Maruti suzuki overtakes Hindustan Unilever in market cap race

Maruti Suzuki, m-cap, market  cap, market valuation, HUL

The logo of Maruti Suzuki India Limited is seen on a glass door at a showroom in New Delhi


  It has been a high-speed ride this year for Maruti Suzuki, the country's largest carmaker. With an eighty 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 eleven days after it surpassed country's biggest bank, SBI.

Maruti Suzuki, which enjoys a market share of over fifty per cent in the world's fifth-biggest 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 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 carmaker had a market cap of Rs 296,174 crore at the close of trading on Tuesday, Rs 4,468 crore higher to Hindustan Unilever. Maruti Suzuki also happens to be the most valued automobile company in the country. With its market cap of Rs 296,174 crore, the carmaker is more valued than the combined market cap of three leading auto companies in the country: Tata Motors (Rs 121,052 crore), M&M (Rs 96,627 crore) and Hero MotoCorp (Rs 73,827 crore) that makes a total of Rs 291,506 crore.

Maruti has overtaken top firms like Infosys, Oil and Natural Gas Corporation (ONGC), Coal India, Housing Development Finance Corporation (HDFC), SBI in market cap during this calendar year. Four companies- Reliance Industries, TCS, HDFC Bank and ITC are now ahead of Maruti. A mere nine per cent rally can take the carmaker to the fourth position and ahead of cigarette to hotel giant ITC (provided ITC stock remains unchanged). ITC had a market cap of Rs 322,499 crore.

What is driving Maruti? Maruti has been able to expand 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 share to over 50 per cent.

The firm has to a large extent managed to shed the image of a small carmaker and marked a strong presence in bigger and premium ones (through its Ciaz, Brezza and S Cross); this also helped improve the average realisation. The profit in 2016-17 was a record at Rs 7,337 crore, about 37 per cent higher than the previous year. Maruti Suzuki's growing volume of 15 per cent is better than the eight per cent industry average.