Maruti Suzuki Fronx: Nomura, others share sales forecast, comparison with Brezza, Baleno, stock price targets & more

If one goes by Nomura India, Maruti Suzuki's first coupe crossover Fronx, which targets the highly competitive compact SUV segment models such as the Tata Nexon, Maruti Suzuki Brezza, Nissan Magnite, Renault Kiger, Hyundai Venue and Mahindra XUV300, has a waiting period of 2.5-3 months at present.

Sales for this segment averaged at 84,000 units per month in FY23 and continues to see strong consumer demand, Nomura India said in its latest note on Maruti Suzuki.

Price comparison with Baleno, Brezza

When compared with the Baleno, the base variant of the Fronx SUV at Rs 7.46 lakh is priced at a premium of Rs 86,000 per unit, while the SUV is priced at a discount of Rs 83,000 per unit to the Brezza.

"In terms of performance offered by the two engine options, we believe that the 1.0L Turbo Boosterjet engine variants are priced at a more than expected premium. We expect, based on the pricing and performance specifications, the bookings received by the company to be skewed towards the 1.2L Dual Jet engine option," Nomura India said.

Elara Securities said some of the variants of Fronx, especially the 1 litre automatic seem to be on the expensive side. But it noted that when Brezza was launched, some of the upper variants also seemed to be expensively priced, but bookings and sales post that have been quite healthy.

"We will monitor how the Fronx as a brand evolves with consumers, as unlike Jimny, consumers still don’t know much about the product. Fronx has received 23,000 units bookings till date as per media reports with waiting period of 1-2 months, and we expect this to accelerate going forward with pricing being announced and vehicles to be available for test rides," it said.

Cannibalisation risk

Nomura India said its analysis of the pricing, compared with Maruti Suzuki and peers’ models, indicates that while the Fronx is positioned slightly below the Nexon, there is a reasonable premium (Rs 1,00,000 on road) compared with the Baleno for the entry/mid variants.

"However, with only turbo variants available in Zeta/Alpha models, the price premium to Baleno is significant and brings it very close to the Brezza. Hence, there could be a risk of cannibalisation from Baleno at the lower end and from Brezza at the higher end. We currently factor in 8,000 units per month for the Fronx in FY24F (6,000 units per month incremental for Baleno + Fronx), which could have some risk given the pricing," it said.

Elara Securities is projecting an incremental monthly volume addition of 6,000-7,000 units for Fronx+Baleno for Maruti Suzuki in FY24E.

Success rate

Maruti's model launch success rate at 70 per cent in the past decade is much higher than the competition’s 14 per cent and may aid market share recoupment, on new/refreshed SUV model launches in FY23-24.

"Expect MSIL’s market share to improve to 45 per cent/46 per cent in FY24E/25E from 41.3 per cent in FY23, led by launches in the SUV space. Maintain Buy with a targe of Rs 11,775, on 26 times (unchanged) FY25E EPS," Maruti said.

The SUV has a dual-tone interior with a 9-inch touchscreen infotainment system with wireless Apple CarPlay and Android Auto, a wireless charger, cruise control, a 360-degree camera, a heads-up display and over 40 connected car features.

It has various safety features such as six airbags, Electronic Stability Program (ESP), Hill Hold Assist & Roll Over Mitigation, ABS with Electronic Brakeforce Distribution (EBD) and ISOFIX. On the exterior design front, the upright nose and split headlamp of the Fronx are inspired by the Grand Vitara, while some elements such as a rising waistline, and a sloping rooftop are inspired by the Baleno, Nomura India noted.

The brokerage has maintained its 'Neutral' rating on the stock with a price target of Rs 9,928.

Meanwhile, Motilal Oswal Securities had in an earlier note suggested that Maruti Suzuki may outperform the underlying industry in FY24, led by Jimny and Fronx and the successful launch of Grand Vitara in September 2022.

While the launch of Grand Vitara and upgraded Brezza were successful, it had no significant impact on Maruti's recovery of domestic PV market share, it noted.

"While MSIL’s market share in the SUV segment improved to 20 per cent by Q3FY23 (from 19.5 per cent in FY22), it lost market share in the car segment (64.1 per cent in Q3FY23 vs 65.8 per cent in FY22), resulting in overall market share dipping to 41.2 per cent in Q3FY23 (from 43.4 per cent in FY22). With three more product launches lined up in the fast-growing SUV segment over the next six to nine months, we expect MSIL’s market share recovery to gather momentum," it said.

Also read: LIC shares in focus today as premium income for FY 2022-23 climbs 17%

Also read: Vedanta shares in focus as parent cuts gross debt by $1 billion