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Leader of the car pack…
�� PV demand expected to rise exponentially
• Maruti Suzuki India Ltd(MSIL) is the leader in the domestic PV
market with a dominant market share of ~44%
• MSIL has been the face of the car industry for more than two
decades with largest selling car brands like Maruti 800, Alto, Swift
to name a few
• MSIL is not only a strong company due to its product offerings
and operations management but also importantly has a strong
connect with the customer. It has enjoyed the highest customer
satisfaction for the past decade that is reflecting in the strongest
brand loyalty of customers at ~78%
• MSIL has the most exhaustive sales (~600 cities) and service
network(~1400 cities), which is more than double the nearest
competitor
• The Indian car market is heavily under penetrated at ~2% in
comparison to China (~6%), US (~120%) & EU( ~52%). We
believe considering macro factors and Indian growth dynamics PV
market would more than double till CY15 at ~4.5mn units.
�� Going ahead
• MSIL has pre-empted the industry growth undertaking strong
capacity expansion to reach ~1.9 million units by FY13E, to ~3-4
million units by FY14E post likely greenfield expansion. This
capacity expansion by the market leader augurs well for market
share maintenance
• Also the company has witnessed increasing market share in the
A3 segment in spite of fierce competition from MNC players.
Realization would improve going forward on back of richer
product mix with higher Swift family sales.
• We believe MSIL is past the major challenge of royalty
restructuring and going forward would witness higher profitability
growth. We believe MSIL’s is currently in the historically lower
range of EBITDA margin, which is expected to expand from here
on back of richer product mix in domestic as well as export
markets.
Valuation
We expect MSIL to retain its market leadership position in the PV space.
MSIL at present has witnessed multiples contraction due to the
overplaying of concerns. We believe these concerns are at best short
term, and MSIL is a good pick to accumulate with long term horizon.
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