AUTO-20121003-MOSL-DB-PG032
-
Upload
rajesh-vora -
Category
Documents
-
view
213 -
download
0
Transcript of AUTO-20121003-MOSL-DB-PG032
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
1/32
80
94
108
122
136
Se p11 D ec11 Mar12 Jun12 Se p12
MOSLAuto Index Sensex
October 2012
DashboardThe Month ly Aut o Update
Speedometer
12-month relative performance
September 2012 relative performance
Chirag Jain([email protected]); + 91 22 3982 5418
Data Track:September 2012 volume update of auto majors
Sector overview and outlook ........................................................... 2
Hero MotoCorp ................................................................................. 3
Bajaj Auto .......................................................................................... 4
Maruti Suzuki .................................................................................... 6
Mahindra & Mahindra ....................................................................... 8
Tata Motors ...................................................................................... 10
TVS Motor ........................................................................................ 12
Special Report
INDIA AUTO: Channel checks .......................................................... 13
Tata Motors: JLR momentum to sustain ......................................... 16
Sector Gauge:August update
Two-wheelers .................................................................................19
Three-wheelers .............................................................................. 21
Cars and UVs .................................................................................... 23
Commercial vehicles ....................................................................... 25
News and Events ............................................................................... 28
M&M launches Quanto (mini-SUV) at INR582k; receives 3,200 bookings
since launch
BharatBenz starts commercial sales of its heavy duty trucks in India
All new Range Rover revealed at Paris Motor Show
Comparative Valuation
CMP * Rating
(INR) FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E
Ba ja j Auto 1,784 Buy 16.6 18.0 14.3 12.1 12.5 9.6 56.7 43.3 44.5 73.0 60.0 61.2
Hero MotoCorp 1,850 Buy 15.5 17.1 14.9 10.0 10.4 8.5 55.4 41.8 39.7 52.4 45.7 50.4
M&M 870 Buy 17.0 13.6 11.1 10.5 8.5 7.6 23.0 21.7 19.3 23.1 24.3 22.7
Maruti Suzuki 1,364 Buy 23.5 20.3 14.4 12.7 9.2 6.4 10.8 10.5 13.2 13.2 12.4 15.9Tata Motors 273 Buy 12.3 19.5 14.0 4.5 3.8 3.2 38.4 25.2 24.7 24.1 23.9 24.2
* Price as on 3 October 2012 Source: Company/MOSL
P/E (x) EV/EBITDA (x) RoE (%) RoCE (%)
Aggregate Volumes For September 2012*
Segment Sep-12 Sep-11 YoY (%) Aug-12 MoM (%) YTDFY13 YTDFY12 Chg (%)
2-Wheelers 885,193 1,136,523 -22.1 898,893 -1.5 5,870,111 6,181,553 -5.0
Motorcycle 783,933 1,011,681 -22.5 801,826 -2.2 5,250,478 5,517,095 -4.8
3-Wheelers 55,891 57,459 -2.7 46,586 20.0 269,340 322,799 -16.6
Cars 106,446 108,442 -1.8 67,747 57.1 602,898 644,923 -6.5
UVs 51,268 40,058 28.0 48,596 5.5 288,032 201,872 42.7
Commercial Vehicles 64,952 61,472 5.7 58,901 10.3 338,842 319,975 5.9
LCV 41,024 33,282 23.3 36,789 11.5 214,698 173,829 23.5M&HCV 23,928 28,190 -15.1 22,112 8.2 124,144 146,146 -15.1
Tractors 20,085 24,673 -18.6 13,234 51.8 109,418 117,546 -6.9
Total Volumes 1,183,835 1,428,627 -17.1 1,133,957 4.4 7,478,641 7,788,668 -4.0
* Aggrega te of Baja j Auto, Hero MotoCorp, TVS Motor, Maruti, M&M, Tata Motors and Ashok Leyland Source: Company/MOSL
Investors are advised to refer through disclosures made at the end of the Research Report.
Jinesh Gandhi ([email protected]); +91 22 3982 5416
96
100
104
108
112
116
3-Sep 9-Sep 15-Sep 21-Sep 27-Sep
MOSL Au to I nd ex Se ns e x
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
2/32
Dashboard
October 2012 2
Sector overview and outlookVolume to remain under pressure, margin have bottomed out
Data Track
Key Financial Indicators
FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E
Bajaj Auto 13.7 -2.1 12.8 19.0 18.0 19.3 107.4 99.3 124.3 18.8 -7.5 25.2
He ro MotoCorp 15.4 -2.6 12.5 11.0 10.1 11.1 119.1 108.0 124.1 18.4 -9.3 14.9
M&M 24.2 9.5 10.0 13.3 13.6 13.5 51.2 63.7 78.4 6.6 24.4 22.9
Ma ruti Suzuki -10.8 1.3 16.2 7.1 8.5 9.9 58.2 67.2 94.8 -29.4 15.5 41.1
Ta ta Motors * 10.3 1.5 15.0 14.3 13.7 14.2 37.8 33.2 41.3 38.5 -12.0 24.4
^ Volume growth for stand alon e; * Cons oli dated whe rever appl icabl e, **Adjusted ma rgin s for change i n royalty accounting
Volume Chg (%) EBITDA Margins (%) EPS (INR) * EPS Growth (%) *
Slowdown visible across segments except UVs and LCVs: Slowdown earlier visible
in the M&HCVs, Cars and 3Ws segment is now evident in 2Ws as well with 4% YoY
drop in 2QFY13. However, growth in UVs (+29% YoY) and LCVs (+13% YoY) continue
to remain healthy. Our channels checks indicate that start to the festive season
have not been encouraging. Dealer inventory is high particularly in 2Ws and Cars
segment. Recent hike in diesel prices does not augur well for the CV segment.
