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Automakers started the new year with a strong performance, as domestic demand
remained buoyant and consumer sentiment stayed upbeat. The strong
performance was despite the fact that major automakers had increased prices in
January 2011 to offset the impact of rising raw-material costs. Among the majors,
Maruti Suzuki (Maruti), Mahindra & Mahindra (M&M) and Hero Honda (HH)
reported better-than-expected volumes during the month. Overall, sales
maintained the strong growth momentum; however, the recent product price and
fuel price increases coupled with higher interest rates are the expected headwinds
going ahead.
Tata Motors (TML) reported 15.2% yoy growth in total volumes in January 2011,
led by better-than-expected 14.3% yoy growth in the passenger vehicles (PV) and
15.8% yoy growth in the commercial vehicles (CV) segments. In the PV segment,
the company reported total offtake of 30,632 units, largely due to a 67.5% yoy
(up 15.9% mom) increase in Nano volumes and a 16.5% yoy (up 61.6% mom)
increase in Indigo vehicles. Within the CV space, total volumes stood at 44,791
units, with the M&HCV and LCV segments registering growth of 11.4% and 19.2%
yoy, respectively.
Maruti reported robust sales volumes, slightly ahead of our estimates, with overall
volume growth of 14.7% yoy to 109,743 units (95,649). On a sequential basis,
volumes grew by strong 10.6%. Volume growth during the month was led by
strong performance in the domestic market, which grew by 23.8% yoy (12.2%
mom), selling 100,422 units. Maruti maintained its strong volume momentum in
the A2, A3 and C segments, posting 23.8%, 32.6% and 27.7% yoy growth,
respectively, in January 2011.
M&M registered strong volume growth of 21.7% yoy and 13.5% mom in total
sales to 57,217 units (47,028) in January 2011, aided by 21.8% yoy growth in
automotive sales (36,718 units) and 21.4% yoy growth in tractor sales (20,499
units). Within the automotive segment, the four-wheeler pick-up segment grew by
17.5% yoy on the back of strong performance from GIO and Maxximo. Logan
sales continued the strong momentum, registering 101.8% yoy growth. The threewheelers
segment registered 36.8% yoy growth. In the tractors space, domestic
sales reported a strong 22% yoy and 28.4% mom increase in volumes to 19,430
units (15,925), while exports volumes increased by 12.1% yoy.
Two-wheelers and three-wheelers: Bajaj Auto (BAL) reported 17.9% yoy growth, in
line with our expectations, with motorcycle sales rising by 18.3% yoy and threewheeler
sales posting 15.1% yoy growth. HH registered slightly better-thanexpected
19.7% yoy growth in sales volume, selling 466,524 units (389,802), led
by a refreshed product range and new vehicle launches. TVS Motor (TVS) reported
marginally lower-than-expected 29.7% yoy sales growth, led by 59.7% yoy growth
in scooter sales and 23.8% yoy growth in motorcycle sales.
Tata Motors
TML reported strong 15.2% yoy and 11.8% mom growth in sales to 75,423
units (65,478), led by better-than-expected volumes in the PV segment.
The CV segment reported 15.8% yoy growth, in line with our expectations,
aided by 11.4% and 19.2% yoy growth in the M&HCV and LCV segments,
respectively.
The PV segment posted slightly better-than-expected volume numbers, with
14.3% yoy growth, and reported its highest sales for the current fiscal.
Nano volumes maintained their momentum, registering 67.5% yoy and 15.9%
mom growth to 6,703 units (4,001) in January.
The Indigo and Indica range of cars reported strong 61.6% and 78.8% mom
growth respectively, during the month; however, sales of Indica declined by
7.5% on a yoy basis.
Maruti
Maruti reported a slightly better-than-estimated 14.7% yoy and 10.6% mom
growth in total volumes to 109,743 units (95,649), owing to the strong
demand momentum in the domestic market.
The company posted robust 23.8% yoy and 12.2% mom growth in domestic
volumes, while exports continued to remain sluggish and fell by 36% yoy.
Maruti maintained its strong volume momentum in the A2, A3 and C
segments, posting 23.8%, 32.6% and 27.7% yoy growth, respectively, in
January 2011.
In the B segment, sales grew by 42.2% yoy.
Mahindra & Mahindra
M&M reported strong monthly sales growth of 21.7% yoy and 13.5% mom to
57,217 units (47,028).
The tractor segment grew by strong 21.4% yoy and 25.5% mom, with
domestic tractor sales surging by 22% yoy and 28.4% mom. Tractor exports
registered decent 12.1% yoy growth. Tractor sales continued to benefit from
the easing supply constraints during the month.
The automotive segment grew by robust 21.8% yoy and posted its highest-ever
monthly volumes during January 2011. Volume growth was driven by strong
sales performance by the Logan, four-wheeler pick-up, LCV and three-wheeler
segments. Logan continued to witness growth traction and registered 101.8%
yoy growth (on a low base). The four-wheeler pick-up segment grew by
healthy 17.5%, backed by good momentum in the sales of Maxximo and Gio.
The three-wheeler and LCV segments posted sales growth of 36.8% and
27.7% yoy, respectively.
