Maruti crosses Rs3 trillion in market cap, shares hit Rs10,000 mark

NEW DELHI: Shares of Punjab National Bank (Rs 518.07 crore) Maruti Suzuki (Rs 342.98 crore) and Tata Steel (Rs 128.88 crore) were trading as the most active stocks in terms of value on NSE in morning trade on Wednesday. Shares of Mahindra & Mahindra (Rs 127.94 crore) HDFC Bank (Rs 96.85 crore) Tata Motors (Rs 88.31 crore) GAIL (Rs 71.49 crore) Bharti Airtel (Rs 60.83 crore) Hindalco Industries (Rs 60.35 crore) Vedanta (Rs 53.54 crore) HDFC (Rs 52.60 crore) and ICICI Bank (Rs 51.12 crore) were also in the league. Benchmark indices on Wednesday hit all-time highs in early trade before turning rangebound. The NSE Nifty index was trading 6 points up at 10 469 while the BSE Sensex was 25 points up at 33 861 around 09:40 am (IST). For trending stocks and buzzing news track this LIVE BLOG from Dalal Street In the Nifty index GAIL (India) Oil and Natural Gas Corporation Coal India Maruti Suzuki India Bharti Infratel and Hero MotoCorp were catching investors attention. However Dr. Reddy s Laboratories Kotak Mahindra Bank Adani Ports & Special Economic Zone Hindustan Petroleum Corporation and State Bank of India were seen experiencing selling pressure. Out of 50 stocks in the Nifty50 index 24 were in the green while 26 were in the red. .story-content span .story-content p .story-content div color: #000 !important; font-family: open sans Arial !important; font-size: 15px !important; ALSO READ Cess hike on large cars will not dent volumes say analysts BSE Auto index hits record high post Maruti Suzuki Q2 results Mahindra & Mahindra vehicles to get smarter with Android Auto Auto sales grew 14% in November Nifty outlook and top trading calls for today s trade: Prabhudas Lilladher span.p-content div id =div-gpt line-height: 0px; font-size: 0px; Shares of automobile companies were on a roll with the S&P BSE Auto index and Nifty Auto index hitting their respective new highs on Tuesday on expectation of pickup in demand. Motherson Sumi Systems Bharat Forge Hero MotoCorp TVS Motor Company and Eicher Motors were up between 3% and 4% while Ashok Leyland Tata Motors Maruti Suzuki India and Bajaj Auto up 2% on the BSE. At 01:59 PM; the S&P BSE Auto index (26 369) and Nifty Auto index (11 821) were up 2% each hitting new highs on the BSE and NSE. On comparison the benchmark indices the S&P BSE Sensex and Nifty 50 index were up 0.4% each. Thus far in December 2017 the auto index has outperformed the market by gaining nearly 5% after auto industry reported a sharp double-digit growth of 23.9% year on year in overall sales driven by strong performance registered by all segments of the industry during the month. The benchmark index gain 2% so far in the current month. Going forward in FY18 CARE Ratings expects the auto industry to witness gradual pickup in demand on back of release of pent up demand post the disruptions led by the effect of demonetization ban on BS-III vehicles and Goods and Services Tax (GST) implementation begins to moderate starting Q3FY18 expected to continue in Q4FY18. Also demand is expected to improve on back of various initiatives taken by the government in the Union Budget 2018 the rating agency said in Auto Newscast. However on the other hand according to Society of Indian Automobile Manufacturers (SIAM) despite revival in domestic economy rising fuel costs is expected to hamper the growth of the industry in the second half of FY18 it added. Mahindra & Mahindra (M&M) Maruti Suzuki India TVS Motor Company and Motherson Sumi Systems from the auto index hit their respective new highs on the bourses. Meanwhile total 12 stocks from the auto and auto ancillary companies from the S&P BSE 500 and S&P BSE Smallcap index have become multi-bagger and appreciated more than 100% in past one year. The list includes Minda Industries TVS Motor Company Lumax Industries Automotive Axles and Lumax Auto Technologies. COMPANY LATEST ONE-YEAR BEFORE GAIN(%) MINDA INDS. 1 225.10 319.15 283.9 PPAP AUTOMOTIVE 565.55 164.65 243.5 LUMAX INDS. 2 094.00 776.25 169.8 ESCORTS 718.50 304.50 136.0 AUTOMOTIVE AXLES 1 407.00 617.15 128.0 SHARDA MOTOR 2 360.00 1 044.65 125.9 JAMNA AUTO INDS. 73.70 33.32 121.2 JBM AUTO 509.00 232.80 118.6 LUMAX AUTO TECH. 865.00 410.30 110.8 GNA AXLES 391.90 186.85 109.7 TVS MOTOR CO. 783.85 374.95 109.1 INDIA NIPP.ELEC. 1 070.00 522.15 104.9 MUMBAI: Maruti Suzuki which sells one out of every two cars and utility vehicles in the country has single-handedly put India on the world map as one of the fastestgrowing car markets. The other carmakers have not contributed to the growth of the value-conscious market. Global behemoths Volkswagen Toyota Nissan showed muted growth since the beginning of FY-13 at a time when the market grew from 2.65 million to 3.04 million units. Maruti Suzuki grew its volumes from 1.05 million to 1.44 million units registering a strong double-digit growth whereas the rest of the market remained stagnant at 1.6 million units. The strong performance of Maruti drove India into the top five