Expected softening in interest rates and reform driven improvement in macro
environment and consumer sentiment, coupled with long term drivers remaining
intact are key drivers for volumes over next few years.
Margins to bottom-out in FY12, with gradual improvement from 2HFY13 onwards:
EBITDA margins are estimated to improve in FY13, benefitting from price increases,
higher operating leverage and soft commodity prices. However, volatile Fx and
increasing competitive intensity in some segments would restrict pricing power.
We anticipate price increases coupled with productivity improvement programs
and high operating leverage to drive profitability from 2HFY13 onwards.
Easing of macro headwinds to be key catalyst for demand recovery: Lending rates
are expected from near peak levels, auguring well PV and CV demand. Further,
higher fuel prices have been one of the key impediments to growth. Lastly,
appreciating INR also augurs well for Maruti Suzuki and Hero MotoCorp, but
negative for Bajaj Auto. However, softening in commodity prices would support
profitability. Easing of macro headwinds would be key driver for volume growth,
profitability and in-turn for re-rating of auto stocks.
Valuation and view: Recent reform initiatives undertaken by the government
would help to improve consumer sentiment. This coupled with expected reduction
in interest rates, augurs well for pick-up in economic activity and in-turn demand
for automobile. Changing competitive landscape in the auto sector would be one
of the key determinants of stock performance. While we believe that worst of
competitive pressure is behind for passenger cars, increasing competitive intensity
for both 2W, UVs and CVs pose challenge to incumbent OEMs and near term
overhang on valuations. We prefer Tata Motors, Maruti Suzuki and Bajaj Auto.
Comparative Valuation
CMP * Rating
(INR) FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E
Bajaj Auto 1,784 Buy 16.6 18.0 14.3 12.1 12.5 9.6 56.7 43.3 44.5 73.0 60.0 61.2
He ro MotoCorp 1,850 Buy 15.5 17.1 14.9 10.0 10.4 8.5 55.4 41.8 39.7 52.4 45.7 50.4
M&M 870 Buy 17.0 13.6 11.1 10.5 8.5 7.6 23.0 21.7 19.3 23.1 24.3 22.7
Ma ruti Suzuki 1,364 Buy 23.5 20.3 14.4 12.7 9.2 6.4 10.8 10.5 13.2 13.2 12.4 15.9
Tata Motors 273 Buy 12.3 19.5 14.0 4.5 3.8 3.2 38.4 25.2 24.7 24.1 23.9 24.2
* Price a s on 3 October 2012 Source : Company/MOSL
P/E (x) EV/EBITDA (x) RoE (%) RoCE (%)
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
3/32
Dashboard
October 2012 3
Data Track
Hero MotoCorp: two-wheelers
The disappointment in
Sep-12 wholesale
volumes is reflection of
weak retail demand and
high channel inventory
build-up.
Hero MotoCorpSep-12 volumes below est; 4th consecutive month of disappointment
Highlights
Hero MotoCorps Sep-12 volumes de-grew 26.4% YoY (-8.8% MoM) to 404,787 (v/s
est 445,000). This is the fourth consecutive month of negative surprise. FY13YTD
volumes have declined by ~3.2%.
Our channel interaction indicates inventory levels of more than 6 weeks with
dealers. Considering the high channel inventory, we believe Hero MotoCorp has
limited scope to further build up inventory for the festive season. Thedisappointment in Sep-12 wholesale volumes is reflection of weak retail demand
and high channel inventory build-up.
Demand pick-up in festive season would be critical for achieving its 4-5% volume
growth guidance for FY13. However, initial signs of festive demand have not been
encouraging.
HMCL has announced capacity addition of 2m units by 2QFY14. It is investing
INR25.75b on two plants (capacity of 0.75m at Rajasthan by 1QFY14 and 1.25m at
Gujarat by 2QFY14) and an R&D center. The company will be funding these
investments through internal accruals and cash of ~INR40b as at March 2012.
Our estimates currently factors in 3% volume de-growth in FY13 to 6.07m units,
implying residual run-rate of 516,500 units/residual de-growth of ~2. Our estimates
would see further downgrades as we model for sustained weakness in volumes.
The stock trades at 17.4x FY13E EPS of INR108.0 and 15.2x FY14E EPS of INR124.1.
Maintain Buy.
Hero MotoCorp: Financial & Valuation Summary
Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE
End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%)
3/11A 192,450 20,077 100.5 -10.0 - - - - 62.5 59.2
3/12A 233,681 23,781 119.1 18.4 15.8 14.2 8.8 10.1 55.4 52.4
3/13E 230,292 21,566 108.0 -9.3 17.4 15.3 7.3 10.6 41.8 45.7
3/14E 265,789 24,779 124.1 14.9 15.2 13.3 6.0 8.7 39.7 50.4
Snapshot of volumes for September
Sep-12 Sep-11YoY
(%)Aug-12
MoM
(%)YTDFY13 Chg (%) FY13E
YoY
(%)
Residual
Gr. (%)
ResidualMonthly
Run rate
FY13 YTDMonthly
Run rate
Total volume 404,787 549,625 -26.4 443,801 -8.8 2,975,097 -3.2 6,073,823 -2.6 -2.0 516,454 495,850
Source: Compa ny/MOSL
Bloomberg HMCL IN
Equi ty Share s (m) 200
CMP (INR) 1,850
52-Wk Range (INR) 2,279/1,703
1,6,12 Rel. Perf. (%) 2/6/24
M.Cap. (USD b) 7.1
300,000
365,000
430,000
495,000
560,000
625,000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
FY11 FY12 FY13
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
4/32
Dashboard
October 2012 4
Bajaj AutoSep-12 volumes in-line, 3W surprise positively; upside risk to our estimates
Data Track
Bloombe rg BJAUT IN
Eq ui ty Sh ares (m) 289.4
CMP (INR) 1,784
52-Wk Ra nge (INR) 1,839/1,351
1,6,12 Re l.Perf.(%) -4/0/15
M.Cap. (USD b) 9.3
Volume de-growth is
largely owing to festive
season this year being amonth later than it was
last year
Highlights
Bajaj Autos total volumes de-grew 14% YoY (+4.4% MoM) to 360,152 (v/s est of
356,500). Domestic volumes de-grew by 18% YoY (+6% MoM) to 226,930 (v/s est of
221,500), whereas exports declined 6% YoY (+1% MoM) to 133,222 units (v/s est135,000 units).
