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India Equity Research Reports, IPO and Stock News
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Automobiles India
No signs of slowdown as yet. January auto sales were ahead of our expectations
except for Maruti Suzuki. Key highlights were – (1) Hero Honda corrected some
inventory build-up during the month, in our view, (2) Maruti export volumes
disappointed because of slowdown in European exports, (3) Mahindra tractor volumes
continue to surprise positively and (4) commercial vehicle volumes have softened a bit
mom. We see upside risk to our volume estimates for Mahindra & Mahindra.
Hero Honda corrects some inventory build-up, in our view
Two-wheeler volumes for Hero Honda and TVS Motors were up 20% yoy and 30% yoy,
respectively, as demand momentum remains fairly robust. Hero Honda sales were down 7% mom
indicating that company might have corrected some inventory while TVS Motors domestic
motorcycle sales were up 8% mom. Scooter segment sales were flat mom while moped sales
declined by 18% mom for TVS Motors.
Mahindra and Maruti sales remain buoyant
Mahindra sales surprised positively for second month in a row after a sharp bounceback by
passenger utility vehicles (+11% yoy ) and robust growth in Maxximo & Gio volumes (+18% yoy).
Tractor sales were also robust (+21% yoy, 25% mom) which bodes well for Mahindra’s margins.
Company plans to launch six to seven new variants of light commercial vehicles, variant of Xylo
and a new SUV over the next 12-18 months which should keep volume growth strong, in our
view. Maruti Suzuki reported 15% yoy growth in total volumes slightly below expectations. While
domestic volumes were up 24% yoy, exports declined by 36% yoy which dragged overall volume
growth. Retail sales were 80,000 in Jan 2011 vs 138,000 in December (all-time high sales) and
high retail sales in Dec should not be taken as a trend. Discounts are expected to decline qoq in
4QFY11E.
Tata Motors: Commercial vehicle sales softened a bit mom but passenger cars increased sharply
Medium commercial vehicle sales declined by 4% mom lower than expectations as January is a
seasonally better month than December. However, as December sales rebounded very sharply a
slight moderation could be expected. Passenger car volumes rose sharply ( 13% yoy, 48% mom)
driven by (1) rebound in Nano sales (6,703 units) boosted by lower finance rates, Rs99
maintenance contract and a 4-year free warranty scheme, and (2) robust growth in Indigo sales
(grew by 17% yoy). Tata Motors had raised prices by Rs3,000-15,000 in passenger vehicles and
Rs1,500-30,000 in commercial vehicles on January 1 to offset raw material cost pressures.
We see upside risks to M&M volume estimates
We believe Mahindra & Mahindra volume numbers for last two months have surprised us
positively. Management indicated that supply issues have been sorted out and volumes have
improved sequentially. We see upside risk to our volume estimates as M&M needs to report 6%
yoy decline in volumes for Feb-Mar 2011 to achieve our volume estimates but we believe demand
is quite buoyant as of now and we don’t expect volume growth to decline in Feb-Mar 2011.
Mahindra & Mahindra is our top pick in the sector.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobiles India
No signs of slowdown as yet. January auto sales were ahead of our expectations
except for Maruti Suzuki. Key highlights were – (1) Hero Honda corrected some
inventory build-up during the month, in our view, (2) Maruti export volumes
disappointed because of slowdown in European exports, (3) Mahindra tractor volumes
continue to surprise positively and (4) commercial vehicle volumes have softened a bit
mom. We see upside risk to our volume estimates for Mahindra & Mahindra.
Hero Honda corrects some inventory build-up, in our view
Two-wheeler volumes for Hero Honda and TVS Motors were up 20% yoy and 30% yoy,
respectively, as demand momentum remains fairly robust. Hero Honda sales were down 7% mom
indicating that company might have corrected some inventory while TVS Motors domestic
motorcycle sales were up 8% mom. Scooter segment sales were flat mom while moped sales
declined by 18% mom for TVS Motors.
Mahindra and Maruti sales remain buoyant
Mahindra sales surprised positively for second month in a row after a sharp bounceback by
passenger utility vehicles (+11% yoy ) and robust growth in Maxximo & Gio volumes (+18% yoy).
Tractor sales were also robust (+21% yoy, 25% mom) which bodes well for Mahindra’s margins.
Company plans to launch six to seven new variants of light commercial vehicles, variant of Xylo
and a new SUV over the next 12-18 months which should keep volume growth strong, in our
view. Maruti Suzuki reported 15% yoy growth in total volumes slightly below expectations. While
domestic volumes were up 24% yoy, exports declined by 36% yoy which dragged overall volume
growth. Retail sales were 80,000 in Jan 2011 vs 138,000 in December (all-time high sales) and
high retail sales in Dec should not be taken as a trend. Discounts are expected to decline qoq in
4QFY11E.
Tata Motors: Commercial vehicle sales softened a bit mom but passenger cars increased sharply
Medium commercial vehicle sales declined by 4% mom lower than expectations as January is a
seasonally better month than December. However, as December sales rebounded very sharply a
slight moderation could be expected. Passenger car volumes rose sharply ( 13% yoy, 48% mom)
driven by (1) rebound in Nano sales (6,703 units) boosted by lower finance rates, Rs99
maintenance contract and a 4-year free warranty scheme, and (2) robust growth in Indigo sales
(grew by 17% yoy). Tata Motors had raised prices by Rs3,000-15,000 in passenger vehicles and
Rs1,500-30,000 in commercial vehicles on January 1 to offset raw material cost pressures.
We see upside risks to M&M volume estimates
We believe Mahindra & Mahindra volume numbers for last two months have surprised us
positively. Management indicated that supply issues have been sorted out and volumes have
improved sequentially. We see upside risk to our volume estimates as M&M needs to report 6%
yoy decline in volumes for Feb-Mar 2011 to achieve our volume estimates but we believe demand
is quite buoyant as of now and we don’t expect volume growth to decline in Feb-Mar 2011.
Mahindra & Mahindra is our top pick in the sector.
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