Auto · investment research
Maruti Suzuki
MARUTI
Verdict
NO ACTION
low confidence · 3-5 years
Composite score
48/100
Weighted across all eight pillars
Business quality
52/100
Moat, returns, balance sheet, cash, management
Valuation score
32/100
At 28.4x against a sector median of 28.4x, the price embeds roughly 15% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
No action. Nothing here is compelling enough to deploy capital today.
WHY
- • Balance sheet scores 86/100 (deteriorating) — Leverage is serviceable from current cash generation.
- • Profitability & returns scores 28/100 (improving) — ROCE was 9.1% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- • Valuation scores 32/100 (stable) — At 28.4x against a sector median of 28.4x, the price embeds roughly 15% earnings growth. Anything less has to come out of the multiple.
- • Business & moat scores 67/100 (deteriorating) — Competition is largely on price; returns depend on execution and the cycle.
WHERE
Auto · Large cap · position sized to at most 0% of an equity portfolio.
WHEN
Re-run this analysis after the next quarterly result.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 8% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹14,524 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Cash conversion — Only 61% of profit converted to operating cash.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check Interest rates — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
Maruti Suzuki is a moat-protected auto business compounding revenue at 10.1% and profit at 7.3%, earning 12.4% on capital. Quality scores 52/100 and valuation 32/100 at 28.4x. The decision is therefore no action with low confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
Maruti Suzuki operates in the Indian auto sector with a large-cap footprint and a listed market value of about ₹392k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Capacity utilisation
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Depreciation from recent capex
- • Distribution and marketing spend
Moat · 70/100
No durable moat identified
Competition is largely on price; returns depend on execution and the cycle.
Segment mix
Growth 36.1% · margin 9.1% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth -4.2% · margin 22.8% — Flat to declining; drags the consolidated growth rate.
Growth 26.6% · margin 9.6% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth -6.1% · margin 18.8% — Flat to declining; drags the consolidated growth rate.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
67/100Trend: deteriorating · weight 14%
- MoatNo durable moat identified
Competition is largely on price; returns depend on execution and the cycle.
- Segment concentrationPassenger vehicles is 6.9% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin22.0%
Margin moved from 33.0% to 22.0% year on year.
Profitability & returns
28/100Trend: improving · weight 16%
- ROCE12.4%
ROCE was 9.1% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE11.6%
Return on equity after leverage — read alongside debt levels.
- Net margin13.6%
Share of every rupee of revenue that reaches reported profit.
Growth quality
39/100Trend: deteriorating · weight 15%
- Revenue CAGR (4y)10.1%
Top-line compounding over the reported history.
- Profit CAGR (4y)7.3%
Profit lags revenue, so growth is being bought with margin.
- Growth sourceAsset-light / incremental
Capex is 4.0% of revenue this year.
Balance sheet
86/100Trend: deteriorating · weight 12%
- Debt / EBITDA0.61x
Leverage is serviceable from current cash generation.
- Debt / equity0.10x
Capital structure relative to shareholder funds.
- Working capital77 days
Cycle is tight, so growth is largely self-funding.
Cash conversion
35/100Trend: stable · weight 13%
- OCF / PAT61%
Accounting profit is not fully turning into cash — the single most common early warning sign.
- Free cash flow₹5,611 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
46/100Trend: deteriorating · weight 14%
- Guidance delivery54% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding73.5% (-2.12 y/y)
Promoters have been reducing ownership over the last year.
- PledgeNo pledge
No pledge disclosed in the sample data.
- Institutional flowFII -1.93 · DII +1.17
Direction of institutional ownership over the last year.
- Capital allocationSurplus cash is largely returned to shareholders…
Surplus cash is largely returned to shareholders rather than reinvested.
Industry & macro
60/100Trend: improving · weight 8%
- Demand trendimproving
Auto (India) demand is improving.
- StructureConsolidated
Consolidated — a few large players hold most of the profit pool.
- Competitive intensityhigh
How hard it is to keep pricing and share.
- Macro driversInterest rates, Fuel prices, Rural demand
Variables that move the earnings base regardless of company execution.
Valuation
32/100Trend: stable · weight 8%
- P/E vs sector28.4x vs 28.4x
At 28.4x against a sector median of 28.4x, the price embeds roughly 15% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted3.87 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield1.43%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹88,288 Cr | ₹18,540 Cr | ₹13,349 Cr | ₹7,075 Cr | ₹-3,520 Cr | 11.6% |
| FY2023 | ₹98,684 Cr | ₹17,763 Cr | ₹11,546 Cr | ₹6,350 Cr | ₹-5,492 Cr | 9.5% |
| FY2024 | ₹1.09 L Cr | ₹31,633 Cr | ₹13,286 Cr | ₹7,573 Cr | ₹-2,244 Cr | 11.6% |
| FY2025 | ₹1.19 L Cr | ₹39,427 Cr | ₹16,954 Cr | ₹10,003 Cr | ₹-3,139 Cr | 9.1% |
| FY2026 | ₹1.30 L Cr | ₹28,572 Cr | ₹17,715 Cr | ₹10,806 Cr | ₹5,611 Cr | 12.4% |
- ⚠ Operating cash flow is well below reported profit — check receivables and inventory.
Ownership & management
Who owns it, and have they delivered?
Promoter
73.5%
-2.12 y/y
Pledge
None
No disclosed pledge
FII
18.5%
-1.93 y/y
DII
18.4%
+1.17 y/y
Guidance delivered in 54% of the last eight quarters; average leadership tenure 2 years.
Surplus cash is largely returned to shareholders rather than reinvested.
- ⚠ Related-party transactions at 8.7% of revenue
Industry & macro context
Auto (India)
Demand trend
improving
Cyclicality
high
Competition
high
Regulatory pressure
low
Consolidated — a few large players hold most of the profit pool.
Macro drivers: Interest rates · Fuel prices · Rural demand
Valuation
fair versus the sector
P/E
28.4x
Sector median P/E
28.4x
P/B
11.43x
Earnings yield
3.52%
FCF yield
1.43%
PE / growth
3.87
Estimated fair-value band ₹14,524 – ₹18,558 , built on FY2026 EPS of ₹564. Gap to the current price: +32.5%. Ranges are a modelling output, not a target price.
At 28.4x against a sector median of 28.4x, the price embeds roughly 15% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Cash conversionmedium
Only 61% of profit converted to operating cash.
Monitor: Receivable days and inventory in the next two quarters.
- Cyclicalitymedium
Auto (India) earnings swing with the cycle, so trailing numbers flatter the peak.
Monitor: Interest rates
- Governancehigh
Related-party transactions at 8.7% of revenue
Monitor: Annual report disclosures and auditor commentary.
- Accounting qualitymedium
Operating cash flow is well below reported profit — check receivables and inventory.
Monitor: Cash-flow statement versus P&L each quarter.
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 12.4% | stays above 9% | falls for two consecutive years |
| Cash conversion | 61% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 10.1% CAGR | tracks the 15% priced in | slows for two quarters with no margin offset |
| Promoter holding | 73.5% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 58/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.
- • Accounting flags reduce the reliability of the reported profit base.