Overall motorcycle volumes de-grew 15% YoY (+4% MoM) to 315,314 (v/s est
315,000). Volume de-growth is largely owing to festive season this year being a
month later than it was last year. We estimate motorcycle volume de-growth of
1% to 3.8m units, implying residual growth of 2.2% and run-rate of 314,047 units,
implying upside risk to volumes if demand picks-up during festive season.
Recently launched Pulsar 200 NS and Discover 125 ST continues to ramp-up well
with overall contribution of ~44,000 units (~32,000 units in Aug-12 & 20,000 in Jul-
12). Pulsar and Discover contributed to ~64% of motorcycle volumes.
Three-wheeler sales de-grew by 3.5% YoY (+11% MoM) to 44,838 (est 41,500 units),
driven by pick-up in export volumes to Sri Lanka. We model 3W volumes de-
growth of ~10% in FY13 to 0.46m units, implying residual run-rate of 40,895 units
(de-growth of 1%).
Our estimates could see upgrades if demand picks-up in 2Ws during festive season
and 3W volume momentum sustains. The stock trades at 18x FY13E EPS of INR99.3
and 14.3x FY14E EPS of INR124.3. Maintain Buy.
Bajaj Auto: Financial & Valuation Summary
Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE
End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%)
3/11A 163,981 26,150 90.4 43.9 - - - - 66.7 76.0
3/12A 195,290 31,069 107.4 18.8 16.6 15.9 8.5 12.1 56.7 73.0
3/13E 195,245 28,748 99.3 -7.5 18.0 17.1 7.1 12.5 43.3 60.0
3/14E 226,449 35,980 124.3 25.2 14.3 13.8 5.8 9.6 44.5 61.2
Snapshot of volumes for September
Sep-12 Sep-11YoY
(%)Aug-12
MoM
(%)YTDFY13 Chg (%) FY13E
YoY
(%)
Residual
Gr. (%)
Residual
Monthly
Run rate
FY13 YTD
Monthly
Run rate
Total volume 360,152 417,686 -13.8 344,906 4.4 2,128,179 -5.7 4,257,832 -2.1 1.8 354,942 354,697
Motorcyc les 315,314 371,208 -15.1 304,352 3.6 1,911,147 -4.0 3,795,432 -1.0 2.2 314,047 318,525
Total Two-Wheel 315,314 371,208 -15.1 304,352 3.6 1,911,147 -4.0 3,795,432 -1.0 2.2 314,047 318,525
Th re e -Wh ee l ers 44,838 46,478 -3.5 40,554 10.6 217,032 -18.6 462,400 -10.2 -1.3 40,895 36,172
Source: Compan y/MOSL
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
5/32
Dashboard
October 2012 5Source: Company/MOSL
Three-wheeler volumes (units)
Export volumes (units)
Three-wheeler volumes
positively surprises
Exports are impacted by
custom duty hike in
Sri Lanka
Two-wheeler volumes (units)
Discover and Pulsar
contribute ~64% to
two-wheeler volumes
Market mix
remains stable
Market mix
180,000
245,000
310,000
375,000
440,000
Ap r Ma y Jun Ju l Aug Sep Oct Nov Dec Jan Feb Mar
FY11 FY12 FY13
24,000
31,000
38,000
45,000
52,000
Apr Ma y Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Mar
FY11 FY12 FY13
40,000
80,000
120,000
160,000
200,000
Ap r May Ju n Jul Aug Sep Oct No v De c Ja n Fe b Ma r
FY1 1 FY12 FY1 3
0%
25%
50%
75%
100%
May-
08
Jul-
08
Sep-
08
Nov-
08
Jan-
09
Mar-
09
May-
09
Jul-
09
Sep-
09
Nov-
09
Jan-
10
Mar-
10
May-
10
Jul-
10
Sep-
10
Nov-
10
Jan-
11
Mar-
11
May-
11
Jul-
11
Sep-
11
Nov-
11
Jan-
12
Mar-
12
May-
12
Jul-
12
Sep-
12
D omestic Exports
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
6/32
Dashboard
October 2012 6
Data Track Maruti SuzukiSep-12 above est driven by ramp-up at Manesar & new Alto
Ramp-up at Manesar and
new Alto pre-launch
inventory filling led to
surprise in volumes.
