and focused strategy the company has been able to maintain a market share of more than 52% in this segment.[12] In 2nd quarter of 2009, the sales of this segment grew by over 9.7% as compared to the sales in the 2nd quarter of 2008.[11] The company competes in the small car sub segment through the brands Maruti 800, Alto, Wagon R, Zen, Swift, A-star and Ritz. Whereas it has its presence in the sedan sub segment through the brands SX4 and D-zire. Omni and Versa are the brands in the van segment.[11] This segment accounts for all the exports of Maruti Suzuki. By quarter to quarter comparison, the export market for the company grew from 12,491 units to 29,314 units by over 134% in the 2nd quarter of the last two years.[11]

Multi Utility Vehicles (1.04% of sales)

This segment contributes only about 1.04% of the sales of the company.[11] The company has a presence in this segment through the brands Gypsy and Grand Vitara.[11] The market share of Maruti Suzuki in this segment is less than 2%. By quarter to quarter comparison, the sales in this segment grew from 1,316 units to 1,383 units by 5.1% in the 2nd quarter of the last two years.[11]

Trends and Forces

Increased competition in the Indian small car market

The small car market in India accounts for more than 57% of all automobile sales.[13] Further, this share has been growing at a rate of 13% per annum.[13] The government is also extending incentives to the small car segment in the form of lower excise duty of 12% compared to 24% on bigger cars.[13] This has attracted global players to enter the compact car segment in the country. General motors and Ford have announced plans to launch its small car in India by 2010. [14][15]. Honda Motor Company (HMC), Nissan Motor (NSANY) and Toyota Motor (TM) have also announced plans to manufacture and market their small cars in India by 2011.[16][17] The entry of global players in the market will increase the competition and shrink Maruti Suzuki's market share and sales. This was seen in the over 57% drop in Maruti 800 car sales in June 2009 as compared to June 2008, due to the launch of Tata Nano in March 2009.[18]

Delay in new launches would result in loss in market share and sales

Sales in the automobile industry are heavily dependent on the frequency with which new and improved models are launched. Over the years, Maruti Suzuki India has maintained its market share by timely launch of new models.[19] In the past two years, the company launched A-Star in October 2008, Ritz in April 2009 and a new model of zen Estilo in August 2009.[20][21][22] In order to counter increasing competition from Tata Motors (TTM) and other foreign automobile manufacturers like General Motors (GMGMQ), Volkswagen (VLKAY), Hyundai Motor Company (005380-SE), Toyota Motor (TM) and Ford Motor Company (F), the company has made plans to further strengthen its product portfolio in the passenger vehicles segment. It has already announced the launch of Kizashi to compete in the sedan market and a new 660cc car in the small car segment.[23][24] Any delay in the launch of the new models and variants would result in to loss in market share and eventual decrease in sales.

Raw material price fluctuations affect the operating margin and net profit margin

Rubber Prices in sen/Kg
Rubber Prices in sen/Kg[25]

Raw material costs comprise about 79.8% of the price of the finished products.[26] Any price increase of the raw materials have a direct bearing on the overall operating margin. As can be seen from the Amex steel index and the world steel price index, there is high degree of volatility in the steel prices. This volatility not only affects the operating margin but also the inventory management of the steel required for production.[27] Tires are also an important part of the raw material required for manufacturing. Tire prices are correlated to rubber prices. The chart above shows the volatility present in the rubber market. The rubber volatility also affects the company's operating margin and consequently the net profit margin. In FY2009, the EBITDA margin for the company dropped to 12% from 17.8% and net profit margin dropped to 8.2% from 9.7% due to increase in the raw material prices.[28]

