---
endpoint: analytics
pattern: Autos
status: done
latency_ms: 212925
conversation_id: 6d000be6-ab0e-4b78-ab38-d6a4507cadc4
citations: 14
created: 2026-05-31 21:29:01Z
---

# How does Maruti Suzuki’s valuation compare to peers, and what justifies its premium/discount?

# Maruti Suzuki India (MARUTI / MSIL IB) — Valuation vs. Peers

CLSA carries an **Outperform (O-PF)** rating on Maruti Suzuki with a DCF-based target of **Rs13,449**, implying **~24x core FY27CL EPS**, and frames the stock as **currently trading at a 15% discount to its long-term average forward PE** — the central anchor of the bull case [1].

## 1. Where Maruti trades today

| Metric | FY24A | FY25A | FY26CL | FY27CL | FY28CL |
|---|---|---|---|---|---|
| EPS (Rs) | 420.1 | 443.9 | 512.3 | 596.1 | 675.2 |
| **PE (x)** | **27.8** | **26.3** | **22.8** | **19.6** | **17.3** |
| EV/Ebitda (x) | — | 15.6 | 13.0 | 10.9 | — |
| ROE (%) | 18.3 | 15.7 | 16.1 | 16.5 | 16.4 |
| Net cash / share (Rs) | 2,123 | 2,302 | 2,609 | 3,009 | 3,508 |

Source: CLSA, Apr-2025 [4]; FY25CL/26CL/27CL also reconfirmed in Jan-2025 sector note (Maruti at 15.6x / 13.0x / 10.9x EV/Ebitda; 24.1x / 21.4x / 18.7x PE) [5].

The "discount" framing has two slightly different vintages within CLSA's own work — both supportive but with different magnitudes:

- **Apr-2025 (post-4QFY25 update)**: 12-mth forward PE of **22.0x** vs. long-run average **25.8x**, i.e. a **14.4% discount** to mean; ±1 StDev band is 21.3x–30.2x [2].
- **Jan-2025 (annual sector outlook)**: forward PE **23.0x** vs. long-run mean **26.0x**, an **11.6% discount**; ±1 StDev band 21.2x–30.7x [6].

Either way, Maruti is in the lower half of its 10-year valuation band — and at FY27CL the stock trades at only **~19.6x PE / ~10.9x EV/Ebitda** with ~16% ROE and a fortress balance sheet (Rs2,609/sh net cash at FY26CL) [4].

## 2. Peer-set valuation grid (CLSA, Jan-2025)

The sector report explicitly benches Maruti against the rest of Indian autos / auto-ancillaries [5]:

| Company | Rec | Mcap (US$bn) | PE 25CL | PE 26CL | PE 27CL | EV/Ebitda 25CL | EV/Ebitda 27CL |
|---|---|---|---|---|---|---|---|
| **Maruti Suzuki** | **O-PF** | 43.1 | **24.1** | **21.4** | **18.7** | **15.6** | **10.9** |
| Mahindra (M&M) | O-PF | 45.1 | 25.5 | 20.6 | 17.8 | 17.0 | 10.5 |
| Tata Motors | O-PF | 37.9 | 14.2 | 11.8 | 9.4 | 4.2 | 2.9 |
| Bajaj Auto | O-PF | 28.7 | 26.7 | 24.4 | 21.6 | 20.1 | 15.7 |
| Eicher Motors | HLD | 16.8 | 29.7 | 26.2 | 22.5 | 24.6 | 16.8 |
| Hero MotoCorp | O-PF | 9.8 | 18.8 | 17.6 | 16.4 | 11.7 | 9.9 |
| TVS Motor | HLD | 13.4 | 39.1 | 29.9 | 25.3 | 22.3 | 14.7 |
| Bharat Forge | U-PF | 7.0 | 42.2 | 33.9 | 27.3 | 21.1 | 15.2 |
| Ashok Leyland | U-PF | 7.7 | 21.7 | 25.8 | 20.0 | 11.9 | 10.5 |
| Escorts Kubota | O-PF | 4.4 | 28.6 | 26.2 | 23.2 | 20.1 | 16.2 |
| SAMIL (Motherson) | O-PF | 12.7 | 35.3 | 25.1 | 18.9 | 10.5 | 6.8 |
| Sona BLW | O-PF | 4.2 | 58.4 | 44.0 | 36.5 | 34.7 | 21.3 |

Key takeaways from the grid:

