Maruti Suzuki India Ltd is best placed to benefit from an improvement in India’s economy as it attracts first-time car buyers, Morgan Sze, founder and chief investment officer of hedge fund Azentus Capital Management, said on Thursday.
Sze, a former Goldman Sachs top trader and now one of the best known Asian hedge fund managers, said the Indian economy is stabilising and last month’s election results have helped improve chances of an acceleration in growth.
India auto industry is also “currently poised for a cyclical upturn”, Sze told hedge fund managers at the Sohn/Karen Leung Foundation Conference Hong Kong. He did not say whether the fund was invested in Martui Suzuki.
Picking Maruti Suzuki as his best bet, the Hong Kong-based fund manager predicted a 28 per cent annualised growth in the automaker’s earnings over the next three years. Maruti Suzuki dominates the market with a 42 per cent share.
Sze said Maruti also benefits from India’s diesel price deregulation because a majority of its cars run on petrol-fuelled engines. He also said its valuations are attractive and the company is best placed to attract first time buyers.
Maruti trades at 20 times its forward 12 months earnings and its share price has risen about 40 per cent so far this year, nearly double the returns in India’s benchmark Sensex index.