Maruti Suzuki, with current market capitalisation of INR 1.36 lakh crores, has defeated Tata Motors whose market capitalisation stands at INR 1.13 lakh crores, to become India’s most valuable automotive company. According to BSE data, Maruti’s shares were priced at INR 4,180 as of Thursday whereas Tata Motors’ shares were priced at INR 395.10.
According to ETIG’s data, on an average, Tata Motors’ market capitalisation was leading Maruti by INR 20,619 crore ever since the latter got listed in 2003. Maruti briefly outran its rival between 2008-10 period. Tata Motors’ recent decline in value is attributed to downturn of JLR’s sales in Chinese market which started affecting the company’s stock performance since June 7th of this year.
As far as the last five years are concerned, Maruti and Tata have delivered returns of 304% and 240% respectively. Factors like a strong pipeline of products, favorable foreign currency impact and margin expansion by lowering discounts have positively impacted Maruti’s projected earnings growth, which had a direct effect in improving stock performance.
According to analysts, future policies and market conditions in India appear to be in favor of Maruti. For example, the implementation of 7th Pay Commission for the government employees is expected to result in passenger vehicle sales growth by FY17 and Maruti is expected to be the main beneficiary since it enjoys 45% market share in passenger vehicle market.