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http://www.kotaksecurities.com/pdf/indiadaily/indiadaily29032012.pdf
Apollo Tyres: Takeaways from recent market data
` Imports are losing market share in truck/bus segment on depreciating
Rupee
` Exports continue to exhibit strong growth
` European passenger car tire market weakening
` Domestic tire production de-grows in January; likely to have picked up in
March
Takeaways from recent market data. Recent data (ATMA) indicates: (1) Imports have
lost ~3% market share in truck/bus tire market due to Rupee depreciation, (2) exports
continue to exhibit strong trend; grew 25% (yoy) in 10MFY12, and (3) production for
the industry de-grew by 2% (yoy) in January. Channel checks indicate that January is a
one-off month and March 2012 would show improvement. Separately, data on the
European market indicates sharp yoy declines in the car tire market both in OE and
replacement segments; could have negative implications for Apollo if the trend sustains
Imports are losing market share in truck/bus segment on depreciating Rupee
Imports have lost ~3% market share in the past five months in the domestic truck/bus tire market
as depreciating Rupee has adversely affected pricing of imported tires (mostly from China).
Proportion of imports in domestic truck/bus tire market declined to 8% in FY2012 (Apr-Jan) versus
11% in FY2012 (Apr-Sep). Considering that the reported numbers are for market share for ten
months, it seems market share of imports would have fallen considerably (mid single digit) in the
past three reported months ending January.
Exports continue to exhibit strong growth
Exports remain healthy with a yoy growth of 25% in 10MFY12 versus CAGR of 4% in FY2007-11.
Passenger car tire (41% yoy in 10MFY12 versus CAGR of 6% in FY2007-11) led the overall
growth. Truck/bus (18% yoy in 10MFY12 versus CAGR of -3% in FY2007-11) and LCV tires (18%
yoy in 10MFY12 versus CAGR of -2% in FY2007-11) have also grown at steady rates.
European passenger car tire market weakening
The European car tire market has declined (yoy) in the first two months of the calendar year from low
single digit growth rates witnessed in the prior months. The replacement market for car tires de-grew
(yoy) by 11% and 8% in January and February. The OE car tire market has held to growth (yoy) rates
of ~2-3% during the same time. It doesn’t seem that the reason for a large decline is a large base of
last year as in January and February 2011, the replacement market grew by 7% and 1% respectively.
Domestic tire production de-grows in January; likely to have picked up in March
Domestic tire production declined by 2% (yoy) in January 2012 led by passenger car and twowheeler segments, which de-grew by 4% (yoy) each. Channel checks suggest that January was a
one-off month as industry adjusted high production rates in the previous month. Production
numbers in March are expected to have maintained the trend seen in the past 10 months. In
10MFY12, production has grown (yoy) by 6%. We are surprised by the weakness in the passenger
car tire market as production has grown (yoy) at 3% only versus CAGR of 15% in 2007-11.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily29032012.pdf
Apollo Tyres: Takeaways from recent market data
` Imports are losing market share in truck/bus segment on depreciating
Rupee
` Exports continue to exhibit strong growth
` European passenger car tire market weakening
` Domestic tire production de-grows in January; likely to have picked up in
March
Takeaways from recent market data. Recent data (ATMA) indicates: (1) Imports have
lost ~3% market share in truck/bus tire market due to Rupee depreciation, (2) exports
continue to exhibit strong trend; grew 25% (yoy) in 10MFY12, and (3) production for
the industry de-grew by 2% (yoy) in January. Channel checks indicate that January is a
one-off month and March 2012 would show improvement. Separately, data on the
European market indicates sharp yoy declines in the car tire market both in OE and
replacement segments; could have negative implications for Apollo if the trend sustains
Imports are losing market share in truck/bus segment on depreciating Rupee
Imports have lost ~3% market share in the past five months in the domestic truck/bus tire market
as depreciating Rupee has adversely affected pricing of imported tires (mostly from China).
Proportion of imports in domestic truck/bus tire market declined to 8% in FY2012 (Apr-Jan) versus
11% in FY2012 (Apr-Sep). Considering that the reported numbers are for market share for ten
months, it seems market share of imports would have fallen considerably (mid single digit) in the
past three reported months ending January.
Exports continue to exhibit strong growth
Exports remain healthy with a yoy growth of 25% in 10MFY12 versus CAGR of 4% in FY2007-11.
Passenger car tire (41% yoy in 10MFY12 versus CAGR of 6% in FY2007-11) led the overall
growth. Truck/bus (18% yoy in 10MFY12 versus CAGR of -3% in FY2007-11) and LCV tires (18%
yoy in 10MFY12 versus CAGR of -2% in FY2007-11) have also grown at steady rates.
European passenger car tire market weakening
The European car tire market has declined (yoy) in the first two months of the calendar year from low
single digit growth rates witnessed in the prior months. The replacement market for car tires de-grew
(yoy) by 11% and 8% in January and February. The OE car tire market has held to growth (yoy) rates
of ~2-3% during the same time. It doesn’t seem that the reason for a large decline is a large base of
last year as in January and February 2011, the replacement market grew by 7% and 1% respectively.
Domestic tire production de-grows in January; likely to have picked up in March
Domestic tire production declined by 2% (yoy) in January 2012 led by passenger car and twowheeler segments, which de-grew by 4% (yoy) each. Channel checks suggest that January was a
one-off month as industry adjusted high production rates in the previous month. Production
numbers in March are expected to have maintained the trend seen in the past 10 months. In
10MFY12, production has grown (yoy) by 6%. We are surprised by the weakness in the passenger
car tire market as production has grown (yoy) at 3% only versus CAGR of 15% in 2007-11.
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