Exploring the Automobile Industry: EICHER Motors Limited and Maruti Suzuki Limited 2024

Introduction

Welcome to this informative blog post where we will be discussing two prominent companies in the automobile industry: EICHER Motors Limited and Maruti Suzuki Limited. Both companies have a strong presence in the Indian market and offer a wide range of products to cater to diverse customer needs. In this blog, we will delve into the history, market share, future plans, and fundamental analysis of these companies. So, let’s get started!

EICHER Motors Limited

Company Overview

EICHER Motors Limited is a leading player in the automobile industry in India. The company operates in two main segments: bikes and commercial vehicles. Under the bike segment, EICHER Motors manufactures Royal Enfield motorcycles, which are known for their rich heritage and superior quality. These bikes are not only popular in India but also in 60 different countries worldwide.

In the commercial vehicle segment, EICHER Motors has a joint venture with Sweden’s AB Volvo, known as Volvo Eicher commercial vehicles limited. This partnership allows EICHER Motors to manufacture and sell Volvo Buses, further expanding their presence in the market.

Company History

EICHER Motors has a rich history that dates back to its incorporation as Eicher Tractor Corporation of India in 1958. In 1959, they built the first indigenous Eicher tractor. Over the years, the company has achieved several milestones, including acquiring a majority stake in Enfield India in 1993 and establishing VE commercial Ventures Limited in partnership with Volvo Group and Aisha Motors Limited in 2008.

Market Share and Growth

Royal Enfield, under EICHER Motors Limited, has been steadily increasing its market share in the motorcycle segment. From 2014 to 2018, the market share in both the overall motorcycle market and the greater than 125 CC category grew from 18% to 21%. Although the market share remained relatively stable at 21%, it has recently started picking up again.

One of the reasons for the growing market share is the alignment of Royal Enfield’s customer base with India’s overall demography. The majority of Royal Enfield customers fall into the 26 to 35 age category, which matches the age group that represents the highest percentage of India’s population. Additionally, the young population in this age group has the financial capacity and a keen interest in traveling, contributing to the growth of Royal Enfield’s business.

Commercial Vehicle Segment

In the commercial vehicle segment, EICHER Motors focuses on manufacturing trucks and buses. Their market share in the heavy-duty truck segment is currently 8.3%, while in the light and medium-duty truck segment, it is 31.5%. However, in the bus segment, they have recently climbed to the second spot with a market share of 24.1% in 2022-23.

EICHER Motors believes that the commercial vehicle segment will see good traction due to the government’s focus on infrastructure spending, which will drive demand for trucks and buses.

Future Plans and Electric Vehicles

EICHER Motors has plans to launch their first electric vehicle (EV) for Royal Enfield in 2026. By 2028, they aim to have a full-fledged EV platform. To support this transition, the company is investing 10 billion INR in capital expenditure in 2024.

The EV space presents both opportunities and threats for EICHER Motors. On one hand, the Indian market’s demography aligns with Royal Enfield’s customer base, which positions them well to tap into the growing EV market. On the other hand, the introduction of EVs by global competitors in the greater than 250cc category poses a challenge. To maintain their market position, EICHER Motors must continue to innovate and adapt to changing consumer preferences.

Fundamental Analysis

EICHER Motors Limited demonstrates strong fundamentals. With a market capitalization of 90,751 crores, it is a large-cap company. The company has a good return on equity (ROE) and return on capital (ROC) at 21.1% and 27.4%, respectively. The debt-to-equity ratio is low at 0.02, indicating a healthy financial position. The company has zero pledge percentage share, further highlighting its stability.

In terms of financial performance, EICHER Motors has been consistently growing its sales and operating profits. The operating profit margin is currently at a record high of 25%, and the profit before tax (PBT) stands at 1,156 crores. The company’s compounded sales growth is 40%, and the compounded profit growth is 73%.

Overall, EICHER Motors Limited exhibits strong financials, a robust balance sheet, and positive growth indicators, positioning it as a promising player in the automobile industry.

Maruti Suzuki Limited

Company Overview

Maruti Suzuki Limited is another prominent player in the Indian automobile industry. The company is known for its wide range of passenger vehicles, including hatchbacks, sedans, SUVs, and multi-purpose vehicles (MPVs). Maruti Suzuki has a strong presence in the Indian market and offers reliable and fuel-efficient vehicles.

Product Portfolio and Market Share

Maruti Suzuki recognizes the growing popularity of SUVs in the Indian market. In 2018, SUVs accounted for 24% of the overall passenger segment market share, which has now increased to 43% in 2022. To capitalize on this trend, Maruti Suzuki has introduced new SUV models such as the Grand Vitara, Fronx, and Gemini. These launches are aimed at increasing their market share in the SUV segment from the current 11% to 25%.

In addition to focusing on the SUV segment, Maruti Suzuki is also planning to launch the Maruti Suzuki Invicto, which is their version of the Innova High cross. This new offering is expected to be a game changer for Maruti Suzuki and further strengthen their product portfolio.

Electric Vehicle Plans

Maruti Suzuki has taken note of the evolving EV market and plans to launch their first EV car in 2024-25. They have revealed some specifications of the upcoming EV, including a range of 550 kilometers, a battery size of 60 kilowatts, and a competitive charging time. Maruti Suzuki aims to offer a pocket-friendly EV that aligns with their reputation for affordable and reliable vehicles.

Looking ahead to 2030, Maruti Suzuki envisions their product portfolio consisting of 60% CNG and internal combustion engine vehicles, 25% hybrid vehicles, and 15% electric vehicles. This vision highlights their commitment to sustainability and adapting to changing market trends.

Fundamental Analysis (Reader Contribution)

Now it’s your turn to analyze the fundamentals of Maruti Suzuki Limited! We encourage you to comment with your analysis, and we will pin the best comment. Share your insights on market capitalization, return on equity, debt-to-equity ratio, sales growth, and any other key factors that contribute to Maruti Suzuki’s financial performance.

Technical Analysis (Separate Blog)

To complement this fundamental analysis, we will be releasing a separate blog post dedicated to the technical analysis of EICHER Motors Limited and Maruti Suzuki Limited. You can find the blog on our website www.rachanaranade.com, where we provide detailed insights into the technical indicators and trends for these companies. Stay tuned for more information!

Conclusion

The automobile industry in India is witnessing significant growth and evolving consumer preferences. Companies like EICHER Motors Limited and Maruti Suzuki Limited are at the forefront of this industry, offering innovative products and adapting to market trends. EICHER Motors excels in the bike and commercial vehicle segments, while Maruti Suzuki has a strong presence in the passenger vehicle market. Both companies have promising future plans, including foraying into the electric vehicle space. By analyzing their fundamentals and keeping an eye on technical indicators, investors can gain valuable insights into these companies and make informed decisions.

We hope you found this blog post informative and insightful. Don’t forget to visit our website for more blogs on technical analysis and fundamental analysis. Feel free to share this post with your friends and relatives who are interested in the automobile industry. If you have any questions or comments, please leave them below. Thank you for reading!

Disclaimer: The information is only for information purpose only. It is always recommended to consult with certified financial experts before making any investment decisions. Follow busymoneyfreak.com