Maruti Suzuki India vs Tata Motors: Which automobile stock can deliver better returns?

Maruti Suzuki India and Tata Motors have been in the automobile space for a long and are among the country's top carmakers. In terms of share price, Maruti has slipped 1.40 per cent so far this year a 5.24 per cent. On the other hand, Tata Motors has climbed 3.63 per cent on a year-to-date (YTD) basis, compared to the BSE Sensex's 5.24 per cent decline. However, on the earnings front, both carmakers posted elevated profits in the December 2022 quarter (FY23), thanks to their robust sales. Maruti reported a net profit of Rs 2,351.30 crore in Q3 FY23 against Rs 1,011.30 crore in the year-ago period. And, Tata Motors recorded a profit of Rs 506.19 crore in Q3 FY23 over Rs 175.85 crore in the same period a year ago.

Here's what analysts have to say on these two counters:

Maruti

Arun Agarwal, Vice-President at Kotak Securities, said, "We expect Maruti's domestic passenger vehicle segment demand to moderate in FY24E due to cost headwinds and declining pent-up demand. We expect the EBITDA margin to recover from Q3 FY23 levels, but there can be possible challenges from increased discounts in certain segments amid demand moderation.

Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One, said, "On the technical aspect, Rs 8,500 is likely to act as a stiff resistance followed by the sturdy wall around Rs 8,650-odd levels."

Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher, said, "The stock has support around Rs 8,250 level. Traders are advised to wait and watch as the market is currently choppy."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "After heavy sell-off seen from higher levels of around Rs 9,769, the counter has made a double bottom structure near Rs 8,250-8,300 levels which are looking lucrative. One can buy at the current market price for an upside target of Rs 8,650 while keeping a stop loss at Rs 8,150."

Tata Motors

Kotak Securities' Agarwal said, "JLR (Jaguar Land Rover) volumes are expected to improve gradually as chip availability improves. In the domestic market, passenger vehicle industry demand is expected to moderate going ahead. There will likely be cost pressures pertaining to upcoming BS-VI RDE Phase II norms and increased competitive intensity in the domestic passenger vehicle segment." JLR is a wholly-owned subsidiary of Tata Motors.

Krishan from Angel One said, "As far as levels are concerned, the Rs 405-400-odd zone is expected to act as sacrosanct support in the comparable period. While on the flip side, a decisive breach above the sloping trend line, placed around Rs 435, could only trigger the next leg of rally in the counter."

Prabhudas Lilladher's Parekh said the stock has support around Rs Rs 410. For Tata Motors, she also advised to wait and watch for now, given the choppy market conditions.

Patel from Anand Rathi said, "A decisive close above Rs 423 level will only trigger fresh longs with a target price of Rs 440 and stop-loss would be at Rs 410."

Meanwhile, Indian equity benchmarks, BSE and NSE, were closed today on account of Ram Navami. Shares of Maruti settled 1.03 per cent higher at Rs 8,289.35 on Wednesday; while Tata Motors rose 1.85 per cent to close at Rs 409.15.

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