In depth Analysis on Long-Term Prospects of Tata Motors, Maruti Suzuki, and M&M

The Indian automotive industry plays a pivotal role in the economy, contributing approximately 7.1% to the National GDP and employing over 19 million individuals. Liberalization and strategic policies have fostered a competitive market, leading to capacity expansion and substantial employment generation. In the Indian automobile market, two-wheelers command a 77% market share, while passenger cars hold 18%, predominantly dominated by small and midsize cars. The sector has experienced a remarkable export growth of 35.9%, reaching 5,617,246 units in 2021-22. India aims to double its auto industry size to Rs.15 lakh crores by 2024, supported by a significant foreign direct investment (FDI) of $33.77 billion.

Over the past two decades, the Indian automotive industry has become a global contender, ranking second in two-wheelers, seventh in commercial vehicles, sixth in passenger vehicles, and first in tractors in global manufacturing output. With a focus on the BRICS nations, the industry anticipates a shift in automobile demand from developed to developing nations. Future trends include increased integration of electronics in vehicles, transforming them into "computers on wheels," and a pursuit of economies of scale and scope, indicating a dynamic and evolving landscape for the global automotive sector.

In the midst of this favourable climate and following the recently disclosed September auto sales, let's explore which automobile giant— Maruti Suzuki, Mahindra & Mahindra (M&M), or Tata Motors—presents more promising good shares for long term investment.

Tata, Maruti, and Mahindra: Key Updates Shaping Long-Term Investment Prospects 

Tata Motors Ltd 

• February 2025: Sales declined by 8% YoY to 79,344 units, with passenger vehicle sales dropping 9% to 46,811 units. The company announced plans to double EV charging points to 400,000, adding 30,000 public chargers and ‘Mega Chargers’ for fast charging.

• January 2025: Tata Motors showcased new EV and CNG models, including Punch.ev, Harrier. ev, and Sierra at Auto Expo 2025, emphasizing its commitment to sustainable mobility.

• December 2024: Announced a 2% price hike on commercial vehicles starting January 2025, citing rising raw material costs.

Maruti Suzuki

• In December 2024, the company reported total sales of 178,248 units, including the highest-ever monthly exports of 37,419 units. Domestic sales stood at 132,523 units, with an additional 8,306 units sold to other OEMs.

• On February 18, Maruti Suzuki's stock rose by 1.41% to Rs. 11,720.20, though it remained 14.29% below its 52-week high of Rs. 13,675.00 recorded in August 2024. 

Mahindra & Mahindra:

• Feb 18, 2025 – Mahindra & Mahindra's stock declined by 14.29% from its 52-week high, settling at Rs. 2,806.20.

• Jan 2025 – Engaged with investors at the Kotak Conference in Mumbai.

• Dec 2024 – Mahindra reported a 16% increase in domestic sales, driven by strong demand for its SUV lineup. The company also announced its 2024-2025 cultural events calendar, including the Mahindra Kabira Festival and the Mahindra Sanatkada Lucknow Festival.

Tata Motors Ltd : A Closer Look

Tata Motors Group (Tata Motors) stands as a USD 42 billion entity, holding a prominent position as a global leader in automobile manufacturing. 

Over the past six months, Tata Motors share rate has yielded a return of 48.73%, surpassing the benchmark Nifty50, which recorded a return of 12.88% during the same period.

On October 1, Tata Motors Ltd reported a 2% increase in total domestic vehicle sales, reaching 82,023 units in September compared to 80,633 units in the same month last year. Domestic passenger vehicle sales, encompassing electric vehicles, saw a 6% decline at 44,809 units, compared to 47,654 units in September 2022. Meanwhile, electric vehicle sales, including international markets, witnessed a substantial growth of 57%, reaching 6,050 units compared to 3,864 units in the same period last year, as indicated in a regulatory filing by Tata Motors.

Maruti Suzuki Ltd : Navigating the Road Ahead

Maruti Suzuki, the Indian subsidiary of Suzuki Motor Corporation, charts its evolution from a nascent participant to the unequivocal leader in the Indian passenger vehicle market. 

Maruti Suzuki India Limited's shares are poised for attention on October 3, following the announcement of a 2.8% year-on-year increase in total sales to 181,343 units in September, propelled by heightened utility vehicle sales. The detailed breakdown includes 153,106 units in domestic sales, 5,726 units sold to other OEMs, and 22,511 units in exports, according to the company's regulatory filing. Notably, Maruti Suzuki achieved a significant milestone, surpassing one million units in total sales for the first time in a half-year period, with a total of 1,050,085 units recorded from April to September 2023. It is to be noted that the company's passenger vehicle market exceeded the three million-mark by the end of September.

