J.P. Morgan -India Two Wheelers

-- 

India Two Wheelers Apr'14 Sales grow ~13% driven by Honda, while Hero, TVS grow inline with market

Two wheeler industry sales growth was healthy at ~13%. The growth was driven by Honda (+21% y/y) and Yamaha (domestic sales +42%), while Hero and TVS Motors grew inline at +14% y/y. Bajaj Auto reported flat growth y/y with two wheeler sales at 299,636 units. Our View: We re-iterate that competition is steadily making inroads into the local market – we are currently Neutral on Bajaj, given its diversified product mix, while we are UW on Hero Moto.

· Hero Moto: Sales at the local OEM came in at 571,054 units (+14% y/y). Hero has introduced the new Splendor iSmart with stop start technology – which has aided sales. Over the year, the Greenfield Rajasthan plant at Rajasthan will raise installed capacity to ~7.7m units (+10% y/y). Work on the Gujarat Greenfield plant is under way and is likely to be commissioned in 2015.

· Bajaj Auto sales at 299,636 units were flat y/y: Bajaj’s sales were driven by exports, which grew +15% y/y, while domestic sales declined by ~-13% y/y. The management in a media interview (CNBC) highlights that their retail market share in the domestic segment has risen from 17% to 19% over the past few months, driven by the roll out of the new ‘Discover’ series.

· TVS Motors sales up +14% y/y: The two wheeler sales increased by 14% to 183,179 as domestic two wheeler sales grew +11% to 158,907 units. Scooter sales at 46,069 units, were up +5%% y/y while motorcycles at 73,636 units were up +9% y/y. Two-wheeler exports registered a growth of 37% with sales increasing to 24,272 units in Apr’14. Three-wheeler sales posted an increase of 59%, growing to 7,504 units.

· Honda sales grew at +21% y/y: Sales at Honda came in at 313,942 units –growth was led by scooters (+29% y/y) while motorcycles grew +12% y/y.HMSI is setting up a separate rural vertical to increase its penetration. As it expands distribution in rural India, it will increase its touch points from 2,850 to 4,000. With this, HMSI is targeting to increase rural sales contribution to ~45% of overall sales from the current ~30-33%.

Table 1: India Two Wheelers April Monthly Sales (unit nos)

	Apr-14	Apr-13	%YoY
Hero Moto	571,054	499,113	14
Bajaj Auto	299,636	300,854	0
TVS Motor	183,179	160,502	14
HMSI	313,942	259,608	21
Yamaha	51,158	35,927	42

Source: Company data

Table 2: Hero Motocorp monthly sales (unit nos)

	Apr-14	Apr-13	%YoY	Mar-14	%MoM
Total Sales	571,054	499,113	14	524,028	9

Source: Company data

Figure 1: Hero Motocorp monthly sales

Source: Company data

Table 3: Bajaj Auto monthly sales (unit nos)

	Apr-14	Apr-13	%YoY
Motorcycles	299,636	300,827	(0)
Three Wheelers	31,893	43,351	(26)
Grand Total	331,529	344,205	(4)
Export Sales	150,714	130,329	16
Domestic Sales	180,815	213,876	(15)

Source: Company data

Figure 2: Bajaj Auto monthly sales

Source: Company

Indian Autos

��

-->