UBS: India Auto Sector Jan’11 – MHCV slows, PV robust

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UBS Investment Research
India Auto Sector
Jan’11 – MHCV slows, PV robust
􀂄 Passenger vehicles: Maruti reports strong domestic growth
Maruti volumes grew 15% YoY (+11%MoM) driven by strong growth in domestic
volumes (+24% YoY). Domestic segment growth was helped by strong growth in
A2 (+24% YoY), A3 (+33% YoY), and Van segment (+28% YoY). Exports
declined 36% YoY. M&M passenger UVs sales increased 11% YoY. Hyundai’s
domestic sales increased 2% YoY. In mid-Jan’11, Maruti increased prices of all its
models except Alto K10 in the range of Rs.1,000-8,000.

􀂄 Hero Honda 2W and M&M domestic tractors show steady growth
Hero Honda 2W sales grew 20% YoY (-7% MoM). M&M 3Ws grew at 37% YoY
and 4-W pick ups (including Gio & Maximmo) recorded a growth of 18% YoY.
M&M domestic tractor shipments grew at 22% and exports recorded a growth of
12% YoY.
􀂄 Tata Motors – MHCV growth slows
Tata Motors LCV segment grew 17%YoY (-3% MoM), while M&HCV segment
grew by 5%YoY (-5% MoM). Passenger vehicles registered an increase of 15%
YoY. Nano shipments increased 16% MoM to 6703 units. Sales of Indica declined
by 7% YoY while sales of Indigo increased by 17% YoY. The UVs segment had a
growth of 26%YoY (+61% MoM).
􀂄 Sector valuation attractive
We expect rural growth to remain strong in FY12 and prefer Hero Honda due to its
high rural exposure. We like Maruti given margins have bottomed and valuations
are compelling. We also like Tata Motors given strong outlook for JLR.