Maruti losing market share in the small cars space, but remains a leader: Macquarie

After factoring in micro-SUVs, Maruti Suzuki's market share in the ₹4 lakh to ₹7 lakh price range is down from 67% in financial year 2021 to 58% in the current financial year and 54% as of the December quarter.

Macquarie believes that distribution and fuel efficiency remain Maruti Suzuki's moat, but Micro-SUVs pose a risk to market share recovery.

A key risk to the upside, according to Maruti is a recovery in the entry-segment PV demand and the subsequent recovery. "While we acknowledge that it is an upside risk, in our view, investors are ignoring the changing landscape of the Indian small car segment," the brokerage wrote in its note.

Rising consumer preference for SUVs, wider model optionality with micro-SUVs, better safety ratings and superior product features will translate into a higher competitive intensity for Maruti, Macquarie said.

Therefore, the brokerage has chosen to retain its neutral rating on Macquarie reflecting its underperformance versus Macquarie's preferred stocks like Tata Motors, TVS Motor Company and Hero MotoCorp. While shares of the other three companies have gained between 80% to 120% over the last 12 months, Maruti's shares are up only 34% during the same period.

Macquarie is factoring in a 60-70 basis points sequential margin uptick for Maruti in the March quarter, which may support the stock in the near-term. However, its valuations of 24.5 times financial year 2026 price-to-earnings is in-line with its long-term average.

Shares of Maruti Suzuki India are trading little changed at ₹11,664.9. The stock is up 13% so far in 2024.