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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_Motogaze_February2012.pdf
January rises as buyer sentiment improves…
Discounts, duty hike fears push buyers to showrooms …
January witnessed smart sales growth (13.5%/4.5% YoY/MoM) at1.7
million units on the back of higher discounts and fears of rising
duties/taxes in the automobile segment. Two wheeler sales showed some
resilience after a couple of months of weakness (up 14.1% YoY) with
market leader Hero MotoCorp clocking double digit growth while Bajaj
Auto lagged behind. Commercial vehicles continued to be led by high LCV
sales. Both witnessed a jump of 17.2%/19.7% YoY respectively. The
MHCV segment also grew (14.0%) as industrial activity pick-up was slowly
coming through IIP numbers. The FY12E laggard PV category showed
smart gains in volumes led by Maruti Suzuki with overall sales of 1.15 lakh
units (up 5.2% YoY). This was also exacerbated through higher
anticipation of a diesel duty or excise duty hike for the automotive
segment cometh the Budget. Thus, OEMs have seen increasing number of
footfalls and conversions in both the diesel and petrol variants.
Investments awaiting clarity in budget…
The complete automotive industry is going through mixed times with
pockets of growth remaining strong (diesel car sales, LCV sales) unlike
certain areas (like petrol car sales). The major OEMs have stalled fresh
investments into various diesel technologies considering the uncertainties
regarding the policy outlook from the Indian government. The clarity on
the same would only emerge after the stance on the diesel pricing vs.
diesel duty is presented in the upcoming Budget. On the growth outlook
front, with easing monetary policy and improving investment climate the
chances of a better FY13E vis-à-vis FY12E have improved significantly.
SIAM estimates overall automobile sales are estimated to grow in double
digits between 10% and 12% while we estimate the same at ~11-13%.
Global commodities slowing down on global concerns…
The global commodity basket has witnessed slight up move on a monthly
basis as improving economic data emanating from the US has helped
boost sentiment. Natural rubber prices have remained around | 190-200
levels, which are favourable compared to the lifetime high of ~| 235 that
was witnessed a quarter ago. The season of tapping gets slow in Q4 so
prices should remain at these levels and later should trend downwards
with fresh supplies. According to our view, we expect global commodity
basket prices to remain at similar level even some commodities.
Industry outlook
We maintain our stance on ~13% volume growth in FY12E and remain
optimistic on the growth prospects of the sector. Moreover, on the
commodity front, we expect global commodity basket prices to remain at
similar levels. Even some commodities like natural rubber could witness
slight declines, going ahead. However, rise in crude oil prices to
~$120/bbl level could hurt as further hikes in petrol prices may happen.
Any additional possible levy of additional duty on diesel vehicle could hurt
buying sentiments in the diesel car space, which has remained the
outperformer in FY12E.
On an index performance basis, the BSE Auto index has heavily
outperformed the BSE Sensex with YoY return of 15.5% vs. -1.1% during
the same period. Among our ICICIdirect.com auto-coverage, we remain
bullish on our ancillary coverage universe as OEM coverage universe
seems to have rallied significantly. We find favourable valuation in Amara
Raja Batteries, Balkrishna Industries and Bharat Forge.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_Motogaze_February2012.pdf
January rises as buyer sentiment improves…
Discounts, duty hike fears push buyers to showrooms …
January witnessed smart sales growth (13.5%/4.5% YoY/MoM) at1.7
million units on the back of higher discounts and fears of rising
duties/taxes in the automobile segment. Two wheeler sales showed some
resilience after a couple of months of weakness (up 14.1% YoY) with
market leader Hero MotoCorp clocking double digit growth while Bajaj
Auto lagged behind. Commercial vehicles continued to be led by high LCV
sales. Both witnessed a jump of 17.2%/19.7% YoY respectively. The
MHCV segment also grew (14.0%) as industrial activity pick-up was slowly
coming through IIP numbers. The FY12E laggard PV category showed
smart gains in volumes led by Maruti Suzuki with overall sales of 1.15 lakh
units (up 5.2% YoY). This was also exacerbated through higher
anticipation of a diesel duty or excise duty hike for the automotive
segment cometh the Budget. Thus, OEMs have seen increasing number of
footfalls and conversions in both the diesel and petrol variants.
Investments awaiting clarity in budget…
The complete automotive industry is going through mixed times with
pockets of growth remaining strong (diesel car sales, LCV sales) unlike
certain areas (like petrol car sales). The major OEMs have stalled fresh
investments into various diesel technologies considering the uncertainties
regarding the policy outlook from the Indian government. The clarity on
the same would only emerge after the stance on the diesel pricing vs.
diesel duty is presented in the upcoming Budget. On the growth outlook
front, with easing monetary policy and improving investment climate the
chances of a better FY13E vis-à-vis FY12E have improved significantly.
SIAM estimates overall automobile sales are estimated to grow in double
digits between 10% and 12% while we estimate the same at ~11-13%.
Global commodities slowing down on global concerns…
The global commodity basket has witnessed slight up move on a monthly
basis as improving economic data emanating from the US has helped
boost sentiment. Natural rubber prices have remained around | 190-200
levels, which are favourable compared to the lifetime high of ~| 235 that
was witnessed a quarter ago. The season of tapping gets slow in Q4 so
prices should remain at these levels and later should trend downwards
with fresh supplies. According to our view, we expect global commodity
basket prices to remain at similar level even some commodities.
Industry outlook
We maintain our stance on ~13% volume growth in FY12E and remain
optimistic on the growth prospects of the sector. Moreover, on the
commodity front, we expect global commodity basket prices to remain at
similar levels. Even some commodities like natural rubber could witness
slight declines, going ahead. However, rise in crude oil prices to
~$120/bbl level could hurt as further hikes in petrol prices may happen.
Any additional possible levy of additional duty on diesel vehicle could hurt
buying sentiments in the diesel car space, which has remained the
outperformer in FY12E.
On an index performance basis, the BSE Auto index has heavily
outperformed the BSE Sensex with YoY return of 15.5% vs. -1.1% during
the same period. Among our ICICIdirect.com auto-coverage, we remain
bullish on our ancillary coverage universe as OEM coverage universe
seems to have rallied significantly. We find favourable valuation in Amara
Raja Batteries, Balkrishna Industries and Bharat Forge.
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