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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Resilient volumes amid taxing macros…
Volume momentum regained…
The auto industry shifted gears and clocked enhanced volumes (up 3.8%
MoM) in November after a lacklustre October. The overall auto industry
grew 24.2% YoY to ~17.3 lakh driven by robust two-wheeler sales (up
27% YoY) and improved volumes in the PV segment (up 11.8% YoY).
However, macroeconomic headwinds in the form of high interest rates
and soaring fuel prices continue to plague interest rate sensitive segments
like M&HCV and passenger cars. On the positive front, the LCV space
continued its growth momentum (47.5% YoY) pulling CV growth to 33.4%
YoY.
Normalcy returning to PV via Maruti… two wheelers remain buoyant…
So far, PV segment sales had been experiencing a torrid time in FY12.
However, November provided respite on the growth front with overall
sales in the category up 11.8% YoY. Market leader Maruti is gradually
achieving pre-strike production levels and is expected to complete the
ramp up by Q4FY12. Major players like Tata Motors and Hyundai Motors
witnessed sequential volume rise of 10.4% and 18.1% in the PV segment.
The successful launch of the XUV 500 and robust Bolero and Scorpio
sales drove M&M’s UV portfolio up 56.9% YoY. However, the overall
consumer sentiment in the passenger car segment continues to be
dampened owing to higher cost of vehicle ownership. The Society of
Indian Automobile Manufacturers (SIAM) had recently pruned its
passenger car growth forecast for FY12 to 2-4%. Thus far, growth has
been a tepid 0.9% YTD. On a brighter note, two-wheeler sales continued
to march ahead with 27% YoY growth. Key players like Hero MotoCorp
and Bajaj Auto posted robust YoY volume growth of 27.4% and 25.3%,
respectively. HMSI replaced TVS Motors as the third largest player in the
country with domestic sales advancing 59.0% to ~1.9 lakh units. Lesser
dependence on financing coupled with robust demand from Tier II cities
and rural areas have driven 17.9% YTD growth in the segment. However,
the sales growth is likely to moderate, going ahead, with the higher base
effect kicking in.
Too early to be upbeat…outlook remains cautious…
The recent petrol price cuts coupled with expectations of an interest rate
cut by the RBI is expected to slightly improve waning consumer
sentiments. The negative IIP growth number of -5.1% in October, the first
time in nearly two years, lends credence to the same. This coupled with
softening commodity prices would result in lower cost of ownership.
However, on the flip side, a further increase in petrol prices and levy of an
additional duty on diesel vehicles could negatively impact passenger
vehicle demand. Moreover, one commodity that remains critical to the
auto sector i.e. natural rubber has moderated from its peak in February
and is currently at ~| 204. According to our estimates, global commodity
prices may soften slightly as the global growth outlook seems to taper off.
Industry outlook
We maintain our stance of ~13% volume growth in FY12E and remain
optimistic on the growth prospects of the sector driven by low penetration
levels, favourable demographics and rising income levels. On an index
performance basis, the BSE Auto index has performed better than the BSE
Sensex with YoY return of -15.5% vs. -18.8% during the same period.
Among our I-direct auto coverage, we remain bullish on frontline OEM
stocks like Tata Motors. In the ancillary coverage, we find favourable
valuation in Exide Industries.
News & views
• Maruti Suzuki India’s managing director has announced that the
company will launch new vehicles in the sports utility and multi
utility segment to regain 50% market share by 2015. Maruti sells
15 models in the Indian market and almost a dozen of these are in
the compact vehicle segment. It has lost ~5% market share this
year due to prolonged workers strike in Manesar plant, from
where most new cars roll out
• Korean auto major Hyundai Motor is planning to launch
commercial vehicles in India. It is currently studying the Indian
market to launch commercial vehicles as part of its global plan to
strengthen the segment. The company mainly sells compact cars
and is considering introducing high-end and premium trucks in the
country
• Japanese small car major Suzuki Motor Corporation is considering
launching electric vehicles in India although it sees infrastructure
as a big challenge. With the demand for diesel cars very high in
India, the company is lining up more diesel engine cars for the
country
• Two-wheeler maker India Yamaha Motor has said it will expand its
production capacity by 4 lakh units next year with an investment
of about | 50 crore. The company will enhance the capacity of its
Surajpur plant in Uttar Pradesh. India Yamaha Motor has another
plant in Faridabad where it manufacturers engines
• Bajaj Auto has launched its new Boxer 150 motorcycle, with an
engine capacity of 150 cc, in the Egyptian market. The Boxer 150
is equipped with ExhausTec technology, which is environmentally
friendly and fuel-efficient. Bajaj vehicles are assembled and
marketed by Ghabbour Auto, the leading company in the
automotive industry in Egyp
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Resilient volumes amid taxing macros…
Volume momentum regained…
The auto industry shifted gears and clocked enhanced volumes (up 3.8%
MoM) in November after a lacklustre October. The overall auto industry
grew 24.2% YoY to ~17.3 lakh driven by robust two-wheeler sales (up
27% YoY) and improved volumes in the PV segment (up 11.8% YoY).
