The man among the boys

India's largest car manufacturer Maruti Suzuki has the envious position of selling every second passenger vehicle in the country. This statistic is further garnished by the fact that Maruti belongs to an industry that jostles with 18 players, each vying to gain in the 2.5 million-passenger vehicle market. Long-term shareholders too have a reason to cheer. If you had invested ₹10,000 in Maruti ten years ago, today your stocks would be worth ₹80,000 - an eight-fold jump.

Maruti not only beats competition in market share, it is far ahead in growth too. While the industry grew 6.2 per cent in volumes (Q1 FY16), Maruti's volumes were up by 13.8 per cent. A significant reason for Maruti's dominance of the Indian passenger vehicle market is its penetration of the hinterlands and a string of successful launches, which include the Ciaz, the Celerio and the Ertiga. The vast availability of its service centres and spare parts is another factor that goes in its favour.

If you want an industry indicator of how well a car manufacturer is doing, look at the discounts it offers. For a long time, Honda didn't offer any discounts on its City. Car manufacturers also use discounts to lure in customers in lean periods. These discounts jumped in the last couple of years when the industry struggled with one of its worst recessions in the last decade. Maruti too had to follow the discount route. The good news is that those discounts are falling and newer launches are not with any discounts.

In the last one year, Maruti's stock has jumped 45 per cent, taking the valuations close to double of its ten-year median of 18, leaving little on the table for fresh investors. Buy only when the valuations cool down.