passenger vehicle markets in the world. If the growth story can be sustained with new investment lined up in the Gujarat facility at Becharji the company may well drive India into the top three passenger vehicles market. RC Bhargava chairman Maruti Suzuki told ET the company has been able to post growth on the back of growing product portfolio and expanding reach in the interiors of the country which has brought into incremental sales and new customer base. It is unusual for one car maker to have over 50% share that is certainly not common but that has been possible because of several factors. Consistent introduction of fresh modern product portfolio and expanding reach even in the face of slowdown has paid rich dividend. With signs of economy gathering momentum we should continue our growth path said Bhargava. To be sure Maruti Suzuki has a product portfolio of 16 models priced between Rs 2.5 lakh and Rs 14 lakh and there is a model available at every Rs 25 000 to Rs 30 000 price points. The network of over 2 000 outlets is by far the biggest by any company in one country amongst global majors. If you look at the numbers closely the top three vehicle makers in India today account for 75% of the overall market from 66% at the end of FY-13 again largely driven by Maruti. (see table) The Japanese car maker s South Korean rival Hyundai the No. 2 car maker here managed to grow volumes and cross a milestone of half-million cars last fiscal. However it didn t grow or lose its share holding on to its own in the midst of growing Maruti s dominance. Honda and Renault India managed to cross 1.3-1.5 lakh sales mark on the back of new models but the monthly sales numbers have seen many ups and downs with no consistent growth trajectory. Homegrown vehicle makers Mahindra & Mahindra and Tata Motors who at their peak sold over 3 lakh units have suffered the most because of Maruti s growing stature. Both Mahindra and Tata have seen annual sales drop by over 25-45% in the last five years to 2.33 lakh to 1.5-1.7 lakh units per annum respectively. The likes of Volkswagen Toyota Skoda and Fiat have seen their volumes dip over 10-30% over the last five years. Maruti Suzuki was losing market share between FY-11and FY-13 due to lack of diesel vehicle capacity. Once the capacity was in place along with new models Maruti not only regained its share but grew its to above 50%. In fact Maruti stood at its highest ever market share of 52% in the month of November this financial year. In the first eight months of FY-18 Maruti Suzuki registered a growth of 15% against the rest of the market which registered a growth of mere 2%. Overall the market grew by 8%. Experts credit the strong performance of Maruti to the focus shown by its parent Suzuki in India not only has it spent money on products capacity but on the entire ecosystem to even in sales marketing and R&D. ALSO READ Maruti Suzuki rides past SBI HDFC in m-cap Tata Motors half of Maruti Suzuki in m-cap Volumes keep Maruti s growth engine humming Maruti Suzuki profit hit by low non-operating income rises 3% 5 stocks contribute over half of Sensex s market-cap gain in 2017 span.p-content div id =div-gpt line-height: 0px; font-size: 0px; It has been a high-speed ride this year for Maruti Suzuki the country s largest car maker. With an 80 per cent surge in its stock price the Suzuki-promoted company has surpassed six Sensex companies in market valuation since January to become the fifth-most valued listed firm. On Tuesday it overtook top FMCG company Hindustan Unilever in market cap just 11 days after it surpassed the country s largest bank SBI. Maruti Suzuki which enjoys a market share of over 50 per cent in the world s fifth-largest car market saw its stock price hit a new high of Rs 9 855 on Tuesday. It closed the day at Rs 9 804.50 (at the BSE) up 5.33 per cent from the previous close. A mere two per cent rise from here can take the scrip to a five-digit value of Rs 10 000. The car maker had a market cap of Rs 2 96 174 crore at the close of trading on Tuesday Rs 4 468 crore higher than that of Hindustan Unilever. Maruti Suzuki also happens to be the most-valued automobile company in the country. Its market cap is more than the combined market cap of three leading auto companies in the country: Tata Motors (Rs 1 21 052 crore) M&M (Rs 96 627 crore) and Hero MotoCorp (Rs 73 827 crore) totalling Rs 2 91 506 crore. Maruti Suzuki has overtaken top firms like Infosys Oil and Natural Gas Corporation (ONGC) Coal India Housing Development Finance Corporation (HDFC) and SBI in market cap in this calendar year. Four companies Reliance Industries TCS HDFC Bank and ITC are ahead of Maruti. A mere nine per cent rally can take the car maker to fourth position and ahead of ITC (if the ITC stock remains unchanged). ITC had a market cap of Rs 3 22 499 crore. What is driving Maruti Suzuki? It has been able to expand its market share each year for the last six years. From a share of just 38 per cent in FY12 (when it was facing labour unrest) it grew to near 47 per cent