However, the Maruti Suzuki share value experienced a decline of 2.6%, closing at Rs 10,346.90 on October 5. It opened 2.10% lower at Rs 10,130 on October 4, following the issuance of a Rs 2,159.7 crore income-tax assessment notice to India's largest car manufacturer.

Mahindra & Mahindra Ltd : Driving Innovation and Growth

Mahindra & Mahindra (M&M), a prominent multinational conglomerate, established a notable presence in the realm of utility vehicles and sports utility vehicles within the automotive landscape.

For the third consecutive month, M&M Ltd achieved the highest sales in the utility vehicle segment. In September, the company sold 41,267 units of vehicles in the domestic market, totalling 42,260 units. Domestic sales for commercial vehicles reached 23,997 units.

As of October 5, 2023, 02:14 PM IST, the M&M share price increased by 0.99% compared to the previous closing price of Rs 1,537.4, reaching Rs 1,537.20. The return performance of Mahindra and Mahindra stock price indicates a decline of 1.36% in the past week, a decrease of 2.30% in the last month, an increase of 4.04% in the last three months, and a notable rise of 32.84% over the past six months.

Comparative Analysis

Sales Analysis - Comparison of number of units sold.

In September 2023, Maruti Suzuki experienced a 2.5% increase in sales compared to the previous year. However, Mahindra & Mahindra saw a decline of 11% and 27% in domestic and export sales, respectively, for the same period. Notably, Maruti Suzuki surpassed the half-yearly sales mark of 1 million units. Tata Motors reported a 34% increase in domestic sales for FY 2023 compared to the previous year.

Stock Analysis

Tata Motors has reported a remarkable YTD return of 56.03% when compared to the previous year 2022.

Financial Analysis

A comparative study of Q4 2023 and Q1 2024 results reveals a 22% increase in profit after tax for M&M Ltd. All three companies show positive returns for FY 2023 compared to the previous financial year.

Cash Flow Statement

M&M Ltd. shows positive cash flow from operating activities for FY 2023, while Maruti Suzuki and Tata Motors report increased negative cash flow. Maruti Suzuki and Tata Motors report increased cash flow for investing activities. All three companies report negative cash flow in financing.

Ratio Analysis

Return On Equity (ROE%) increased for Maruti Suzuki, Tata Motors, and M&M.

Long-Term Investment Considerations

An overview of critical findings concerning Tata Motors, Maruti, and M&M serves as a convenient resource for investors seeking insight. Offering a personalized investment recommendation derived from our comprehensive exploration, the goal is to provide guidance for investors in their decision-making process. The discussion concludes by emphasizing the importance of ongoing monitoring of industry trends and company performance, recognizing the dynamic nature of the automotive market. In the intricate landscape of the automotive industry, Tata Motors, Maruti Suzuki, and M&M emerge as distinctive investment prospects, each weaving its unique narrative. For investors aiming to identify promising long-term stocks to buy, unravelling the nuances of these stories becomes more than an investment strategy—it transforms into a journey into the future of mobility.

Frequently Asked Questions

What is the share price of Tata Motors, Maruti Suzuki and M&M?

As on 5th October, 2023, Tata motors stock price is Rs.619.60 and Maruti Suzuki share price is Rs.10210.15 and the Mahindra and Mahindra share price is Rs.1537.95

Why consider Tata Motors, Maruti, and M&M as good stocks to buy for long term in the automotive sector?

Each company brings unique strengths and market positions to the table. Tata Motors has a growing global presence, Maruti Suzuki is a market leader in India, and M&M is known for its resilience. Evaluating these factors can help in making a well-informed long-term investment decision.

How do the growth prospects differ among Tata Motors, Maruti, and M&M?

Tata Motors, with its global expansion and focus on electric vehicles, Maruti Suzuki's dominance in the Indian market, and M&M's diverse portfolio including SUVs and tractors, offer varied growth opportunities. Evaluating the specific growth strategies of each company is essential.

What role does innovation play in the long-term success of Tata Motors, Maruti, and M&M?

Innovation, especially in the areas of electric and sustainable mobility, can be a key driver for long-term success. Understanding the companies' innovation initiatives, R&D investments, and future plans is crucial.

How do global economic factors impact the long-term performance of Tata Motors, Maruti, and M&M?

Considerations of global economic trends, trade policies, and geopolitical factors are essential. Assessing how each company navigates and adapts to these factors provides insights into their long-term sustainability.

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