- **Maruti is the cheapest of the structurally premium-rated PV pure-plays**: at 21.4x FY26CL / 18.7x FY27CL PE, it sits **below M&M** (20.6x / 17.8x — but trading at a 42.6% premium to its own history, see §3) and well below 2-wheeler / EV-supply-chain names like Bajaj (24.4x / 21.6x), Eicher (26.2x / 22.5x) and Sona BLW (44.0x / 36.5x) [5].
- **Tata Motors is the only large-cap that screens visibly cheaper** (11.8x / 9.4x FY26CL/27CL PE) but the comparison is misleading — TTMT's EV/Ebitda is 3.7x / 2.9x because JLR carries materially higher cyclicality, capex intensity and US-tariff exposure; the SOTP values JLR at only 2.5x Ebitda [5].
- **Direct PV peer Hyundai Motor India (HMIL)** is the cleanest like-for-like comp: HMIL trades at **18.6x FY27CL EPS, ~30% below Maruti's long-term average forward PE multiple**, with CLSA at O-PF and a DCF target of Rs2,155 (implying 25x FY27CL EPS) [12]. The gap reflects HMIL's smaller scale, lower volume CAGR (7% FY25-27 vs. industry 6%) and royalty drag (~3% of sales).

## 3. Maruti's "discount" in context — peers' premium/discount to own history

The peer mean-reversion lens is the most useful angle on the question: at the time of the Jan-2025 sector outlook, Maruti was the **standout discount name** while almost every other large-cap was trading at a premium to its own decade history [5][6][8][9][10][11]:

| Company | Current 12M Fwd PE | Long-run Avg PE | Premium / (Discount) |
|---|---|---|---|
| **Maruti Suzuki (Apr-25)** | **22.0x** | **25.8x** | **(14.4%) DISCOUNT** [2] |
| **Maruti Suzuki (Jan-25)** | **23.0x** | **26.0x** | **(11.6%) DISCOUNT** [6] |
| Mahindra (M&M) | 27.7x | 19.4x | **+42.6% PREMIUM** [8] |
| Eicher Motors | 29.1x | 28.5x | +2.1% premium [10] |
| Bajaj Auto | 24.6x | 19.0x | **+29.5% PREMIUM** [9] |
| Samvardhana Motherson | 22.4x | 23.0x | (2.6%) discount [11] |

This is the key valuation paradox the CLSA team highlights: **the segment leader (~70% of monthly Indian PV market on some prints) trades at a meaningful discount to its own history, while the share-gainer (M&M) and the premium-mix beneficiaries (Eicher, Bajaj) trade at large premiums to theirs** [5][8][9][10].

## 4. What justifies the discount today

CLSA explicitly argues the discount is **unjustified at long-term horizon** but **near-term-explicable**. Specific drivers:

- **Margin reset from Kharkhoda plant ramp.** 4QFY25 Ebitda margin fell to 10.5% (140bps below consensus); fixed-cost surge from the new Kharkhoda plant (+10% capacity, ~30bps drag), higher advertising (e-Vitara launch / auto expo, ~30bps), raw-material inflation (~20bps), unfavourable mix (lower exports / CNG / SUV, ~40bps) and CSR/digitalisation (~90bps) drove a 113bps QoQ contraction. CLSA expects the new-plant margin drag to persist **2–3 quarters until utilisation ramps**, and has cut FY26CL Ebitda margin by 66bps and EPS by 6.7% [1].
- **Subdued demand outlook & rising discounts.** A weak PV demand backdrop is forcing higher dealer discounting across the sector (though Maruti's own per-unit discount fell to ~Rs28k from ~Rs31k QoQ, partially offsetting the margin pressure) [1].
- **Market-share loss to M&M and EV competitors.** In Mar-2025, Maruti lost ~150bps YoY of PV market share alongside Hyundai (also -150bps), while M&M gained 150bps with Thar Roxx + XEV 3XO launches — feeding the M&M premium / Maruti discount divergence in §3.
- **EV transition optionality is real but back-end-loaded.** Maruti's e-Vitara is launching now, with plans to export from India to 100 countries — CLSA is **not aggressively building this into export forecasts** (13% Cagr FY25-27CL), so any traction is upside, not in numbers [1].

## 5. What justifies a premium re-rating from here (CLSA's bull case)

- **Maruti still owns the structural pole-position** of Indian PV — segment leadership, deepest distribution, and the strongest balance sheet (~Rs2,609/sh net cash at FY26CL [4]).
- **CNG mix is the highest in the industry** and rising — Maruti has the "lion's share" of CNG-powered vehicles, which CLSA expects to **cushion profitability amid rising input costs** [1]. The Apr-2025 sector data confirms CNG is now 21% of PV volume and grew 44% YoY in Mar-2025.
- **Margin volatility vs. peers:** CLSA notes Hyundai India "has managed to operate with steady Ebitda margin in a band of c.12–13% as against more volatile margin by the industry leader Maruti Suzuki" — Maruti's operating leverage is double-edged, but historically it has been the larger absolute earner with mid-teens ROE [13][4].
- **DCF math.** CLSA uses a 12.25% WACC (Ke 12.25%, all-equity capital structure, 7% RFR matching India 10-yr, 1.0 beta, 5.25% MRP, 5% TGR) [3][14]. At those inputs, fair value triangulates to **Rs13,449 (equivalent to ~24x core FY27CL EPS)** — a deliberate alignment between DCF output and ~1-StDev-below-mean PE [1].
- The sector note's standing thesis on Maruti: "We remain positive on MSIL, as we believe it is trading below its long-term average valuation levels on account of near-term concerns, thus giving good opportunity for long-term investors to accumulate" [7].

