UBS ::India Auto Sector Aug’11: PVs lackluster, MHCVs pick up momentum

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UBS Investment Research
India Auto Sector
Aug’11: PVs lackluster, MHCVs pick up
m omentum
􀂄 PV: Maruti and Tata Motors continue to report negative growth
Maruti domestic volumes declined 17% yoy (+16% mom). Hyundai domestic sales
declined 7% yoy. Tata Motors reported decline of 33% yoy for PVs with cars
down 39% yoy (inc. Nano which declined 85% YoY) offset by 15% YoY increase
in UVs. M&M UV sales growth slowed to 7% YoY (-11% mom).
􀂄 2Ws and tractors: strong growth continues
Hero Motocorp 2W sales grew 19% yoy (3% mom). TVS 2W domestic sales
slowed (+11% YoY) while 2W exports grew strongly by 39% yoy. TVS moped
volumes recorded 1% yoy growth, scooters grew 28% yoy and motorcycles sales
were up 17% yoy. TVS domestic 3W volumes were down 30% yoy, while exports
recorded strong growth (+188% yoy). M&M domestic tractors shipment grew 21%
YoY; exports declined by 4% YoY
􀂄 MHCVs pick up momentum, LCV continues to shine
Tata Motor’s LCV shipments grew strongly by 27% YoY, MHCV sales gained
momentum with 12% yoy. M&M LCVs (4W pickups) continued to report strong
growth (+67% YoY).
􀂄 Preferred picks: Maruti, M&M and Hero Honda
We like Maruti as we believe margins have bottomed and valuations are cheap. We
continue to be positive on M&M and Hero Motocorp as key beneficiaries of strong
growth in rural economy