Mgmt expects further
ramp-up to add 15k units/
month
Bloomberg MSIL IN
Equity Shares (m) 302.1
CMP (INR) 1,36452-Wk Range (INR 1,498/906
1,6,12 Rel.Perf.(%) -2/12/4
M.Cap. (USD b) 7.9
Maruti Suzuki: Financial & Valuation Summary
Year Total Inc. PAT Con. EPS EPS Con. P/E P/CE P/BV EV/ RoE RoCE
End (INR m) (INR m) (INR) Gr. (%) (x) (x) (X) EBITDA (%) (%)
3/11A 369,199 23,101 82.4 -9.2 - - - - 16.5 22.13/12A 355,871 16,351 58.2 -29.4 23.5 14.2 2.6 12.7 10.8 13.2
3/13E 427,281 19,993 67.2 15.5 20.3 10.7 2.2 9.2 10.5 12.4
3/14E 500,583 28,234 94.8 41.1 14.4 8.2 1.9 6.4 13.2 15.9
Highlights
Domestic volumes at 88,801 (v/s est 66,000) was driven by ramp-up at Manesar
and new Alto pre-launch inventory filling. Ertiga continues to do well with ~6,750
units. Mini segment (M800, Alto, Wagon-R, A-Star) volume momentum improved,
with 5% YoY (+77% MoM) growth in volumes, driven by pre-launch inventory filling
of new Alto. While Dzire volumes ramped-up to 11,694 units (v/s 3,085 units in
Aug-12), Swift volumes are estimated to have ramped-up to ~11,000 units (v/s 800
units in Aug-12). However, demand for petrol vehicles remained under pressure.
The management has indicated that Manesars operations would normalize by
end-Oct and it has currently ramped-up operations to ~1,000 cars/day (v/s capacityof 1,700 cars/day). It expects further ramp-up to add ~15,000 units/month, of which
~5,000/month would be of A-Star exports. However, considering normal operations
at SPIL (diesel engine plant), we believe MSIL would built diesel engine inventory
for usage upon normalization of operations. We estimate loss of ~36,000 units in
FY13, as believe that it can makes-up for lost volumes in 4QFY13.
We are revising our estimates to factor in for faster than estimated ramp-up. Our
estimates now factors in for volume growth of 3.8%/15% in FY13/FY14 to 1.18m/
1.35m units, JPY/INR of 0.685/0.663 and ~10bp/10bp increase in staff cost in FY13
and FY14, resulting in -10bp/+140bp change in EBITDA margins in FY13/FY14 (excl
SPIL). As a result, our consol. EPS has seen upgrade of ~3%/1% for FY13/FY14 to
INR67.2/94.8 and cash EPS upgrade of ~2/1% to INR127/INR166.
The stock trades at 14.4x FY14 consol EPS of INR94.8 and 8.2x FY14 Cash EPS.
Maintain Buy with price target of INR1,660 (~10x FY14 CEPS/17.5x FY14 EPS).
Snapshot of volumes for September
Sep-12 Sep-11YoY
(%)Aug-12
MoM
(%)YTDFY13 Chg (%) FY13E
YoY
(%)
Residual
Gr. (%)
Residual
Monthly
Run rate
FY13 YTD
Monthly
Run rate
Total volume 93,988 85,565 9.8 54,154 73.6 526,275 -1.4 1,176,780 3.8 8.4 108,417 87,713
Domes tic 88,801 78,816 12.7 50,129 77.1 473,221 0.0 1,054,925 4.8 9.1 96,951 78,870
A1 1,400 1,993 -29.8 1,382 1.3 8,583 -28.9
C 12,620 11,737 7.5 11,593 8.9 59,166 -24.5
A2 55,563 55,053 0.9 26,739 107.8 289,060 -10.6
A3 11,982 9,607 24.7 3,532 239.2 76,011 37.5
A4 12 14 NA 0 NA 35 NA
UV 7,224 412 NA 6,883 5.0 40,366 NA
Export 5,187 6,749 -23.1 4,025 28.9 53,054 -12.7 121,855 -4.3 3.3 11,467 8,842
Source: Compa ny/MOSL
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
7/32
Dashboard
October 2012 7
Export volumes (units)
Segment mix (domestic)
Source: Company/MOSL
Monthly volumes (units)
Export de-grew
by 23% YoY
A2 & A3 segments
dominate the
segment mix; UVs
contribution rising
Export contribution to
volumes fell
to ~11% in FY12 from
14.5% in FY10
Demand for petrol car
remains weak
Market mix
40,000
65,000
90,000
115,000
140,000
Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Ma r
FY11 FY12 FY13
0
5,000
10,000
15,000
20,000
Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Mar
FY11 FY12 FY13
0%
25%
50%
75%
100%
M
ay-08
Jul-08
Sep-08
N
ov-08
Jan-09
M
ar-09
M
ay-09
Jul-09
Sep-09
N
ov-09
Jan-10
M
ar-10
M
ay-10
Jul-10
Sep-10
N
ov-10
Jan-11
M
ar-11
M
ay-11
Jul-11
Sep-11
N
ov-11
Jan-12
M
ar-12
M
ay-12
Jul-12
Sep-12
A1 A2 A3 + A4 MPVs + UVs
0%
25%
50%
75%
100%
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Domes ti c Sa les Exports
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
8/32
Dashboard
October 2012 8
MahindraandMahindra:Financial&ValuationSummaryYear NetSales S/APAT*S/AEPS* Cons. Con.EPS P/E Cons. RoE RoCE EV/ EV/End (INRm) (INRm) (INR) EPS(INR) Gr(%) (x) P/E(x) (%) (%) Sales(x ) EBITDA
3/11A 234,603 25,732 43.0 48.0 18.1 25.0 26.8
3/12A 318,535 28,888 48.3 51.2 6.6 18.0 17.0 23.0 23.1 1.6 13.63/13E 393,584 33,149 55.4 63.7 24.4 15.7 13.6 21.7 24.3 1.3 11.1
3/14E 443,341 36,511 61.0 78.4 22.9 14.3 11.1 19.3 22.7 1.2 10.4
* S/A including MVML
Data Track Mahindra & MahindraSep-12 volumes in line; growth in pick-up segment moderates, passenger
remains strong; tractor sales continues to decline
Recently launched
Quanto has garnered
3200 bookings. Also,
XUV5OO has an order
book of 14k units with
waiting period ranging
from 6-15 weeks across
markets.