## 6. Bottom line

- **Headline read:** Maruti trades at **~22x 12M-fwd PE**, an **11–14% discount to its own ~25.8x long-run mean** [2][6], and is the cheapest of the structurally-premium India PV pure-plays on FY26CL/27CL multiples [5].
- **Why the discount exists (near-term):** Kharkhoda plant fixed-cost drag for 2–3 quarters, margin volatility (1Q-3Q below mid-teens band peers like HMIL maintain), share losses to M&M, and a weak PV demand cycle [1][13].
- **Why CLSA thinks the discount is the entry point (medium-term):** scale + balance-sheet leadership intact, CNG share leadership cushions input-cost cycles, e-Vitara export optionality not in numbers, mean-reversion of the historical PE band [1][7].
- **Where Maruti's discount looks especially anomalous:** vs. **M&M trading at a 42.6% premium to its own history** [8], **Bajaj Auto at +29.5% premium** [9], and **Eicher at +2.1% premium** [10] — peers paying up for growth/mix gains while the segment leader is marked down for transient cost timing. Versus the cleanest direct PV peer **HMIL (18.6x FY27CL, ~30% below MSIL's long-run mean)** [12], Maruti commands a justified premium on scale and CNG leadership, but a narrower-than-historical one.

The CLSA thesis is therefore not "Maruti is expensive vs. peers" — it is "Maruti trades cheaper than its own history and cheaper than premium-rated peers (M&M/Eicher/Bajaj) on a forward basis, with near-term margin noise creating the entry."

---
**Sources**
[1] Maruti Suzuki — O-PF (Drive ahead & supportive valuation) — CLSA (27-Apr-2025) — 607957045LinqAlpha.PDF
[2] Maruti Suzuki — 12-mth forward PE multiple chart (Apr-15 to Apr-25; current 22.0x vs LRA 25.8x, 14.4% discount) — CLSA (27-Apr-2025) — 607957045LinqAlpha.PDF
[3] Maruti Suzuki — DCF valuation methodology (12.25% WACC, 7% RFR, 1.0 beta, 5% TGR, 5.25% MRP) — CLSA (27-Apr-2025) — 607957045LinqAlpha.PDF
[4] Maruti Suzuki — Key financials & multiples table (FY24A–FY28CL) — CLSA (27-Apr-2025) — 607957045LinqAlpha.PDF
[5] India Autos — Coverage universe valuation comp table (Rec / TP / PE / EV-Ebitda) — CLSA (08-Jan-2025) — 607947781LinqAlpha.PDF
[6] India Autos — Maruti Suzuki 12-mth forward PE history (Jan-15 to Jan-25; current 23.0x vs LRA 26.0x, 11.6% discount) — CLSA (08-Jan-2025) — 607947781LinqAlpha.PDF
[7] India Autos — Maruti Suzuki summary view in sector outlook (O-PF, Rs12,631 TP) — CLSA (08-Jan-2025) — 607947781LinqAlpha.PDF
[8] India Autos — M&M 12-mth forward PE chart (current 27.7x vs LRA 19.4x, +42.6% premium) — CLSA (08-Jan-2025) — 607947781LinqAlpha.PDF
[9] India Autos — Bajaj Auto 12-mth forward PE chart (current 24.6x vs LRA 19.0x, +29.5% premium) — CLSA (08-Jan-2025) — 607947781LinqAlpha.PDF
[10] India Autos — Eicher Motors prospective PE (current 29.1x vs LRA 28.5x, +2.1% premium) — CLSA (08-Jan-2025) — 607947781LinqAlpha.PDF
[11] India Autos — Samvardhana Motherson 12-mth forward PE (current 22.4x vs LRA 23.0x, -2.6%) — CLSA (08-Jan-2025) — 607947781LinqAlpha.PDF
[12] Hyundai Motor India — O-PF (Profitability disappoints): "trading at an 18.6x FY27CL EPS which is c.30% lower than MSIL's long-term average forward earnings multiple" — CLSA (28-Jan-2025) — 607949207LinqAlpha.PDF
[13] Hyundai Motor India — Investment thesis: HMIL steady c.12–13% Ebitda margin vs. "more volatile margin by the industry leader Maruti Suzuki" — CLSA (28-Jan-2025) — 607949207LinqAlpha.PDF
[14] Maruti Suzuki — Detailed WACC calculation (Figure 15) — CLSA (27-Apr-2025) — 607957045LinqAlpha.PDF

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