in FY16. With the commencement of operations at the Gujarat plant early this year (owned by parent Suzuki) it has overcome capacity constraints and further expanded its share to over 50 per cent. The firm has to a large extent managed to shed the image of being a small car maker and marked a strong presence in bigger and premium ones (through its Ciaz Brezza and S Cross); this also helped improve its average realisation. The profit in 2016-17 was a record at Rs 7 337 crore about 37 per cent higher than in the previous year. Maruti Suzuki s growing volume of 15 per cent is better than the eight per cent industry average. ET Intelligence Group: A setback in rural constituencies in the Gujarat assembly election may prompt the government to undertake initiatives to improve rural income such as increasing the quantum of minimum support prices (MSPs) and comprehensive loan waivers. This may prove beneficial to companies focusing on rural markets. According to political analysts a key reason for BJP s loss of some seats in rural Gujarat is lack of material growth in farm income in the past four years. Since rural voters account for nearly two-third of the total voters in the country the government may resort to measures to address their concerns. In the Union Budget 2017 the government had announced to double farm income by 2022. According to industry trackers farmers engaged in the dairy output saw healthy income growth compared with those depended on crop income. Measures including raising MSP of crops and loan waiver by state governments were taken to alleviate this gap. The government raised the MSP of wheat the main winter crop by 6.8 per cent over the past year to Rs 1 735 per quintal. Besides the central government has also sought parliamentary approval for an additional net spending of ?33 000 crore during the current fiscal of which a large part will be spent on the rural employment scheme. With several state elections lined up in 2018 the government is likely to focus on the allocation to rural schemes such as direct benefit transfer for fertilisers innovation for better price realisation to farmers and improvement in the crop insurance scheme. The government may take cue from the Madhya Pradesh government which launched a scheme to hedge price risk in agriculture commodities wherein farmers are compensated for distress sales below the MSP set by the central government. These measures are likely to improve disposable income in rural areas in the medium to long-term. This bodes well for companies which derive sizeable revenue from rural market. Tractor makers like Mahindra & Mahindra and Escorts auto-makers such as Hero MotoCorp and Maruti Suzuki cement companies like Ultratech FMCG companies such as Hindustan Unilever Dabur Emami and Bajaj Corp are expected to record superior earnings growth given their presence in rural markets. Improving tractor volume augurs well for M&M a market leader in tractor segment. Its tractor margin is expected to be nearly twice that of the automotive segment. Hence the improving proportion of tractor volume in the total sales volume would benefit earnings growth. Hero MotoCorp derives nearly half of its volume from the rural market. Its stock is nearly 40 per cent cheaper than that of Maruti Suzuki despite being the market leader in motorcycles. This gap may reduce with continuous improvement in rural income. .story-content span .story-content p .story-content div color: #000 !important; font-family: open sans Arial !important; font-size: 15px !important; ALSO READ News digest: Election results stressed assets FRDI Bill and more News digest: NTPC plant explosion plush hotel rooms in sky and more News digest: Pharma firms face price heat markets log new highs and more News digest: Lotte buys Havmor Ice Cream clouds over Rafale and more News digest: GST composition scheme NHAI to get a makeover and more span.p-content div id =div-gpt line-height: 0px; font-size: 0px; IBC resolution of steel firms pushed to FY19 Indian lenders are likely to wrap up the resolution process of Bhushan Power & Steel (BPSL) Essar Steel Monnet Ispat & Energy and Electrosteel Steels only in the first quarter of the next financial year (FY19) and miss the initial deadline of December-end set under the Insolvency and Bankruptcy Code (IBC). 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Coulomb a veteran at Apple for over 15 years has relocated from Singapore to India which Apple CEO Tim Cook has pegged as the next big market that is similar to what China was over a decade ago. Read more Maruti Suzuki overtakes Hindustan Unilever in market cap race It has been a high-speed ride this year for Maruti Suzuki the country s largest car maker. With an 80 per cent surge in its stock price the Suzuki-promoted company has surpassed six Sensex companies in market valuation since January to become the fifth-most valued listed firm. On Tuesday it overtook top FMCG company Hindustan Unilever in market cap just 11 days after it surpassed the country s largest bank SBI. Read more