Bloomberg MM IN
Equity Sha res (m) 587.2
CMP (INR) 870
52-Wk Range ( INR) 875/6221,6,12 Re l.Perf.(%) -2/6/5
M.Cap. (USD b) 10.0
Highlights
M&Ms September-12 volumes came at 68,427 (v/s est 69,400), down 1% YoY (+16%
MoM). Sales stood marginally lower due to moderation in growth for the pick-
ups/LCVs. Our FY13 volume estimate of 9.5% growth implies 8.8% residual growth
with monthly run-rate of 62,619 units.
UV volumes grew 14.9% YoY (+6.5% MoM) to 39,404 (v/s est 40,000), driven by
healthy growth in passenger UVs and launch of Quanto (mini SUV based on Xylo
platform). However, growth in pick-up segment moderated to 7% YoY to 14,417
units (v/s FY12 growth of ~45%). Our FY13 estimates factor in 20% YoY growth in
UVs to 461,137, implying residual run-rate of 39,860 (14.5% residual growth).
3-wheeler volumes de-grew 17.2% YoY (+0.7% MoM) to 6,048 (v/s est 6,300). Our
FY13 estimates factors in flat volumes, implying residual run rate of 6,071 (6.2%residual growth).
Speaking on the performance for the month of Sep-12 , Mr Pravin Shah, Chief
Executive, Automotive Division said, We are happy with the performance and
growth that we have achieved during September 2012 over the festive season
month of September 2011. Post reduction in CRR, banks have started cutting
lending rates and are also looking at reducing vehicle loan rates. We are hopeful
of a good performance in the upcoming festive season.
Over 3200 bookings of the recently launched Quanto (mini SUV) have been
received. M&M also stated that XUV5OO has an order book of 14k.
Tractor sales declined by 18.6% YoY (+51.8% MoM) to 20,085 units (v/s est ~20,000units), as festive dispatches to dealers this year would be reflected in Oct/Nov.
We expect FY13 volumes to drop by 5% for M&M (industry growth at 0-2%) to
223,606, implying a residual run-rate of 19,031 units.
The stock trades at 13.6x FY13E consolidated EPS of INR63.7 and 11.1x FY14E
consolidated EPS of INR78.4. Maintain Buy.
Snapshot of volumes for September
Sep-12 Sep-11YoY
(%)Aug-12
MoM
(%)YTDFY13 Chg (%) FY13E
YoY
(%)
Residual
Gr. (%)
Residual
Monthly
Run rate
FY13 YTD
Monthly
Run rate
Total volume 68,427 68,810 -0.6 59,070 15.8 376,684 10.5 786,766 9.5 8.6 68,347 62,781
UV 39,404 34,307 14.9 37,006 6.5 221,976 26.6 461,137 20.0 14.5 39,860 36,996
LCV 990 968 2.3 724 36.7 6,123 -1.2 14,514 5.0 10.1 1,399 1,021
Veri to 1,900 1,560 21.8 2,102 -9.6 8,151 -6.4 20,069 12.5 30.5 1,986 1,359
Three-Wheelers 6,048 7,302 -17.2 6,004 0.7 31,016 -6.4 67,440 0.0 6.2 6,071 5,169
Tractors 20,085 24,673 -18.6 13,234 51.8 109,418 -6.9 223,606 -5.0 -3.1 19,031 18,236
Source: Compa ny/MOSL
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
9/32
Dashboard
October 2012 9
Tractor volume (units)
Tractor volumes
de-grew 19% YoY
Utility vehicle volumes (units)
Product mix
Source: Company/MOSL
Tractors and UVs
dominate the segment
mix, but we expect the
share of three wheelers
and LCVs to increase
UV volumes continue
to remain strong
12,000
21,000
30,000
39,000
48,000
Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r
FY11 FY12 FY13
4,000
12,000
20,000
28,000
36,000
Apr Ma y Jun Jul Aug Se p Oct Nov Dec Jan Feb Mar
FY11 FY12 FY13
0%
25%
50%
75%
100%
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
UVs Tractors LCVs, 3-wheelers Cars
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
10/32
Dashboard
October 2012 10
Data Track Tata MotorsSep-12 in-line at 75,773 (-4% YoY, +5.5% MoM, v/s est 77,000); M&HCV volumes
remain under pressure
M&HCV volume
continues to be under
pressure, with no major
seasonal improvement
MoM.
Highlights Total September-12 volumes de-grew 4% YoY (+5.5% MoM) to 75,773 units (v/s est
77,000). While domestic CVs grew by 5.3% YoY (+7.8% MoM) led by continued
strong momentum in LCV sales, the domestic PVs declined by 17.7% YoY (-3%
MoM). Based on our volume growth estimate of 3.3% for FY13, implied residual
run-rate is ~87,803 units (3.9% residual growth).
Domestic CV volumes grew 5.3% YoY (7.8% MoM) to 48,680 (v/s est 48,350) led by
strong LCV growth of 18.9% YoY (+9.6% MoM) to 33,393 (v/s est 31,750). However,
M&HCV volume continues to be under pressure, with de-growth of 15.8% YoY
(+4.1% MoM) to 15,287 (v/s est 16,600), with no major seasonal improvement
MoM. Our FY13 estimates factor in volume growth of 4.8% for CVs (incl exports)with M&HCV volume decline of 11.7% and ~14.9% growth in LCVs.
