Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sales continue to plunge…
Demand slides as buyers face taut barriers …
July volumes reflected a continual fall in demand as consumers have
balked at purchases owing to the challenging scenario of high interest
rates and dearer fuel prices. The industry registered a figure of ~1.6
million units in July 2011, down 0.2% on an MoM basis. Weakened
demand highlighted by sluggish sales numbers can be attributed to taxing
macro headwinds. Volumes remained buoyant in the two-wheeler space
on account of persistent growth from Tier-II cities, rural areas and lesser
dependency on vehicle financing. We feel that although consumer
demand is more structural today as compared to previous years, volume
growth would remain stunted (till H1FY12) as the interest rate cycle peaks
out. For FY12E, we maintain our volume estimates of ~13% for the
industry. The volume growth of the industry in July 2011 has been 12.4%
YoY with the passenger car (PV) segments languishing behind (down
1.6% YoY). The commercial vehicle (CV) segment outperformed growing
at 24.4% with MH&CV improving volumes ~10.3% YoY. The two-wheeler
segment growth continued to beat industry growth, growing at ~14.7%
YoY on a high base.
Sales hit by soaring interest rates…
The RBI has hiked interest rates 11 times since March 2010 and its lagged
impact is clearly visible on the demand front in both the CV and PV space.
This decline in demand is expected to sustain as the RBI has shifted its
focus towards containing inflation in the near term, which could lead to
further rate hikes. On the brighter side, if inflation moderates, we can
witness an early peaking of the interest rate cycle.
Global commodities slowing down on global concerns…
Global commodity prices have witnessed a mild correction in several
commodities ranging from oil to metals. Commodity prices ranging from
aluminium to steel have seen a cool off of a couple of percentage points.
Also, one commodity that remains critical to the auto sector and has
slowed down to a slight extent is natural rubber. It has come off its peak
of ~| 235 and is at ~| 210 (down 12%). In our view, global commodity
prices will soften in the near to medium term as the global growth outlook
tapers off from earlier estimates.
Industry outlook
We maintain an optimistic outlook towards volume growth in the sector.
We expect industry wide volume growth of ~13% for FY12E. On an index
performance basis, the BSE Auto index has marginally outperformed the
BSE Sensex with YoY return of -2.6% as compared to -6.7% during the
same period. The demand side, which remained healthy in FY11, has
shown early signs of slowdown amid the challenging macroeconomic
scenario. Though we believe demand is structural, immediate concerns
for the sector like fuel price hikes and higher interest rates could cause
severe concerns for the entire industry as volume growth and profitability
could see softening. In our ICICIdirect.com auto coverage, we remain
bullish on frontline OEM stocks like Tata Motors. In the ancillary coverage,
we find favourable valuation and business growth perspectives in Bharat
Forge and Exide Industries
News & views
• The country's largest auto player, Tata Motors, rolled out three
variants of its recently launched crossover SUV, the Aria. The Aria
4x2 was launched in three trim levels - the Aria Prestige at the topend, the Aria Pleasure and the Aria Pure at the lower-end. The Aria
4x2 range will be available from | 11.61 lakh onwards (exshowroom, Delhi). The Aria range along with the 4x2 range is
being made available in 85 cities through 150 showrooms
• Austrian sports bike maker KTM will launch its first motorcycle,
jointly developed with Bajaj Auto Ltd, in India at the Auto Expo to
be held in Delhi early next year. The company, in which Bajaj Auto
holds nearly a 40% stake, had already launched its first codeveloped bike in Europe in March this year. The bike will be
produced at the Pune facility of Bajaj Auto
• US auto giant Ford has said it would invest $1 billion to build a
vehicle assembly and engine plant in India as it ramps up
production to exploit the country's burgeoning car market. The
new factory in Gujarat will employ around 5,000 workers and will
be Ford's second in India. Ford's move comes close on the heels
of Maruti Suzuki expressing its interest in setting up shop in
Gujarat
• Toyota has announced an investment of ~| 1,650 crore to ramp
up the production capacity of its Indian operations by one lakh
units and for increasing localisation of components by 2014. The
company, which is present in India through a joint venture with
the Kirloskar Group, will invest | 898 crore to expand the
production capacity of the two plants by 2013. Another group firm
will put in an additional | 750 crore to set up aluminium casting
and machining lines by 2014
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sales continue to plunge…
Demand slides as buyers face taut barriers …
July volumes reflected a continual fall in demand as consumers have
balked at purchases owing to the challenging scenario of high interest
rates and dearer fuel prices. The industry registered a figure of ~1.6
million units in July 2011, down 0.2% on an MoM basis. Weakened
demand highlighted by sluggish sales numbers can be attributed to taxing
macro headwinds. Volumes remained buoyant in the two-wheeler space
on account of persistent growth from Tier-II cities, rural areas and lesser
dependency on vehicle financing. We feel that although consumer
demand is more structural today as compared to previous years, volume
growth would remain stunted (till H1FY12) as the interest rate cycle peaks
out. For FY12E, we maintain our volume estimates of ~13% for the
industry. The volume growth of the industry in July 2011 has been 12.4%
YoY with the passenger car (PV) segments languishing behind (down
1.6% YoY). The commercial vehicle (CV) segment outperformed growing
at 24.4% with MH&CV improving volumes ~10.3% YoY. The two-wheeler
segment growth continued to beat industry growth, growing at ~14.7%
YoY on a high base.
