Bullish on Autos? Siddhartha Khemka Picks Maruti Suzuki and Samvardhana Motherson

Why It Matters

The upbeat earnings and robust pipelines of Maruti Suzuki and Motherson signal resilient growth potential for India’s auto ecosystem, making them attractive focal points for investors despite broader macro risks.

Key Takeaways

• Maruti Suzuki targets ~10% FY27 domestic volume growth
• Motherson’s 4Q PAT jumped 55% YoY, EBITDA margin 11%
• Both firms benefit from $96 bn order backlog and EV transition
• Passenger‑vehicle demand outpaces 2‑wheelers and commercial trucks
• Rising input costs pressure margins across all auto segments

Pulse Analysis

India’s automobile landscape remains a study in contrasts as FY27 unfolds. Passenger‑vehicle sales are buoyed by a combination of lean dealer inventories, strong retail appetite for utility models, and an expanding electric‑vehicle portfolio, while the two‑wheel and commercial‑vehicle segments grapple with softer retail demand and geopolitical disruptions in West Asia. Meanwhile, the tractor market continues to thrive on rural liquidity and supportive farm policies, though weather‑related risks and higher input prices temper optimism for the second half of the year.

Maruti Suzuki, the country’s dominant OEM, leveraged its extensive model range and pricing discipline to deliver a 28% year‑over‑year revenue surge in the fourth quarter. A healthy order backlog of roughly 190,000 units and a pipeline of new launches—particularly in the small‑car and SUV segments—provide clear visibility for FY27. Export strength, especially in the passenger‑vehicle segment, adds a defensive layer, while margin stability was achieved by offsetting higher input costs with reduced discounting and economies of scale. The company’s target price of roughly $187 reflects confidence in its ability to sustain ~10% volume growth and a projected 16% earnings compound annual growth rate through FY28.

Component supplier Samvardhana Motherson showcased a 55% rise in adjusted profit after tax, expanding its EBITDA margin to 11% as it capitalised on high‑growth wiring‑harness and integrated‑assembly businesses. Backed by a $96 bn booked pipeline and ambitious $108 bn revenue goal over five years, the firm is scaling greenfield projects across automotive, consumer electronics, and aerospace, with a particular focus on electric‑vehicle integration. The 8% upward revision in FY27‑28 earnings estimates underscores the firm’s resilience amid a challenging macro environment, positioning Motherson as a compelling play for investors seeking exposure to the broader electrification and diversification trends reshaping the Indian auto supply chain.