However, macroeconomic headwinds in the form of high interest rates
and soaring fuel prices continue to plague interest rate sensitive segments
like M&HCV and passenger cars. On the positive front, the LCV space
continued its growth momentum (47.5% YoY) pulling CV growth to 33.4%
YoY.
Normalcy returning to PV via Maruti… two wheelers remain buoyant…
So far, PV segment sales had been experiencing a torrid time in FY12.
However, November provided respite on the growth front with overall
sales in the category up 11.8% YoY. Market leader Maruti is gradually
achieving pre-strike production levels and is expected to complete the
ramp up by Q4FY12. Major players like Tata Motors and Hyundai Motors
witnessed sequential volume rise of 10.4% and 18.1% in the PV segment.
The successful launch of the XUV 500 and robust Bolero and Scorpio
sales drove M&M’s UV portfolio up 56.9% YoY. However, the overall
consumer sentiment in the passenger car segment continues to be
dampened owing to higher cost of vehicle ownership. The Society of
Indian Automobile Manufacturers (SIAM) had recently pruned its
passenger car growth forecast for FY12 to 2-4%. Thus far, growth has
been a tepid 0.9% YTD. On a brighter note, two-wheeler sales continued
to march ahead with 27% YoY growth. Key players like Hero MotoCorp
and Bajaj Auto posted robust YoY volume growth of 27.4% and 25.3%,
respectively. HMSI replaced TVS Motors as the third largest player in the
country with domestic sales advancing 59.0% to ~1.9 lakh units. Lesser
dependence on financing coupled with robust demand from Tier II cities
and rural areas have driven 17.9% YTD growth in the segment. However,
the sales growth is likely to moderate, going ahead, with the higher base
effect kicking in.
Too early to be upbeat…outlook remains cautious…
The recent petrol price cuts coupled with expectations of an interest rate
cut by the RBI is expected to slightly improve waning consumer
sentiments. The negative IIP growth number of -5.1% in October, the first
time in nearly two years, lends credence to the same. This coupled with
softening commodity prices would result in lower cost of ownership.
However, on the flip side, a further increase in petrol prices and levy of an
additional duty on diesel vehicles could negatively impact passenger
vehicle demand. Moreover, one commodity that remains critical to the
auto sector i.e. natural rubber has moderated from its peak in February
and is currently at ~| 204. According to our estimates, global commodity
prices may soften slightly as the global growth outlook seems to taper off.
Industry outlook
We maintain our stance of ~13% volume growth in FY12E and remain
optimistic on the growth prospects of the sector driven by low penetration
levels, favourable demographics and rising income levels. On an index
performance basis, the BSE Auto index has performed better than the BSE
Sensex with YoY return of -15.5% vs. -18.8% during the same period.
Among our I-direct auto coverage, we remain bullish on frontline OEM
stocks like Tata Motors. In the ancillary coverage, we find favourable
valuation in Exide Industries.
News & views
• Maruti Suzuki India’s managing director has announced that the
company will launch new vehicles in the sports utility and multi
utility segment to regain 50% market share by 2015. Maruti sells
15 models in the Indian market and almost a dozen of these are in
the compact vehicle segment. It has lost ~5% market share this
year due to prolonged workers strike in Manesar plant, from
where most new cars roll out
• Korean auto major Hyundai Motor is planning to launch
commercial vehicles in India. It is currently studying the Indian
market to launch commercial vehicles as part of its global plan to
strengthen the segment. The company mainly sells compact cars
and is considering introducing high-end and premium trucks in the
country
• Japanese small car major Suzuki Motor Corporation is considering
launching electric vehicles in India although it sees infrastructure
as a big challenge. With the demand for diesel cars very high in
India, the company is lining up more diesel engine cars for the
country
• Two-wheeler maker India Yamaha Motor has said it will expand its
production capacity by 4 lakh units next year with an investment
of about | 50 crore. The company will enhance the capacity of its
Surajpur plant in Uttar Pradesh. India Yamaha Motor has another
plant in Faridabad where it manufacturers engines
• Bajaj Auto has launched its new Boxer 150 motorcycle, with an
engine capacity of 150 cc, in the Egyptian market. The Boxer 150
is equipped with ExhausTec technology, which is environmentally
friendly and fuel-efficient. Bajaj vehicles are assembled and
marketed by Ghabbour Auto, the leading company in the
automotive industry in Egyp
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