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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_May2012.pdf
Two-wheeler numbers stable, car sales dawdling…
Strong pre-Budget buying lowers April car sales
April sales volumes for the overall automobile industry grew ~8.5% YoY
but declined ~5% MoM. The drop in MoM figures is indicative of heavy
pre-Budget buying as most companies reported a good set of numbers for
March. The disappointment came in the form of low commercial vehicle
growth at 2.75% YoY and a huge drop of 38% MoM. The passenger
vehicle segment also grew at a tepid rate of ~6%. However, the utility
vehicle (UV) segment was the bright spot, clocking 47% growth YoY. In
the two-wheeler space, the scooter segment continued to maintain its
high volume growth with April clocking ~30% growth YoY.
Maruti Suzuki (MSIL) reported a 3.4% increase in YoY sales. Mahindra &
Mahindra (M&M) reported a 27% increase in YoY numbers. Ashok Leyland
(ALL) also reported a jump of over 56%, albeit over a smaller base.
Two-wheeler volumes were relatively stable even as Hero MotoCorp
(HMCL) posted its highest ever monthly sales figures at 5.5 lakh, rising
6.6% YoY. Bajaj Auto (BAL) riding on the rise in export numbers by 7%
also reported a net increase of 4% in sales volume. TVS Motors also
reported a 4.5% YoY growth in the number of vehicles sold in April. The
low YoY growth achieved by two-wheeler players is indicative of a
slowdown due to higher base effect and an expectation of a reduction in
interest rates in the coming months.
The important trigger for the automobile industry would be lowering of
fuel rates and continued reduction in interest rates in the current fiscal.
Global crude prices cooling off…
With global crude prices cooling off on the back of the crisis in the Euro
zone, weak jobs data in the US and lower than expected trade data from
China, inflationary pressures in India may decrease and prompt the RBI to
reduce interest rates. This is likely to spur industrial activity, which has
slackened considerably. This would have a positive impact on auto sales
volumes in the next few months.
Monsoons to provide sentiment boost…
With the anticipation of normal monsoons, rural demand could continue
to remain robust in case monsoons help in improved farm productivity
and a rise in incomes. The primary beneficiaries of a good monsoon will
be two-wheelers, utility vehicles, light commercial vehicles (LCV) and the
tractor segments.
Industry outlook
The outlook towards volume growth of the sector is positive. We expect
volume growth to range between 11% and 14% in FY13E. Volumes are
likely to increase at a fast clip in the scooter segment in the two-wheeler
space and the diesel portfolio in the passenger vehicle space. On the basis
of index performance, the BSE Auto index (one-month return -4.6%) has
slightly underperformed the BSE Sensex (one-month return -3.7%).
However, going forward, we see demand growth and margin expansion
due to softening raw material prices.
Among our I-direct auto-coverage, we remain positive on frontline OEM
stocks like Maruti Suzuki and Tata Motors while in the ancillary coverage
we find favourable valuation and business growth perspective in Apollo
Tyres and Exide Industries.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_Motogaze_May2012.pdf
Two-wheeler numbers stable, car sales dawdling…
Strong pre-Budget buying lowers April car sales
April sales volumes for the overall automobile industry grew ~8.5% YoY
but declined ~5% MoM. The drop in MoM figures is indicative of heavy
pre-Budget buying as most companies reported a good set of numbers for
March. The disappointment came in the form of low commercial vehicle
growth at 2.75% YoY and a huge drop of 38% MoM. The passenger
vehicle segment also grew at a tepid rate of ~6%. However, the utility
vehicle (UV) segment was the bright spot, clocking 47% growth YoY. In
the two-wheeler space, the scooter segment continued to maintain its
high volume growth with April clocking ~30% growth YoY.
Maruti Suzuki (MSIL) reported a 3.4% increase in YoY sales. Mahindra &
Mahindra (M&M) reported a 27% increase in YoY numbers. Ashok Leyland
(ALL) also reported a jump of over 56%, albeit over a smaller base.
Two-wheeler volumes were relatively stable even as Hero MotoCorp
(HMCL) posted its highest ever monthly sales figures at 5.5 lakh, rising
6.6% YoY. Bajaj Auto (BAL) riding on the rise in export numbers by 7%
also reported a net increase of 4% in sales volume. TVS Motors also
reported a 4.5% YoY growth in the number of vehicles sold in April. The
low YoY growth achieved by two-wheeler players is indicative of a
slowdown due to higher base effect and an expectation of a reduction in
interest rates in the coming months.
The important trigger for the automobile industry would be lowering of
fuel rates and continued reduction in interest rates in the current fiscal.
Global crude prices cooling off…
With global crude prices cooling off on the back of the crisis in the Euro
zone, weak jobs data in the US and lower than expected trade data from
China, inflationary pressures in India may decrease and prompt the RBI to
reduce interest rates. This is likely to spur industrial activity, which has
slackened considerably. This would have a positive impact on auto sales
volumes in the next few months.
Monsoons to provide sentiment boost…
With the anticipation of normal monsoons, rural demand could continue
to remain robust in case monsoons help in improved farm productivity
and a rise in incomes. The primary beneficiaries of a good monsoon will
be two-wheelers, utility vehicles, light commercial vehicles (LCV) and the
tractor segments.
Industry outlook
The outlook towards volume growth of the sector is positive. We expect
volume growth to range between 11% and 14% in FY13E. Volumes are
likely to increase at a fast clip in the scooter segment in the two-wheeler
space and the diesel portfolio in the passenger vehicle space. On the basis
of index performance, the BSE Auto index (one-month return -4.6%) has
slightly underperformed the BSE Sensex (one-month return -3.7%).
However, going forward, we see demand growth and margin expansion
due to softening raw material prices.
Among our I-direct auto-coverage, we remain positive on frontline OEM
stocks like Maruti Suzuki and Tata Motors while in the ancillary coverage
we find favourable valuation and business growth perspective in Apollo
Tyres and Exide Industries.
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