INR / USD relationship

Exports constitute about 7% of Maruti Suzuki's total sales.[29] The value of the Indian rupee (INR) compared to the US dollar impacts the earnings of the company. Any appreciation in the value of the INR results in lower margins, thereby resulting in lower share price and dividend payments. During FY2008-09, the INR/USD relationship remained volatile. The flight of foreign capital amidst fears of a slowing Indian economy led to a weak INR as compared to USD[30], thereby benefiting Maruti Suzuki India. But with the government taking steps to restore investor confidence in the economy, the Rupee is again appreciating.[31]


Passenger Cars

  • Tata Motors -Based in Mumbai, India, Tata Motors Limited is a part of Tata Group. It manufactures commercial and passenger vehicles primarily in India. It offers passenger cars, multi-utility vehicles, and pick-ups; medium and heavy commercial vehicles, such as rigid trucks, tractor trailers, and tippers; intermediate, light, and small commercial trucks; buses; and defense related vehicles. The company, through its subsidiaries, also provide engineering and automotive products; manufacture of construction equipment; automotive vehicle components manufacturing and supply chain activities; and provision of machine tools and factory automation products, as well as offers high-precision tooling, and plastic and electronic components for automotive and computer applications. In addition, it provides automotive retailing and services, as well as financing for the vehicles sold by the company. The company markets its products in Europe, Africa, the Middle East, south Asia, south east Asia, and Australia.[32]
  • Hyundai Motor Company - Based in Seoul, South Korea, Hyundai Motor Company manufactures and distributes motor vehicles and parts worldwide. It offers passenger cars, recreational vehicles and commercial vehicles, including light commercial vehicles; medium and heavy duty trucks; special vehicles, such as refrigerated van truck, dry van truck, wing body truck, and trailer wing body/bottle carriers; medium and large size buses; and bare chassis.[33]
  • Honda - Headquartered in Tokyo, Honda Motor Co., Ltd., together with its subsidiaries develops, manufactures and distributes motorcycles, automobiles, and power products worldwide. Its motorcycle business manufactures motorcycles, all-terrain vehicles, and personal watercrafts. Honda’s motorcycle line consists of sports, business, and commuter models. Its automobile business offers passenger cars, multiwagons, minivans, sport utility vehicles and mini cars. The company also offers various financial services to its customers and dealers. In addition, it manufactures various power products, including power tillers, portable generators, general-purpose engines, grass cutters, outboard engines, water pumps, snow throwers, power carriers, power sprayers, lawn mowers, and lawn tractors. Honda sells its products through various outlets, wholesalers, and independent retail dealers.[34]
  • Toyota - Headquartered in Toyota City, Japan, Toyota Motor Corporation operates in the automotive industry worldwide. It designs, manufactures, assembles, and distributes passenger cars, recreational and sport-utility vehicles, minivans and trucks, and related parts and accessories. It also offeres hybrid vehicles. Its products also comprise conventional engine vehicles, including subcompact and compact cars, mini-vehicles, passenger vehicles, commercial vehicles,auto parts, mid-size models and luxury models.In addition, Toyota offers sports and specialty vehicles, recreational and sport-utility vehicles, pickup trucks, minivans and cab wagons, trucks and buses. Further, the company provides finance to dealers and their customers for the purchase or lease of Toyota vehicles. Additionally, it is also involved in the design and manufacture of prefabricated housing and information technology-related businesses, including intelligent transport systems and an e-commerce marketplace, called[35]

Utility Vehicles

  • Swaraj Mazda - Headquartered in Nawanshahar district, Punjab, the Company's principal activity is to manufacture and sale of commercial vehicles and spares for both goods and passenger applications.[36] The company has inked a technical assistance agreement with Isuzu Motors, Japan on Jun. 30, 2006. The agreement is for the expansion of vehicle production capacity, new assembly line for Isuzu vehicles and also setting up of in-house facilities for the manufacture of luxury buses based on existing Mazda and Isuzu chassis.[37]
  • Mahindra & Mahindra Ltd - The company manufactures a range of automotive vehicles, agricultural tractors, implements, and industrial engines. It is also involved in property development and construction activities. The company offers various multi utility vehicles, light commercial vehicles, three-wheelers, and tractors as well as spare parts and related services. It also provides various services related to financing, leasing, and hire purchase of automobiles and tractors. In addition it also offers design and engineering services to the automotive, aerospace, and general engineering industries; and produces automotive components, as well as forgings, gears, steel, stampings, and special polymers. It is headquartered in Mumbai, India.[38]

