Hyundai Motor India IPO: Emkay Global suggests that Maruti Suzuki might trade at comparable valuations to Hyundai. This is due to Suzuki’s heavy reliance on India and its alliance with Toyota, balanced by Hyundai’s strong global presence and premium brand positioning.
With Hyundai’s Indian subsidiary, Hyundai Motor India, making strides as the second-largest passenger vehicle manufacturer with a 14.9 percent market share in FY24, investors are curious about its potential impact on Maruti Suzuki India’s share price. Reports suggest that Hyundai’s domestic unit could be valued at $22-28 billion. According to Emkay Global, such a valuation could pose up to a 50 percent upside risk to its target share price for Maruti Suzuki. This assessment considers different scenarios for valuations and discounts, either at par with Hyundai or at a 20 percent discount. Emkay Global suggests that Maruti Suzuki might trade at comparable valuations to Hyundai. This is due to Suzuki’s heavy reliance on India and its alliance with Toyota, balanced by Hyundai’s strong global presence and premium brand positioning.
Emkay Global highlighted additional upside risks such as the potential recovery in small-car demand, similar to the trend seen in commuter motorcycles, and Maruti Suzuki’s plan to launch its E-SUV in October 2024, marking the industry’s first electric vehicle launch in this segment. Despite recent market gains, Emkay Global has revised its recommendation from “ADD” to “REDUCE.” However, they maintain an unchanged target price of Rs 10,700 per share, based on a core FY26E PER of 25 times.
Hyundai Motor India IPO
Emkay Global observed that the growth in the passenger vehicle (PV) industry in the last 5-7 years has been primarily fueled by new product launches. Automakers boasting a robust product cycle have seen an uptick in market share alongside healthy volume growth. Conversely, those with fewer launches have experienced a decline in market share.
In the last 12-18 months, Maruti Suzuki has seen a notable increase of 40 basis points in market share year-on-year in FY24YTD, driven by the strong reception of its SUV launches, notably the new Brezza, Grand Vitara, and Fronx models.
In a note dated February 16, Emkay Global stated that they anticipate Maruti Suzuki’s share gains to persist from FY24E to FY26E due to the recent product updates and the completion of significant competition launches. However, they emphasize the importance of monitoring emerging trends, such as slowing retails, increasing inventory, a swift decline in the order book (from 288K/355K units in Q2/Q1 to 215K units in Q3), and escalating discounts even in the SUV segment.
