M&M:Strong volume growth of 31.5% yoy.:Standard Chartered

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Strong volume growth of 31.5% yoy. Tractor segment
reported highest-ever monthly sales, a growth of
29.3% yoy. Similarly the UV segment grew 44.7%,
reporting the highest-ever sales. YTD volume has
grown 23.8% yoy. Reiterate Outperform.




Strong 31.5% yoy growth. Oct’10 volume grew 31.5% yoy and
11.6% mom to 58,776 units, highest ever after a relatively weak
previous month. Overall, segments have reported strong growth,
except LCVs and three wheelers, which showed negative growth
on yoy and mom basis. Exports grew by strong 40% yoy and
16.7% mom to 2,907 units.

Tractors post record sales. The tractor segment reported the
highest-ever sales of 24,281 units, a 29.3% yoy (and 38.9%
mom) growth. Domestic volume grew 31%, but exports declined
7.5% yoy to 903 units. The launch of an ultra-cheap entry-level
tractor targeted at small and marginal farmers could provide
further impetus to M&M’s tractor volumes over the next 12
months. The YTD volume growth for tractors is at 17% and we
expect residual growth of 7.4%

UV reports highest-ever sales, grows by 44.7% yoy. M&M’s
UV segment reported volume growth of 44.7% yoy and 0.3%
mom to 27,189 units, its highest-ever reported sales numbers.
Domestic volume grew 42.7% yoy but declined 2.4% mom.
Exports growth was strong at 77% yoy and 53% mom to 2,004
units. YTD UV has grown at 20% yoy and residual growth is
expected at 7%.

Decline in three-wheeler and LCV growth. Three-wheeler
volume declined 4.1% yoy and 10% mom to 5,410 units. LCV
volume also declined 2.9% yoy and 23.6% mom to 817 units.
Logan, on the other hand, registered healthy growth of 65.7%
yoy and 7.9% mom to 1,079 units..

2W segment: The 2W segment (not included in our FY11E
volume estimates) grew 212% to 21,204 units. The motorcycle
segment reported sales of 2,664 units. Cumulative sales for this
segment stood at 92,034 units.

Valuation. YTD total volume has grown 23.8% yoy vs. our
estimate of 14.1%. The estimated residual growth rate for FY11
stands at 1.8% (excluding LCV and Logan). Maintain
Outperform.