Financial Comparison of the competitors:

Financial metrics
Name Revenue in Rs Crore Net Profit Margin Operating Margin
Tata Motors[39]28,7386.96%10.44%
Mahindra & Mahindra Ltd[42]30,15010.34%11.45%
Ashok Leyland[43]7,7295.83%10.09%
Swaraj Mazda[45]6713.75%7.80%

Market share

Market share of Passenger cars in India
Market share of Passenger cars in India[46]
Market share of Utility vehicles in India
Market share of Utility vehicles in India[47]


  1. Auto mart, Maruti Suzuki India Ltd.
  2. 2.0 2.1 2.2 2.3 Maruti suzuki annual report 2008-09, company at a glance
  3. 3.0 3.1 3.2 Maruti suzuki Director's Report 2008-09
  4. Reuters: Maruti Suzuki India Company Profile
  5. maruti suzuki sales
  6. 6.0 6.1 Marutisuzuki Deisel engine manufacturing facility
  7. 7.0 7.1 rediff money, Maruti Suzuki, profit and loss statement
  8. 8.0 8.1 The telegraph, Maruti suzuki expansion plans
  9. Money control, Maruti suzuki , MFs invested in maruti suzuki
  10. 10.0 10.1 maruti suzuki company website,Investors section, company at a glance
  11. 11.0 11.1 11.2 11.3 11.4 11.5 11.6 maruti suzuki website, sales figures
  12. Stockwatch, maruti suzuki
  13. 13.0 13.1 13.2 Value notes,General Motors Attempts to Penetrate Small Car Segment,encouraging factors
  14. Value notes,General Motors Attempts to Penetrate Small Car Segment
  15. Burn your fuel, Ford small car in India by 2010
  16. Sify, Businessline,Toyota thinks big for India small car
  17. Dance with shadows, Honda plans small car for India
  18. Maruti suzuki official website, monthly sales data
  19. Suzuki to Make India Production Hub, Launch New Car, The Economic Times
  20. Maruti Suzuki to launch A-star by month end, The Hindu Business line
  21., Maruti Suzuki to launch Ritz in April 2009
  22. New Estilo from Maruti Suzuki
  23. Maruti Suzuki Strengthens Position With Launch of Kizashi
  24. Business standard, Maruti Suzuki plans to launch 660 cc car
  25. Malaysian rubber board, monthly average prices
  26. Maruti suzuki website, Company at a glance, Profit and loss ratios
  27. One steel, steel and tube holdings limited,chairman's address
  28. Directors report 2008-09
  29. Maruti Suzuki, Annual report FY2008-09, Company at a glance
  30. New strains on the balance of payments, People's Democracy
  31. , India Rupee Ends 3-Week Slide as Spending Plan May Boost Growth,
  32. Linkedin company profile, tata motors
  33. Hyundai Motor Co, Company Description
  34. Honda Motor Co. Ltd.,Company Description
  35. Linkedin Toyota
  36. Alacra store, Swaraj Mazda
  37. Swaraj Mazda Limited, business profile,myiris
  38. Linkedin, Manendar and manendra
  39. rediff money, maruti suzuki profile
  40. Google Finance, Hyundai Motor Company
  41. Google finance, Toyota motor company
  42. Mahendra & Mahendra, Presentation
  43. Ashok Leyland rediff moneyt
  44. google finance, honda motor company
  45. rediff money, Swaraj Mazda
  46. Indian auto sector, passenger cars market
  47. Indian auto sector, utility vehicles market
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