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Autos
Potential Result Underperformers: Maruti Suzuki
�� We expect double digit YoY growth in sales for the sector, driven by strong
growth in two wheelers. However on a sequential basis, sales are expected
to be flat, despite seasonally strong quarter due to decline in passenger cars
as well as production issues at Maruti. Also, we expect profit to decline due
to inflationary cost pressures impacting margins as well as higher interest
and depreciation charges.
�� Two wheeler companies will likely register the strongest yoy growth rates
followed by tractors/commercial vehicle majors. Car industry, mainly Maruti
will be impacted by production loss.
�� We expect Tata Motors’ consolidated sales to grow 18% YoY, driven by 26%
increase in JLR sales. However, standalone sales would be a drag, up just
8% yoy. EBITDA growth at 7% to Rs. 44.9bn to be restricted by 130bps yoy
decline in margins at 13.2%. Standalone margins are expected to register
80bps decline at 8.9% due to losses in small car business. JLR margins
would largely be flat qoq as favourable currency movement counters weaker
mix. We expect consolidated profit to decline 6% at Rs19.7bn, reflecting 10%
decline in standalone operations due to high depreciation expenses.
�� Amongst other commercial vehicle companies, we expect Ashok Leyland’s
EBITDA to increase by just 1% yoy, despite 8% growth in sales due to
margin contraction on lower volumes. Net profit is expected to decline 22%
yoy on negative operating leverage. On the other hand, we expect Eicher
Motor to register 84% increase in EBITDA due to higher sales and improved
efficiencies in both the two-wheeler business and the commercial vehicle
business post-integration with Volvo, leading to margin recovery of 330 bps
yoy. Profit will grow similar 85% to Rs718mn.
�� We expect Maruti’s sales to decline by 10% qoq (16% yoy), due to similar
decline in volumes on labour unrest at Manesar plant. Margins are expected
to decline 145bps yoy and 50bps qoq due to higher input costs, discounts
and negative operating leverage. We therefore expect EBITDA to decline by
28% yoy and net profit by similar 28% yoy to Rs.4.3bn.
�� We expect M&M to register 33% yoy growth in sales, driven by 30% increase
in volumes. EBITDA to grow 14% yoy (8% qoq) due to 230bps decline in
margins on worsening mix, higher input costs and vat drawback. We expect
profit to grow 8% yoy to Rs.7.7bn, restricted by increase in depreciation and
tax expense. On a sequential basis profit are expected to grow 27%, due to
seasonally high other income of Rs.2.0bn as compared to Rs.0.25bn in
Q1FY12.
�� In two wheelers, despite strong sales for both Hero MotoCorp and Bajaj
Auto, EBITDA growth will be slower due to yoy margin comparison. On a
sequential basis, we expect slight improvement due to top line. TVS Motor
should be the strongest performer with 24% EBITDA growth, also due to
lower comparable base. Profit should grow by 28% yoy due to lower lower
interest expense.
Apollo Tyres standalone operations to benefit from price hikes and ramp up
at Chennai radial plant. Therefore, we estimate profit to grow 10% yoy to
Rs 411mn, albeit lower than EBITDA growth of 26% yoy, due to higher
depreciation and interest charges. On a consolidated basis, we expect sales
to grow 26% yoy to Rs 24.6bn, EBITDA at Rs 2.3bn (up 25%) and profit at
Rs 588mn (up 10% yoy).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Autos
Potential Result Underperformers: Maruti Suzuki
�� We expect double digit YoY growth in sales for the sector, driven by strong
growth in two wheelers. However on a sequential basis, sales are expected
to be flat, despite seasonally strong quarter due to decline in passenger cars
as well as production issues at Maruti. Also, we expect profit to decline due
to inflationary cost pressures impacting margins as well as higher interest
and depreciation charges.
�� Two wheeler companies will likely register the strongest yoy growth rates
followed by tractors/commercial vehicle majors. Car industry, mainly Maruti
will be impacted by production loss.
�� We expect Tata Motors’ consolidated sales to grow 18% YoY, driven by 26%
increase in JLR sales. However, standalone sales would be a drag, up just
8% yoy. EBITDA growth at 7% to Rs. 44.9bn to be restricted by 130bps yoy
decline in margins at 13.2%. Standalone margins are expected to register
80bps decline at 8.9% due to losses in small car business. JLR margins
would largely be flat qoq as favourable currency movement counters weaker
mix. We expect consolidated profit to decline 6% at Rs19.7bn, reflecting 10%
decline in standalone operations due to high depreciation expenses.
�� Amongst other commercial vehicle companies, we expect Ashok Leyland’s
EBITDA to increase by just 1% yoy, despite 8% growth in sales due to
margin contraction on lower volumes. Net profit is expected to decline 22%
yoy on negative operating leverage. On the other hand, we expect Eicher
Motor to register 84% increase in EBITDA due to higher sales and improved
efficiencies in both the two-wheeler business and the commercial vehicle
business post-integration with Volvo, leading to margin recovery of 330 bps
yoy. Profit will grow similar 85% to Rs718mn.
�� We expect Maruti’s sales to decline by 10% qoq (16% yoy), due to similar
decline in volumes on labour unrest at Manesar plant. Margins are expected
to decline 145bps yoy and 50bps qoq due to higher input costs, discounts
and negative operating leverage. We therefore expect EBITDA to decline by
28% yoy and net profit by similar 28% yoy to Rs.4.3bn.
�� We expect M&M to register 33% yoy growth in sales, driven by 30% increase
in volumes. EBITDA to grow 14% yoy (8% qoq) due to 230bps decline in
margins on worsening mix, higher input costs and vat drawback. We expect
profit to grow 8% yoy to Rs.7.7bn, restricted by increase in depreciation and
tax expense. On a sequential basis profit are expected to grow 27%, due to
seasonally high other income of Rs.2.0bn as compared to Rs.0.25bn in
Q1FY12.
�� In two wheelers, despite strong sales for both Hero MotoCorp and Bajaj
Auto, EBITDA growth will be slower due to yoy margin comparison. On a
sequential basis, we expect slight improvement due to top line. TVS Motor
should be the strongest performer with 24% EBITDA growth, also due to
lower comparable base. Profit should grow by 28% yoy due to lower lower
interest expense.
Apollo Tyres standalone operations to benefit from price hikes and ramp up
at Chennai radial plant. Therefore, we estimate profit to grow 10% yoy to
Rs 411mn, albeit lower than EBITDA growth of 26% yoy, due to higher
depreciation and interest charges. On a consolidated basis, we expect sales
to grow 26% yoy to Rs 24.6bn, EBITDA at Rs 2.3bn (up 25%) and profit at
Rs 588mn (up 10% yoy).
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