Hyundai Motor India IPO vs Maruti Suzuki: Which Auto Stock is Set to Drive Higher? Creta, EVs, and Share Price Showdown

With the automobile sector growing rapidly due to rising demand for cars, urbanisation, the shift towards electric vehicles (EVs), and strong government support, Hyundai’s upcoming IPO seems perfectly timed.

Hyundai Motor India and Maruti Suzuki are two major players in the Indian car market. But which one is a better investment? Let’s compare them on different points.

Hyundai Motor India

Hyundai Motor India is part of the Hyundai Motor Group, the third-largest carmaker globally by sales. For over a decade, it has been the second-largest carmaker in India’s passenger vehicle market and the largest exporter of Indian cars for nearly 20 years. Since 1998, Hyundai has sold and exported around 12 million vehicles in India.

The company has over 1,377 sales outlets and 1,561 service centres in 957 cities and towns across India. Its range of cars includes sedans, hatchbacks, and SUVs, and it is also growing its presence in the EV space.

Maruti Suzuki India

Maruti Suzuki, a subsidiary of Japan’s Suzuki Motor Corporation, is India’s top passenger car company in both production and sales. It offers a wide variety of vehicles, from hatchbacks to premium sedans and compact SUVs.

Maruti has expanded internationally, exporting cars to countries like Nepal, Bangladesh, Africa, Europe, and Australia. Known for making affordable, fuel-efficient cars, Maruti also has a strong service network with over 4,000 centres in 1,989 towns and cities. Though it has yet to launch an EV, Maruti offers hybrid cars and has partnered with Toyota to work on EVs in India. It also has a strong presence in the pre-owned car market.

Revenue

Both companies earn most of their revenue from selling cars, along with after-sales services and spare parts.

Maruti Suzuki’s sales have grown at an annual rate of 14.3% over the past four years, driven by popular models like the Baleno, Swift, and Ertiga. The company has also benefited from introducing compressed natural gas (CNG) cars. Hyundai’s sales also grew at a rate of 14.3% in the same period, helped by new car launches and a backlog of orders.

Maruti Suzuki leads in revenue, but Hyundai isn’t far behind in terms of sales growth.

Profitability

Profitability can be seen through earnings before interest, tax, depreciation, and amortisation (Ebitda), and net profit growth.

Hyundai Motor India’s Ebitda and net profit grew by 21.1% and 34%, respectively, in the past four years. This growth was mainly due to price increases and improved operational efficiency.

Maruti Suzuki’s Ebitda and net profit grew even more, at 28.5% and 32.4%, helped by higher prices and a better product mix.

In terms of profitability, Maruti Suzuki has a clear lead over Hyundai.

Debt Management

Maruti Suzuki is a debt-free company with strong cash flows. It plans to spend ₹1.25 trillion to increase its production capacity to nearly four million units by 2030, with the first phase expected to be ready by 2025.

Hyundai Motor India, on the other hand, has some debt but maintains strong cash flows. It has plans to spend ₹1,000-3,000 crore a year to expand its EV offerings, increase production, and strengthen its service network.

Both companies are managing their finances well, but Maruti’s debt-free status gives it an edge.

Financial Efficiency

When it comes to financial efficiency, Hyundai Motor India leads. Its return on capital employed (RoCE) averaged 35.7% over the past three years, compared to Maruti Suzuki’s 14.5%. Hyundai’s return on equity (RoE) was also higher at 32.5%, compared to Maruti’s 11.3%.

Dividends

Both companies have been paying regular dividends to shareholders. Hyundai Motor’s dividends have grown at a rate of 93.3% over the past three years, while Maruti’s dividends grew at 29.4%. Hyundai’s dividend yield is higher, but it will be interesting to see if this continues after its listing.

Valuation

Both Hyundai Motor and Maruti Suzuki are trading at similar valuations, with price-to-earnings (P/E) ratios around 26. The price-to-book (P/B) ratio of Maruti Suzuki stands at 4.3. This suggests that both companies are valued close to the industry average.

Which Stock is Better?

Maruti Suzuki leads in revenue growth, profit growth, and debt management. However, Hyundai Motor India is ahead in financial efficiency and dividend payouts.

Hyundai is focused on expanding its production and EV offerings, with plans to produce multiple EV models by 2030. Maruti, meanwhile, is strengthening its premium car range and will also enter the EV market through its partnership with Toyota. Both companies have solid strategies for the future, but the auto industry is cyclical and carries risks. It’s important to carefully assess your risk tolerance before investing in these companies.

Both Hyundai and Maruti have strong prospects, but investors should consider their financial goals and risk appetite before making any decisions.

Happy investing!