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The nation's No. 1 automaker has outgrown Suzuki Motor in market value. Maruti's stock surged 65% in the past year, swelling its market capitalisation to $19.73 billion (Rs 1.26 lakh crore) based on Tuesday's closing stock price of Rs 4,158.80 on the Bombay Stock Exchange. Japanese parent Suzuki is valued at $19 billion. Maruti has recently also ousted Tata Motors as India's most valuable automotive company.
In This Pic : suzuki, maruti
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Its stellar operational and financial performance and rosy outlook in a sluggish automobile market have driven Maruti's stock rally. On the other hand, Suzuki had a bumpy ride in recent years with sales weakening in all major markets except Asia. For the Japanese company, the brightest spot is the Indian unit, which has turned into its biggest money-spinner, accounting for a quarter of revenue and a chunk of profit.
In This Pic : suzuki, maruti
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Barring Maruti, no other constituent of the CNX MNC - an index that captures the stock performance of top MNC subsidiaries - has a market cap close to that of the parent. The market value of Hindustan Unilever, for instance, is 22% of its Anglo Dutch parent Unilever, while that of Castrol India is just 3% of BP. For Maruti, too, the parent held an upper hand historically.
In This Pic : suzuki, maruti
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Data compiled by ETIG show on average, Suzuki's market cap had been $5.6 billion more than Maruti's since the listing of the Indian unit in 2003. But the lead that Maruti has now taken over the parent could widen, as analysts and investors remain bullish on the Indian company but not so much on the parent. Analysts have been consistently upgrading their earnings estimate on Maruti on multiple triggers, such as falling discounts that add to margins, higher efficiency as more vehicles roll out of its factories, and volume growth driven by new launches and an improving economy.
In This Pic : suzuki, maruti
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Maruti's earnings per share is expected to more than double to Rs 278 in fiscal 2018 from Rs 126 in fiscal 2015, according to estimates compiled by Bloomberg. Suzuki's earnings performance, meanwhile, has been weighed by its weak performance in Japan and markets outside Asia. It reported a 4% decline in operating profit for the fourth quarter of fiscal 2015 and its outlook for a 6% increase in the operating profit estimate for fiscal 2016 was below consensus estimate. Analysts don't expect any major improvement in its stock price in the near future.
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