During the month, M&M launched Genio – a pick-up vehicle based on the
Xylo platform priced at `4.99lakhs (BS3 variant, ex-showroom Navi Mumbai).
Management has indicated its plan to launch 8–10 new products across
segments by March 2012.
Bajaj Auto
BAL reported overall sales growth of 17.9% yoy and 13.3% mom to 313,583
units (266,018), in line with our estimates.
The motorcycle segment posted strong 18.3% yoy and 13.1% mom growth
during January 2011 with Pulsar and Discover accounting for ~68% of the
overall motorcycle sales.
The three-wheeler segment recorded 15.1% yoy and 14.6% mom growth to
37,961 units (32,969).
Exports also registered strong yoy growth of 44.4%.
Going forward, with the addition of 130 new dealers from April 2011,
management expects the monthly run-rate to increase to 350,000 units from
the current 300,000 units.
Hero Honda
HH reported robust 19.7% yoy growth in sales volume, selling 466,524 units
(389,802), led by strong momentum across all the segments. On a sequential
basis, volumes declined by 6.9% on account of high base in December 2010.
Refreshed product ranges, new product launches and innovative branding and
marketing initiatives continued to drive the company’s performance on the
volume front. New Super Splendor and Splendor Pro launched in September
2010 also helped the company in posting better volumes.
TVS Motor
TVS Motor reported marginally lower-than-expected 29.7% yoy growth in
volumes to 165,152 units (127,288), led by a 31% yoy increase in domestic
sales to 145,654 units (111,214).
Overall two-wheeler volumes jumped by 28.8% yoy, owing to impressive
59.7% yoy growth in scooter sales (40,736 units) and a 23.8% yoy increase in
motorcycle volumes (67,721 units).
Three-wheeler sales continued to report strong performance and registered
100.4% yoy growth in sales to 3,427 units (1,710).
Outlook
We remain positive on the Indian auto sector. Overall, we estimate auto volumes
to register a ~13% CAGR over FY2010–12E, aided by the improved business
environment for the sector. Over the long term, comparatively low penetration
levels, a healthy economic environment and favourable demographics supported
by higher per-capita income levels are likely to help the auto companies in
sustaining their top-line growth. However, higher input costs and interest rates are
the anticipated headwinds that could affect the sector’s volume and earnings
growth. We expect rising input costs to restrict profitability, despite having a
positive view on demand. We prefer stocks where strong and improving
fundamentals could deliver positive earnings surprises. We continue to prefer
companies in the four-wheeler space over companies in the two-wheeler space,
considering reasonable valuations and volume growth visibility.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automakers started the new year with a strong performance, as domestic demand
remained buoyant and consumer sentiment stayed upbeat. The strong
performance was despite the fact that major automakers had increased prices in
January 2011 to offset the impact of rising raw-material costs. Among the majors,
Maruti Suzuki (Maruti), Mahindra & Mahindra (M&M) and Hero Honda (HH)
reported better-than-expected volumes during the month. Overall, sales
maintained the strong growth momentum; however, the recent product price and
fuel price increases coupled with higher interest rates are the expected headwinds
going ahead.
Tata Motors (TML) reported 15.2% yoy growth in total volumes in January 2011,
led by better-than-expected 14.3% yoy growth in the passenger vehicles (PV) and
15.8% yoy growth in the commercial vehicles (CV) segments. In the PV segment,
the company reported total offtake of 30,632 units, largely due to a 67.5% yoy
(up 15.9% mom) increase in Nano volumes and a 16.5% yoy (up 61.6% mom)
increase in Indigo vehicles. Within the CV space, total volumes stood at 44,791
units, with the M&HCV and LCV segments registering growth of 11.4% and 19.2%
yoy, respectively.
Maruti reported robust sales volumes, slightly ahead of our estimates, with overall
volume growth of 14.7% yoy to 109,743 units (95,649). On a sequential basis,
volumes grew by strong 10.6%. Volume growth during the month was led by
strong performance in the domestic market, which grew by 23.8% yoy (12.2%
mom), selling 100,422 units. Maruti maintained its strong volume momentum in
the A2, A3 and C segments, posting 23.8%, 32.6% and 27.7% yoy growth,
respectively, in January 2011.
M&M registered strong volume growth of 21.7% yoy and 13.5% mom in total
sales to 57,217 units (47,028) in January 2011, aided by 21.8% yoy growth in
automotive sales (36,718 units) and 21.4% yoy growth in tractor sales (20,499
units). Within the automotive segment, the four-wheeler pick-up segment grew by
17.5% yoy on the back of strong performance from GIO and Maxximo. Logan
sales continued the strong momentum, registering 101.8% yoy growth. The threewheelers
segment registered 36.8% yoy growth. In the tractors space, domestic
sales reported a strong 22% yoy and 28.4% mom increase in volumes to 19,430
units (15,925), while exports volumes increased by 12.1% yoy.