Domestic passenger cars de-grew by 18.5% YoY (-3.4% MoM) to 17,133 (v/s est
17,833), driven by 87% YoY (-15.6% MoM) growth in Nano volumes. Nano volumes
came at 5,491 (v/s 6,507 in Jul-12). Ex Nano, domestic car volumes de-grew 35.6%
YoY (+3.8% MoM) impacted by 23%/52% YoY decline in Indica/Indigo volumes
respectively. We factor in a drop of 1.5% in passenger cars volumes in FY13.
Domestic UV volumes de-grew 14.9% YoY (-1.4% MoM) at 4,519 (v/s est 4,610). Our
FY13 estimate assumes volume growth of 10%.
We factor in overall volume growth of 3.3% in FY13. FY13 JLR volumes are estimated
at ~362,500 (+15%). The ordinary/DVR stock is currently trading at 8.3x/5x FY13E and 6.6x/4x FY14E
consolidated EPS. Maintain Buy with target price of INR370/INR223 for ordinary/
DVR shares.
Snapshot of volumes for September
Sep-12 Sep-11YoY
(%)Aug-12
MoM
(%)YTDFY13 Chg (%) FY13E
YoY
(%)
Residual
Gr. (%)
Residual
Monthly
Run rate
FY13 YTD
Monthly
Run rate
Total volume 75,773 78,783 -3.8 71,826 5.5 409,864 2.6 936,680 3.3 3.9 87,803 68,311
HCV's 16,332 19,583 -16.6 15,515 5.3 82,639 -20.2 195,380 -11.7 -4.2 18,790 13,773
LCV's 37,007 32,118 15.2 33,230 11.4 192,662 15.3 417,900 14.9 14.5 37,540 32,110
Cars 17,794 21,743 -18.2 18,374 -3.2 108,873 2.3 261,290 -1.5 -4.1 25,403 18,146
UV's 4,640 5,339 -13.1 4,707 -1.4 25,690 13.5 62,110 10.0 7.6 6,070 4,282
of which e xports 5,441 6,217 -12.5 4,373 24.4 27,749 -10.7
Source: Compan y/MOSLTotal volumes estimated by assuming export volumes
Bloombe rg TTMT IN
Actua l Eq. Sh (m) 3,173.8
CMP (INR) 273
52-Wk Range ( INR) 321/138
1,6,12 Re l. Perf. (%) 7/-11/57
M.Cap. (USD b) 17.3
Tata Motors: Financial & Valuation Summary
Year Sales Adj. PAT Adj. EPS Norm. P/E Norm. RoE RoCE EV/ EV/
End * (INR m) (INR m) (INR) EPS (INR) Ratio P/E (x) (%) (%) Sales (x) EBITDA (x)
3/11A 1,221,279 90,695 27.3 15.4 10.1 17.8 47.3 26.5 0.0 0.0
3/12A 1,656,545 125,568 37.8 22.2 7.3 12.4 38.4 24.1 0.6 4.5
3/13E 1,971,042 110,482 33.2 14.0 8.3 19.6 25.2 23.9 0.5 3.8
3/14E 2,185,850 137,408 41.3 19.5 6.6 14.0 24.7 24.2 0.4 3.2
* Consoli dated; ^ Normal ized for capi talized e xpens es
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
11/32
Dashboard
October 2012 11
LCV volumes (units)
Car volumes (units)
Source: Company/MOSL
Product mix in the CV segment
LCV volumes
remains robust
Domestic car volumes
grew 18% YoY
M&HCV volumes (units)
M&HCV volumes
continue to disappoint
LCVs account for ~70% of
the CV product portfolio
8,000
14,000
20,000
26,000
32,000
38,000
Apr Ma y Jun Jul Aug Sep Oct Nov De c Ja n Feb Ma r
FY11 FY12 FY13
4,000
10,000
16,000
22,000
28,000
Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Feb Mar
FY11 FY12 FY13
8,000
16,000
24,000
32,000
40,000
48,000
Apr May Jun Jul Aug Sep Oct Nov De c Ja n Fe b Mar
FY11 FY12 FY13
0%
25%
50%
75%
100%
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
M&HCVs LCVs
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
12/32
Dashboard
October 2012 12
TVS MotorVolumes de-grew 20.7% YoY; while motorcycles de-grew 30.9% YoY
Data Track
Motorcyle volumes (units)
Motorcycle volumes
decline
Scooters and mopeds (units)
Sales mix
Source: Company/MOSL
Scooters and
mopeds have been the
key volume driver
Scooter volumes also
under pressure
Snapshot of volumes for June
Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTDFY13 Chg (%)
Total volume 154,647 194,898 -20.7 161,255 -4.1 835,062 -9.3
Motorcycles 53,673 77,726 -30.9 53,355 0.6 300,402 -17.0
Scooters 38,193 52,253 -26.9 40,895 -6.6 191,920 -12.4
Mopeds 58,874 60,205 -2.2 63,704 -7.6 326,453 1.9
Source: Company/MOSL
60,000
78,000
96,000
114,000
132,000
Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Fe b Mar
FY11 FY12 FY13
0%
25%
50%
75%
100%
May-0
8
Jul-0
8
Sep-0
8
Nov-0
8
Jan-0
9
Mar-0
9
May-0
9
Jul-0
9
Sep-0
9
Nov-0
9
Jan-1
0
Mar-1
0
May-1
0
Jul-1
0
Sep-1
0
Nov-1
0
Jan-1
1
Mar-1
1
May-1
1
Jul-1
1
Sep-1
1
Nov-1
1
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-1
2
Motorcycles Scooters & Mopeds
50,000
62,000
74,000
86,000
98,000
Ap r Ma y Jun Jul Au g Se p Oct Nov De c Ja n Fe b Mar
FY11 FY12 FY13
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
13/32
Dashboard
October 2012 13
Special Report INDIA AUTO: Channel checks2-W channel checks suggest weak demand, inventory pile-up; Early signs of
dealers offering discounts
Demand continues to remain weak, despite the start of festive season
Our channel interactions indicate continued weakness in demand in the two-wheeler
industry.
