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For April, 2-wheeler sales volume impressed us, whereas cars record sharp slowdown in growth.
In terms of yoy growth, Hero Honda and M&M led the pack to outperform peers, whereas Bajaj
led in mom growth. Sharp drop in car enquires, impact the segment demand for Maruti and Tata
Motors.
April sales volume performance was mixed bag as 2-wheeler company's clock historic peak
volume, whereas cars and CV's record sharp mom dip from the historic peak of March.
In terms of yoy growth, Hero Honda and M&M led the pack with 39.1% and 18.6% growth
respectively. Whereas in terms of mom growth, Bajaj led the pack with 17.2% growth.
Our channel checks suggest car customer enquiries have recorded nearly 20% drop, as rising
fuel and interest rates impact. The slow bank credit and low discounts in April also impacted
in lower conversion of enquiry into actual sales.
In an environment of rising petrol prices, lending rates, our Buys in the sector are Mahindra,
Hero Honda, Tata Motor and Ashok Leyland in that order. We remain cautious and maintain a
Hold rating on Maruti and Sell on Bajaj Auto.
Monthly company sales volume details
Hero Honda continues to surprise us by recording 39% yoy and flat mom sales volume to
clock historic highest sales volume of 517,099 vs RBS est of 475,000. The strong demand
from North India markets, due to marriage season and festival seemed a key driver for
growth. Even though dealer supplies have improved, inventory is below normal levels.
M&M's April sales volume performance is impressive amongst 4-wheeler peers. Automotive
division recorded 19% yoy growth in domestic volume. Tractors continued their growth path to
record +13% yoy growth. Domestic growth seem to be tilted towards new products launched
in mid of CY10.
Tata Motors performance in April (+12.6% yoy) was mixed. Star performers were LCVs (28%
yoy) followed by Utility vehicles (15%). Domestic M&HCV record just 5.9% yoy growth, which
is marginally below our expectation. Cars suffered a major setback as Indigo and Indica both
record sharp drop of 42%yoy. But this was covered-up by Nano tripling sales yoy to clock
10,012 sales.
Maruti recorded just 4.4% yoy growth in total sales volume to 97,115 vs RBS est of 105,000.
Domestic sales volume recorded +8.9% yoy growth to 87,144 vehicles as its largest segment
compact cars record just 1.8% yoy growth. Exports continue on downtrend to record 23% yoy
to 10,011 vehicles. Channel checks highlight, low discounts and sharp drop in enquiries as
reason for poor April sales volume performance.
Bajaj auto recorded strong 17.2% yoy total sales volume growth to 367,309 (just 1% below
historic peak in Oct 10). Exports drive home growth with 59% yoy growth as some of the
March shipments got postponed to April. Management commented that domestic growth was
weak at +5% and was entirely attributed to new product launch Discover 125cc. Adjusted for
new product and export pushover from previous month, sales volume performance doesn't
impress.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For April, 2-wheeler sales volume impressed us, whereas cars record sharp slowdown in growth.
In terms of yoy growth, Hero Honda and M&M led the pack to outperform peers, whereas Bajaj
led in mom growth. Sharp drop in car enquires, impact the segment demand for Maruti and Tata
Motors.
April sales volume performance was mixed bag as 2-wheeler company's clock historic peak
volume, whereas cars and CV's record sharp mom dip from the historic peak of March.
In terms of yoy growth, Hero Honda and M&M led the pack with 39.1% and 18.6% growth
respectively. Whereas in terms of mom growth, Bajaj led the pack with 17.2% growth.
Our channel checks suggest car customer enquiries have recorded nearly 20% drop, as rising
fuel and interest rates impact. The slow bank credit and low discounts in April also impacted
in lower conversion of enquiry into actual sales.
In an environment of rising petrol prices, lending rates, our Buys in the sector are Mahindra,
Hero Honda, Tata Motor and Ashok Leyland in that order. We remain cautious and maintain a
Hold rating on Maruti and Sell on Bajaj Auto.
Monthly company sales volume details
Hero Honda continues to surprise us by recording 39% yoy and flat mom sales volume to
clock historic highest sales volume of 517,099 vs RBS est of 475,000. The strong demand
from North India markets, due to marriage season and festival seemed a key driver for
growth. Even though dealer supplies have improved, inventory is below normal levels.
M&M's April sales volume performance is impressive amongst 4-wheeler peers. Automotive
division recorded 19% yoy growth in domestic volume. Tractors continued their growth path to
record +13% yoy growth. Domestic growth seem to be tilted towards new products launched
in mid of CY10.
Tata Motors performance in April (+12.6% yoy) was mixed. Star performers were LCVs (28%
yoy) followed by Utility vehicles (15%). Domestic M&HCV record just 5.9% yoy growth, which
is marginally below our expectation. Cars suffered a major setback as Indigo and Indica both
record sharp drop of 42%yoy. But this was covered-up by Nano tripling sales yoy to clock
10,012 sales.
Maruti recorded just 4.4% yoy growth in total sales volume to 97,115 vs RBS est of 105,000.
Domestic sales volume recorded +8.9% yoy growth to 87,144 vehicles as its largest segment
compact cars record just 1.8% yoy growth. Exports continue on downtrend to record 23% yoy
to 10,011 vehicles. Channel checks highlight, low discounts and sharp drop in enquiries as
reason for poor April sales volume performance.
Bajaj auto recorded strong 17.2% yoy total sales volume growth to 367,309 (just 1% below
historic peak in Oct 10). Exports drive home growth with 59% yoy growth as some of the
March shipments got postponed to April. Management commented that domestic growth was
weak at +5% and was entirely attributed to new product launch Discover 125cc. Adjusted for
new product and export pushover from previous month, sales volume performance doesn't
impress.
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