Two-wheelers and three-wheelers: Bajaj Auto (BAL) reported 17.9% yoy growth, in
line with our expectations, with motorcycle sales rising by 18.3% yoy and threewheeler
sales posting 15.1% yoy growth. HH registered slightly better-thanexpected
19.7% yoy growth in sales volume, selling 466,524 units (389,802), led
by a refreshed product range and new vehicle launches. TVS Motor (TVS) reported
marginally lower-than-expected 29.7% yoy sales growth, led by 59.7% yoy growth
in scooter sales and 23.8% yoy growth in motorcycle sales.
Tata Motors
TML reported strong 15.2% yoy and 11.8% mom growth in sales to 75,423
units (65,478), led by better-than-expected volumes in the PV segment.
The CV segment reported 15.8% yoy growth, in line with our expectations,
aided by 11.4% and 19.2% yoy growth in the M&HCV and LCV segments,
respectively.
The PV segment posted slightly better-than-expected volume numbers, with
14.3% yoy growth, and reported its highest sales for the current fiscal.
Nano volumes maintained their momentum, registering 67.5% yoy and 15.9%
mom growth to 6,703 units (4,001) in January.
The Indigo and Indica range of cars reported strong 61.6% and 78.8% mom
growth respectively, during the month; however, sales of Indica declined by
7.5% on a yoy basis.
Maruti
Maruti reported a slightly better-than-estimated 14.7% yoy and 10.6% mom
growth in total volumes to 109,743 units (95,649), owing to the strong
demand momentum in the domestic market.
The company posted robust 23.8% yoy and 12.2% mom growth in domestic
volumes, while exports continued to remain sluggish and fell by 36% yoy.
Maruti maintained its strong volume momentum in the A2, A3 and C
segments, posting 23.8%, 32.6% and 27.7% yoy growth, respectively, in
January 2011.
In the B segment, sales grew by 42.2% yoy.
Mahindra & Mahindra
M&M reported strong monthly sales growth of 21.7% yoy and 13.5% mom to
57,217 units (47,028).
The tractor segment grew by strong 21.4% yoy and 25.5% mom, with
domestic tractor sales surging by 22% yoy and 28.4% mom. Tractor exports
registered decent 12.1% yoy growth. Tractor sales continued to benefit from
the easing supply constraints during the month.
The automotive segment grew by robust 21.8% yoy and posted its highest-ever
monthly volumes during January 2011. Volume growth was driven by strong
sales performance by the Logan, four-wheeler pick-up, LCV and three-wheeler
segments. Logan continued to witness growth traction and registered 101.8%
yoy growth (on a low base). The four-wheeler pick-up segment grew by
healthy 17.5%, backed by good momentum in the sales of Maxximo and Gio.
The three-wheeler and LCV segments posted sales growth of 36.8% and
27.7% yoy, respectively.
During the month, M&M launched Genio – a pick-up vehicle based on the
Xylo platform priced at `4.99lakhs (BS3 variant, ex-showroom Navi Mumbai).
Management has indicated its plan to launch 8–10 new products across
segments by March 2012.
Bajaj Auto
BAL reported overall sales growth of 17.9% yoy and 13.3% mom to 313,583
units (266,018), in line with our estimates.
The motorcycle segment posted strong 18.3% yoy and 13.1% mom growth
during January 2011 with Pulsar and Discover accounting for ~68% of the
overall motorcycle sales.
The three-wheeler segment recorded 15.1% yoy and 14.6% mom growth to
37,961 units (32,969).
Exports also registered strong yoy growth of 44.4%.
Going forward, with the addition of 130 new dealers from April 2011,
management expects the monthly run-rate to increase to 350,000 units from
the current 300,000 units.
Hero Honda
HH reported robust 19.7% yoy growth in sales volume, selling 466,524 units
(389,802), led by strong momentum across all the segments. On a sequential
basis, volumes declined by 6.9% on account of high base in December 2010.
Refreshed product ranges, new product launches and innovative branding and
marketing initiatives continued to drive the company’s performance on the
volume front. New Super Splendor and Splendor Pro launched in September
2010 also helped the company in posting better volumes.
TVS Motor
TVS Motor reported marginally lower-than-expected 29.7% yoy growth in
volumes to 165,152 units (127,288), led by a 31% yoy increase in domestic
sales to 145,654 units (111,214).
Overall two-wheeler volumes jumped by 28.8% yoy, owing to impressive
59.7% yoy growth in scooter sales (40,736 units) and a 23.8% yoy increase in
motorcycle volumes (67,721 units).
Three-wheeler sales continued to report strong performance and registered
100.4% yoy growth in sales to 3,427 units (1,710).
Outlook
We remain positive on the Indian auto sector. Overall, we estimate auto volumes
to register a ~13% CAGR over FY2010–12E, aided by the improved business
environment for the sector. Over the long term, comparatively low penetration
levels, a healthy economic environment and favourable demographics supported
by higher per-capita income levels are likely to help the auto companies in
sustaining their top-line growth. However, higher input costs and interest rates are
the anticipated headwinds that could affect the sector’s volume and earnings
growth. We expect rising input costs to restrict profitability, despite having a
positive view on demand. We prefer stocks where strong and improving
fundamentals could deliver positive earnings surprises. We continue to prefer
companies in the four-wheeler space over companies in the two-wheeler space,
considering reasonable valuations and volume growth visibility.
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