While demand in the Kerala market increased marginally YoY during the festive
season (Onam in August), it stood below the expectation of dealers/OEMs. Kerala
being a relatively high-end/premium segment market, Bajaj benefited with the
help of its new launches leading to double digit growth in sales. However, in
other markets, Bajajs new launches, though received positive response, is
cannibalizing sales of its existing product range.
Festive demand during Ganesh Chaturthi festival in Maharashtra has been weak
as customers delay purchases in view of weak income growth and inflationary
trend in the economy.
Dealer inventory remains high at over 30 days across players (including
HMSI), leaving limited room for festive build-up
Our channel interaction indicated inventory levels of over 30 days across players
Hero (45-50 days), Bajaj (35-40 days), HMSI (30 days), and Yamaha (45 days).
With weak festive demand and already high inventory, we expect wholesale
dispatches during festive season to be lower YoY, particularly for Hero MotoCorp
as it corrects high channel inventory.
We interacted with a cross-section of 2-wheeler dealers across India. Key takeaways:
Demand continues to remain weak, despite the start of festive season
Dealer inventory remains high at over 30 days across players (including HMSI),
leaving limited room for festive build-up
Retail sales under pressure for HMSI as well, despite reporting strong wholesale
volume growth
Discounts/incentives stable but players pushing sales through finance schemes;
West worst hit
Japanese players enjoy higher market share in the Southern market
VALUATION & VIEW: Bajaj Auto better placed than Hero MotoCorp.
Channel inventory remains high across players (est days)
Source: Company, MOSL
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
14/32
Dashboard
October 2012 14
Retail sales under pressure for HMSI as well, despite reporting strong
wholesale volume growth
While HMSI continues to report healthy volume growth, our channel check suggests
weak demand and inventory pile-up with dealers.
The strong growth in wholesale volumes is largely a reflection of network
expansion (currently ~600 dealers v/s ~450 last year) and inventory pile-up with
dealers (around 30 days).
HMSIs volume growth is expected to moderate on the back of weak demand,
high channel inventory and capacity expansion (2nd plant) is in the base.
Growth rate to moderate with weak retail demand, high channel inventory & as capacity expansion is in the base
Source: Company, MOSL
Discounts/incentives stable but players pushing sales through financeschemes; West worst hit
Past experience suggest minimal positive impact of discounts on demand. This,
together with high base and negative impact on brand, is keeping companies
away from offering discounts/freebies. However, selectively dealers have started
offerings discounts/freebies given high inventory.
Regionally, East and South remains relatively healthy, followed by North. Western
market is the worst hit.
West is the largest 2W market followed by South and North
Note: Based on FY12 sales Source: Company, MOSL
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
15/32
Dashboard
October 2012 15
Japanese players enjoy higher market share in the Southern market
All the three Japanese players viz HMSI, Yamaha and Suzuki have relatively higher
market share in the southern market.
Our channel interaction indicated that with higher education levels and higher
exposure to brands/technology, customers perceive Japanese brands to be
superior to Indian brands.
Thus, it would be imperative over the long term for Indian brands to consistently
bring in superior products to sustain and grow their market position.
Share of sales from the Southern market is higher than Industry average for Japanese players
Note: Based on FY12 sales Source: Company, MOSL
Valuation & view: Bajaj Auto better placed than Hero MotoCorp
After 3 years of strong volume growth, domestic two-wheeler volumes arewitnessing some pressure over last 6 months. This coupled with increased
competitive intensity could put pressure on market share and profitability for
incumbents.
We believe recovery in demand in upcoming festive season would be very critical
to maintain profitability.
We believe Bajaj Auto is better placed vis--vis Hero MotoCorp due to its
diversified product/market mix and would be less impacted to any increase in
competitive intensity.
Financials and ValuationsVolume gr. (%) EPS (INR) EPS Gr. (%) P/E (x) P/CEPS (x) EV/EBITDA(x) P/B(x) RoE (%)
FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E
Bajaj Auto 13.7 -2.1 107.4 99.3 18.8 -7.5 16.6 18.0 15.9 17.1 12.1 12.5 10.5 8.5 56.7 43.3
Hero Honda 15.4 -2.6 119.1 108.0 18.4 -9.3 15.5 17.1 14.0 15.0 10.0 10.4 12.5 8.6 55.4 41.8
Source: Company, MOSL
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
16/32
Dashboard
October 2012 16
Special Report Tata Motors: JLR momentum to sustain; 13.4% volume
CAGR over FY12-15Strong FCF to drive de-leveraging despite significant investment program
JLR product action, market expansion to drive 13.4% CAGR (FY12-15)
Luxury vehicle market volume momentum remains intact. Top 4 players grew ~9.3%
in FY13YTD (Apr-Aug) led by 21% growth in China. Luxury SUV (JLR's strength) growth
remains robust across markets; FY13YTD, SUV volume growth is 40% for JLR and 18%
for Mercedes Benz. Expect JLR's volumes to grow ~15% in FY13 leading the 13.4%
CAGR over FY12-15E on the back of product expansion (40 product actions over 5
years) and further market penetration. JLR's China volumes should benefit from
expected ~18% CAGR in the market over CY11-15, JLR's own dealer expansion and
Chery JV enabling JLR to compete better with a production base in China.
