Maruti Suzuki vs Hyundai Motor India shares: Which auto stock to buy after Q2FY25 results?

Indian stock market has been witnessing an intriguing contest between automobile industry stalwart Maruti Suzuki India and the newly-listed Hyundai Motor India.

Maruti Suzuki, a dominant force in the passenger vehicle (PV) segment, continues to leverage its expansive portfolio and widespread dealership network to maintain market leadership. On the other hand, Hyundai Motor India’s recent debut on the bourses has sparked significant investor interest.

Both automakers, however, reported weaker-than-expected earnings for the second quarter ended September 2024, reflecting the broader challenges faced by the sector.

Q2 results

Maruti Suzuki reported a 17% year-on-year (YoY) fall in its net profit (due to impact of provisions) to ₹to 3,069.2 crore, while its revenue remained flat at ₹37,202.8 crore amid a decline in domestic sales volumes and slowdown in demand. The company also saw a drop in small car sales in July-September slow its revenue growth to the lowest in several quarters.

On the other hand, Hyundai Motor India recorded a 16% YoY decline in its net profit for Q2FY25 to ₹1,375.47 crore, hurt by weak domestic demand and exports. Its revenue dropped 7.5% to ₹17,260.38 crore from ₹18,659.69 crore, YoY.

Maruti Suzuki indicated that its retail volume during festive period is expected to grow by 14% YoY. For full year FY25 it is expected to grow by 4% YoY. The company plans multiple new launches (10+) over next 6-7 years, including 6 new EVs and Hybrid models.

Hyundai Motor India Chief Operating Officer Tarun Garg said that while domestic sales had shown modest sequential growth, overall demand softened in response to cyclical trends, compounded by ongoing geopolitical tensions. The passenger vehicle industry is expected to clock a modest low-single digit growth this fiscal year, he said.

Hyundai also announced the launch of its maiden locally-made electric vehicle (EV) early next year, a spin on its bestselling mid-size SUV Creta.

Maruti Suzuki Vs Hyundai Motor India: Which stock to buy?

Jathin Kaithavalappil, Assistant Vice President at Choice Broking believes Hyundai Motor India and Maruti Suzuki both have solid investment cases after reporting Q2 results.

“The former suits best for priorities as desired by investors looking for premium brands and state-of-the-art technology, whereas the latter suits best for those looking for streamlined industry trends, for which HMI has an upper hand on valuation premium in comparison to MSIL. The outlook for MSIL remains positive as the company has reshaped its portfolio into a more SUV-balanced one, is near-entry in EV markets, and plans to expand its production capacity,” said Kaithavalappil.

According to him, the choice between these two would ultimately depend on whether investors are interested in Hyundai Motor India’s technological leadership and premium positioning or Maruti Suzuki’s prospects for growth and value-driven approach.

Sagar Shetty, Research Analyst, StoxBox highlighted that both Passenger Vehicle (PV) Original Equipment Manufacturers (OEM) registered dim financial results during the quarter, primarily due to the segment’s demand slowdown. However, the impact of the slowdown was much more evident for Hyundai, with its revenue falling by 7.5% YoY while MSIL registered a flat revenue growth. 

“The top-line impact for Maruti Suzuki India (MSIL) was under control with the help of its growing export market and improved realization. On all other fronts, the OEMs registered a decline. After the recent Q2 financials, we remain largely positive on Maruti Suzuki. MSIL’s strategic plans, including new model launches, diversified product and powertrain mix and capacity expansion, further enhance its growth prospects, making it a more attractive stock to buy following the Q2 results,” Shetty said.

According to him, Hyundai remains a strong player in India; however, with no new major launches (a key growth driver in PV) other than its upcoming Creta EV, for which MSIL is also launching its new e-SUV and higher royalty to the parent company, the growth will likely be muted. 

Chirag Jain, Senior Research Analyst at Emkay Global Financial Services Ltd. said he prefers Maruti Suzuki India over Hyundai Motor India, given its catch-up on operational and financial metrics (even on a lower SUV mix) with a much diversified product and powertrain mix, and a higher growth optionality.

Emkay Global has a ‘Reduce’ rating on Hyundai Motor India shares with a target price of ₹1,750 apiece, while the brokerage upgraded its rating on Maruti Suzuki to ‘Add’ from ‘Reduce’ after Q2 results. It kept Maruti Suzuki share price target at ₹12,000.

Comparing Hyundai Motor India with Maruti Suzuki India, MOFSL said, “While both OEMs are very close in competency and future growth potential, we can ascribe a slight premium to Hyundai Motor India over Maruti Suzuki given Hyundai Motor’s technological prowess in emerging technologies that can be customized to meet Indian customer requirements as needed; superior financial metrics; a relatively premium brand perception; and better alignment with industry trends.”

MOFSL assigns a 27x Sep’26E PER multiple to Hyundai Motor India, relative to its target multiple of 26x currently assigned to Maruti Suzuki.

The brokerage firm has ‘Buy’ call on both the auto stocks. It has Hyundai Motor India share price target of ₹2,235 apiece and has set target of ₹13,875 for Maruti Suzuki shares.

At 2:00 PM, Maruti Suzuki shares were trading 0.40% lower at ₹11,004.40 apiece, while Hyundai Motor India shares were up 1.20% at ₹1,760.05 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.