Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India auto sector
Two wheelers: Mixed fortunes
Event
We spoke with India Yamaha Motor’s (IYM) management recently. We are
concerned about rising competition in the two-wheeler space. While Honda
Motorcycles & Scooters India (HMSI) is likely to be aggressive in the volume
segment, IYM is very keen to raise its market share in the premium segment.
We have analysed the recent sales trend for the domestic motorcycle
segment. We maintain Underperform on Hero MotoCorp (previously called
Hero Honda) and Neutral on Bajaj Auto.
Impact
IYM targeting 20% share of premium segment by Mar 12. Yamaha has
a market share of 15% in premium motorcycles. It is targeting 20% market
share in this segment in the next six months. Since Aug 10, Yamaha has
gained 6% share, while Bajaj has lost 8% share in the premium segment. In
the 150cc segment, IYM launched SZ in Oct’10, in addition to its already
successful FZ16 bike. Now both these models have ~5% share.
Network expansions to drive Yamaha’s growth. IYM has ~400 dealers and
~1,200 touch points currently (HMCL has 1,200 dealers, BJAUT will reach
600 by Mar 2012 and HMSI has 450 dealers). The expansion of touch points
(through sub-dealers) is a focus area for the company. The response to 150cc
bikes in tier 3 towns has been better than expected and the company will
focus on increasing penetration in these towns. Further, as it grows penetration,
it expects volume segment bikes Crux and YBR100 sales to pick-up.
Sector profitability will depend on HMSI’s response. As per Yamaha’s
management, Bajaj's new bike Boxer 150, priced at Rs43k, is an interesting
move but Yamaha doesn’t foresee any significant threat to its volumes.
Yamaha believes the profitability of the sector will depend on the way HMSI
responds post its capacity expansions. Yamaha plans to increase promotions
on its bikes if it sees any demand slackness post-festive season.
Motorcycle volume growth to moderate in 2H FY12E. India’s motorcycle
market grew 15% in August, with HMCL growing at 20%, TVS at 13% and
Bajaj at 8%. Since Apr 11, Hero has grown ahead of the market, while Bajaj
and TVS’ sales have been weaker. Some of Hero’s outperformance can be
attributed to the much lower base last year; hence we expect a moderation
post Oct 2011.
Model mix has been unfavourable for Bajaj. Sales of Bajaj’s economy bike,
Platina, grew 46% in Aug 11 but its premium bike, Pulsar, declined 10%.
Premium bikes contributed 29% to Bajaj’s sales in Aug 11, as against 35% in
Aug 10. Moreover, Discover sales have also been muted at ~3-4% in the last
two months. Bajaj’s sales included 9,251 units of Boxer 150, which have lower
margins.
Outlook
2-wheeler outperformance likely to be short-lived. Strong cashflows and
high dividend yields make two-wheelers producers attractive in the current
macro-environment. However, as our longer-term concerns persist, we
maintain an Underperform on HMCL and Neutral on BJAUT. HMCL trades at
15.7x FY13E PER, a 22% premium to BJAUT.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India auto sector
Two wheelers: Mixed fortunes
Event
We spoke with India Yamaha Motor’s (IYM) management recently. We are
concerned about rising competition in the two-wheeler space. While Honda
Motorcycles & Scooters India (HMSI) is likely to be aggressive in the volume
segment, IYM is very keen to raise its market share in the premium segment.
We have analysed the recent sales trend for the domestic motorcycle
segment. We maintain Underperform on Hero MotoCorp (previously called
Hero Honda) and Neutral on Bajaj Auto.
Impact
IYM targeting 20% share of premium segment by Mar 12. Yamaha has
a market share of 15% in premium motorcycles. It is targeting 20% market
share in this segment in the next six months. Since Aug 10, Yamaha has
gained 6% share, while Bajaj has lost 8% share in the premium segment. In
the 150cc segment, IYM launched SZ in Oct’10, in addition to its already
successful FZ16 bike. Now both these models have ~5% share.
Network expansions to drive Yamaha’s growth. IYM has ~400 dealers and
~1,200 touch points currently (HMCL has 1,200 dealers, BJAUT will reach
600 by Mar 2012 and HMSI has 450 dealers). The expansion of touch points
(through sub-dealers) is a focus area for the company. The response to 150cc
bikes in tier 3 towns has been better than expected and the company will
focus on increasing penetration in these towns. Further, as it grows penetration,
it expects volume segment bikes Crux and YBR100 sales to pick-up.
Sector profitability will depend on HMSI’s response. As per Yamaha’s
management, Bajaj's new bike Boxer 150, priced at Rs43k, is an interesting
move but Yamaha doesn’t foresee any significant threat to its volumes.
Yamaha believes the profitability of the sector will depend on the way HMSI
responds post its capacity expansions. Yamaha plans to increase promotions
on its bikes if it sees any demand slackness post-festive season.
Motorcycle volume growth to moderate in 2H FY12E. India’s motorcycle
market grew 15% in August, with HMCL growing at 20%, TVS at 13% and
Bajaj at 8%. Since Apr 11, Hero has grown ahead of the market, while Bajaj
and TVS’ sales have been weaker. Some of Hero’s outperformance can be
attributed to the much lower base last year; hence we expect a moderation
post Oct 2011.
Model mix has been unfavourable for Bajaj. Sales of Bajaj’s economy bike,
Platina, grew 46% in Aug 11 but its premium bike, Pulsar, declined 10%.
Premium bikes contributed 29% to Bajaj’s sales in Aug 11, as against 35% in
Aug 10. Moreover, Discover sales have also been muted at ~3-4% in the last
two months. Bajaj’s sales included 9,251 units of Boxer 150, which have lower
margins.
Outlook
2-wheeler outperformance likely to be short-lived. Strong cashflows and
high dividend yields make two-wheelers producers attractive in the current
macro-environment. However, as our longer-term concerns persist, we
maintain an Underperform on HMCL and Neutral on BJAUT. HMCL trades at
15.7x FY13E PER, a 22% premium to BJAUT.
No comments:
Post a Comment