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Indian automobile industry’s performance during the
month of August’11 mirrored the trend of the last few
months with passenger vehicles segment reflecting weak
demand. On the other side, 2-wheelers segment continued
to witness brisk demand. The surprising part is the
resilience shown by medium and heavy commercial
vehicle segment (MHCV) despite higher interest rates and
concerns regarding economic growth, as it continues to
report growth on a high base of last year. Our interaction
with dealers suggests that despite the onset of festive
season, the enquiries and footfalls at passenger vehicle
dealerships’ remain weak. Maruti Suzuki (MSIL) launched
its new ‘Swift’ and despite strong bookings, the company
failed to capitalise on the same due to labour problems
at Manesar plant. Honda is expected to launch its compact
car ‘Brio’ while Toyota is likely to introduce diesel engines
on ‘Etios’ and ‘Liva’ during the month of September.
Commercial vehicle dispatches remained strong with
higher demand for both small commercial vehicles and
MHCV despite concerns over economic growth and higher
interest rates. 2-wheeler dispatches are in a stark contrast
to passenger vehicles with demand remaining robust and
top manufacturers having low pipeline inventory.
Two-wheelers: Industry dispatches touched a new high of
1.28mn units, a growth of 18%. Except for Mahindra & Mahindra,
all players reported strong double digit growth in dispatches.
Passenger Vehicles: Overall industry dispatches are
estimated to be flat at 235k units with decline in domestic
demand being compensated by with higher exports.
Commercial Vehicles: CV demand remains unaffected by
the gloom over automobile industry with both MHCV and LCV
witnessing growth.
Our Viewpoint
We expect passenger vehicle demand to remain soft during
the upcoming festive season on a high base of last year.
However, on a sequential basis, we expect improvement in
demand. We revise our target price on Hero MotoCorp and
BJAUT to Rs2,000 and Rs1,850 discounting FY13E earnings
15.5x and 15x respectively. Our top picks in the sector are
Ashok Leyland, Bajaj Auto and Mahindra & Mahindra.
Visit http://indiaer.blogspot.com/ for complete details �� ��
Indian automobile industry’s performance during the
month of August’11 mirrored the trend of the last few
months with passenger vehicles segment reflecting weak
demand. On the other side, 2-wheelers segment continued
to witness brisk demand. The surprising part is the
resilience shown by medium and heavy commercial
vehicle segment (MHCV) despite higher interest rates and
concerns regarding economic growth, as it continues to
report growth on a high base of last year. Our interaction
with dealers suggests that despite the onset of festive
season, the enquiries and footfalls at passenger vehicle
dealerships’ remain weak. Maruti Suzuki (MSIL) launched
its new ‘Swift’ and despite strong bookings, the company
failed to capitalise on the same due to labour problems
at Manesar plant. Honda is expected to launch its compact
car ‘Brio’ while Toyota is likely to introduce diesel engines
on ‘Etios’ and ‘Liva’ during the month of September.
Commercial vehicle dispatches remained strong with
higher demand for both small commercial vehicles and
MHCV despite concerns over economic growth and higher
interest rates. 2-wheeler dispatches are in a stark contrast
to passenger vehicles with demand remaining robust and
top manufacturers having low pipeline inventory.
Two-wheelers: Industry dispatches touched a new high of
1.28mn units, a growth of 18%. Except for Mahindra & Mahindra,
all players reported strong double digit growth in dispatches.
Passenger Vehicles: Overall industry dispatches are
estimated to be flat at 235k units with decline in domestic
demand being compensated by with higher exports.
Commercial Vehicles: CV demand remains unaffected by
the gloom over automobile industry with both MHCV and LCV
witnessing growth.
Our Viewpoint
We expect passenger vehicle demand to remain soft during
the upcoming festive season on a high base of last year.
However, on a sequential basis, we expect improvement in
demand. We revise our target price on Hero MotoCorp and
BJAUT to Rs2,000 and Rs1,850 discounting FY13E earnings
15.5x and 15x respectively. Our top picks in the sector are
Ashok Leyland, Bajaj Auto and Mahindra & Mahindra.
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