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Maruti Suzuki India Ltd
(MRTI.BO / MSIL IN)
Best placed to capture domestic car growth
■ Main investment thesis: We believe that the Indian car industry is set to
witness explosive growth for the next few years (about 20% in the next few
years). India is set to cross US$3,000 per capita (PPP), a point at which
many markets have taken off. Maruti is the market leader in the domestic
passenger vehicle industry with a 45% share. Maruti has bolstered its hold
over the market by expanding its presence across price points and closing
gaps in product offerings. Maruti has also established an unassailable lead
over competitors in distribution and service. While our concern on the
influence of the parent company (royalty, currency exposure, export
strategy) remains, we believe Maruti is the best way to play the domestic car
market in the near-to-long term horizon.
■ India exposure and plans: The company is mainly focused on the domestic
market, with some exports (15% of sales). Maruti’s product portfolio, skewed
towards the small car segment, is well suited for the unique tastes of the
Indian consumer. The company also enjoys a efficient cost structure, driven
by high productivity of assets, low manufacturing costs in addition to scale
benefits. Its export strategy is also a play on the costs strengths in India. The
company has plans to expand its capacity by 45% by end of FY2013. In
addition, Maruti is in the process of setting up R&D facility, making India the
R&D hub for Suzuki in entire Asia ex-Japan.
■ Impact of survey findings: Maruti came out as the most popular choice of
car for planned purchases in our survey (37% of respondents). A key finding
in our survey was the tremendous focus on value/price and fuel economy –
Maruti is best placed on these parameters. In addition, we see increased
growth and optimism in smaller cities. Maruti, with its wide sales and service
network, and focus on Tier 2 cities is well positioned to capture this growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Maruti Suzuki India Ltd
(MRTI.BO / MSIL IN)
Best placed to capture domestic car growth
■ Main investment thesis: We believe that the Indian car industry is set to
witness explosive growth for the next few years (about 20% in the next few
years). India is set to cross US$3,000 per capita (PPP), a point at which
many markets have taken off. Maruti is the market leader in the domestic
passenger vehicle industry with a 45% share. Maruti has bolstered its hold
over the market by expanding its presence across price points and closing
gaps in product offerings. Maruti has also established an unassailable lead
over competitors in distribution and service. While our concern on the
influence of the parent company (royalty, currency exposure, export
strategy) remains, we believe Maruti is the best way to play the domestic car
market in the near-to-long term horizon.
■ India exposure and plans: The company is mainly focused on the domestic
market, with some exports (15% of sales). Maruti’s product portfolio, skewed
towards the small car segment, is well suited for the unique tastes of the
Indian consumer. The company also enjoys a efficient cost structure, driven
by high productivity of assets, low manufacturing costs in addition to scale
benefits. Its export strategy is also a play on the costs strengths in India. The
company has plans to expand its capacity by 45% by end of FY2013. In
addition, Maruti is in the process of setting up R&D facility, making India the
R&D hub for Suzuki in entire Asia ex-Japan.
car for planned purchases in our survey (37% of respondents). A key finding
in our survey was the tremendous focus on value/price and fuel economy –
Maruti is best placed on these parameters. In addition, we see increased
growth and optimism in smaller cities. Maruti, with its wide sales and service
network, and focus on Tier 2 cities is well positioned to capture this growth.
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