Sales hit by soaring interest rates…
The RBI has hiked interest rates 11 times since March 2010 and its lagged
impact is clearly visible on the demand front in both the CV and PV space.
This decline in demand is expected to sustain as the RBI has shifted its
focus towards containing inflation in the near term, which could lead to
further rate hikes. On the brighter side, if inflation moderates, we can
witness an early peaking of the interest rate cycle.
Global commodities slowing down on global concerns…
Global commodity prices have witnessed a mild correction in several
commodities ranging from oil to metals. Commodity prices ranging from
aluminium to steel have seen a cool off of a couple of percentage points.
Also, one commodity that remains critical to the auto sector and has
slowed down to a slight extent is natural rubber. It has come off its peak
of ~| 235 and is at ~| 210 (down 12%). In our view, global commodity
prices will soften in the near to medium term as the global growth outlook
tapers off from earlier estimates.
Industry outlook
We maintain an optimistic outlook towards volume growth in the sector.
We expect industry wide volume growth of ~13% for FY12E. On an index
performance basis, the BSE Auto index has marginally outperformed the
BSE Sensex with YoY return of -2.6% as compared to -6.7% during the
same period. The demand side, which remained healthy in FY11, has
shown early signs of slowdown amid the challenging macroeconomic
scenario. Though we believe demand is structural, immediate concerns
for the sector like fuel price hikes and higher interest rates could cause
severe concerns for the entire industry as volume growth and profitability
could see softening. In our ICICIdirect.com auto coverage, we remain
bullish on frontline OEM stocks like Tata Motors. In the ancillary coverage,
we find favourable valuation and business growth perspectives in Bharat
Forge and Exide Industries
News & views
• The country's largest auto player, Tata Motors, rolled out three
variants of its recently launched crossover SUV, the Aria. The Aria
4x2 was launched in three trim levels - the Aria Prestige at the topend, the Aria Pleasure and the Aria Pure at the lower-end. The Aria
4x2 range will be available from | 11.61 lakh onwards (exshowroom, Delhi). The Aria range along with the 4x2 range is
being made available in 85 cities through 150 showrooms
• Austrian sports bike maker KTM will launch its first motorcycle,
jointly developed with Bajaj Auto Ltd, in India at the Auto Expo to
be held in Delhi early next year. The company, in which Bajaj Auto
holds nearly a 40% stake, had already launched its first codeveloped bike in Europe in March this year. The bike will be
produced at the Pune facility of Bajaj Auto
• US auto giant Ford has said it would invest $1 billion to build a
vehicle assembly and engine plant in India as it ramps up
production to exploit the country's burgeoning car market. The
new factory in Gujarat will employ around 5,000 workers and will
be Ford's second in India. Ford's move comes close on the heels
of Maruti Suzuki expressing its interest in setting up shop in
Gujarat
• Toyota has announced an investment of ~| 1,650 crore to ramp
up the production capacity of its Indian operations by one lakh
units and for increasing localisation of components by 2014. The
company, which is present in India through a joint venture with
the Kirloskar Group, will invest | 898 crore to expand the
production capacity of the two plants by 2013. Another group firm
will put in an additional | 750 crore to set up aluminium casting
and machining lines by 2014
No comments:
Post a Comment