M&HCV segment could witness strong revival in FY14
Likely bottoming out of IIP growth (1.4% in FY13, lowest since FY92), expected interest
rate downcycle, and favorable macro impetus (e.g. FDI in retail) should augur well for
M&HCV business. We expect Tata Motors' (TTMT) M&HCV volume to grow 10% in
FY14, recovering from likely 12% de-growth in FY13. LCV volume momentum remains
strong with ~20% growth in FY13YTD. Expect 15% CAGR in LCV volumes over 2 years,
driven by SCVs.
Consolidated EBITDA margin to improve in FY14, strong FCF despiteaggressive capex
We expect Consolidated EBITDA margin to recover 50bp in FY14 to 14.2%. JLR's EBITDA
margin should improve 60bp to 15% in FY14 on the back of better mix and operating
leverage. We believe TTMT has multiple levers to support/improve margins over
next 3-4 years. Our estimates for FY15 are yet to factor in any benefits from the Chery
JV and own engine plant in UK & India. Our estimates suggest consolidated FCF
generation of INR274b over FY13-15, despite investing ~INR600b, transforming it into
a net cash company by FY15.
8% upgrade in FY14 EPS; Buy with TP of INR370/223 (ordinary/DVR)We believe JLR is on the right strategic path and is investing in the right areas, resulting
in its evolution to a much stronger and balanced player in the luxury vehicle market.
The CV business, which contributes ~35% to fair value, is expected to witness recovery
in FY14, resulting in significant improvement in standalone operations. We are
upgrading our FY14 consolidated EPS by 8.1% to INR41.1 to factor in for improvement
in JLR's product mix. The ordinary/DVR stock is currently trading at 8x/4.8x FY13E and
6.5x/3.9x FY14E consolidated EPS. Maintain Buy with revised target price of INR370
(FY14 SOTP based) for ordinary share and INR223 for DVR (40% discount to ordinary).
Also refer our Report dated
1 October 2012
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
17/32
Dashboard
October 2012 17
Domestic model-wise volumes for September 2012*
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
18/32
Dashboard
October 2012 18
Domestic model-wise volumes for September 2012* (Contd...)
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
19/32
Dashboard
October 2012 19
Sector Gauge Two-wheelersDomestic volumes moderate
Two-wheelers: Domestic volume trend (units)
Domestic market share in 2-wheelers
Domestic two-wheeler
volumes show signs
of slowdown
Increasing competition in
2-wheeler segment,with HMSI consistently
gaining market share
Two-wheelers: Volume snapshot Mar-12
Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTD FY13 Chg (%) FY12 Chg (%)
Total Domestic 2W 1,057,857 1,107,782 -4.5 1,132,696 -6.6 5,710,082 6.8 13,424,594 14.3
% of Tota l 2W 87 87 88 87 87
Total Motorcycle 766,059 836,887 -8.5 821,821 -6.8 4,216,829 3.3 10,086,547 11.9
% of Domes tic 2W 72 76 73 74 75
Scooters & Mopeds 291,798 270,895 7.7 310,875 -6.1 1,493,253 18.0 3,338,047 22.5
% of Domes tic 2W 28 24 27 26 25
Exports 161,061 172,261 -6.5 158,429 1.7 842,606 -2.1 1,957,613 27.8
% of Tota l 2W 13 13 12 13 13
Total 2W 1,218,918 1,280,043 -4.8 1,291,125 -5.6 6,552,688 5.6 15,382,207 15.9
Source: SI AM/MOSL
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
FY11 FY12 FY13
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
20/32
Dashboard
October 2012 20
Motorcycles: domestic volume trend
Motorcycles: domestic market share
Two-wheelers: Product mix
Two-wheelers: export volumes (units)
Slowdown in domestic
motorcycle volumes
Motorcycles dominate
2W segment
Export volumes
also remain under
pressure
Hero MotoCrop
continues to dominate
motorcycle segment,
although HMSI's
increasing its
market share
400,000
600,000
800,000
1,000,000
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
FY11 FY12 FY13
0%
25%
50%
75%
100%
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
He ro MotoCorp Ba ja j Auto HMSI Yama ha TVS Motor
0%
25%
50%
75%
100%
Apr-08
Ju
n-08
Au
g-08
O
ct-08
De
c-08
Fe
b-09
Apr-09
Ju
n-09
Au
g-09
O
ct-09
De
c-09
Fe
b-10
Apr-10
Ju
n-10
Au
g-10
O
ct-10
De
c-10
Fe
b-11
Apr-11
Ju
n-11
Au
g-11
O
ct-11
De
c-11
Fe
b-12
Apr-12
Ju
n-12
Au
g-12
Motorcycle Scooters & Mopeds
100,000
125,000
150,000
175,000
200,000
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
FY11 FY12 FY13
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
21/32
Dashboard
October 2012 21
Sector Gauge Three-wheelersDemand remains weak
Three-wheelers: volume trend (including exports)
Three-wheelers: domestic segment mix
3W volumes impacted
due to lower exports
Passenger segment
dominates three-
wheelers with over 80%
contribution
Three-wheelers: Volume snapshot Mar-12
Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTD FY13 Chg (%) FY12 Chg (%)Total Domestic 3W 45,386 45,468 -0.2 44,286 2.5 200,921 0.6 513,276 -2.4
% of Total 3W 63 58 68 65 59
Passenger 37,553 36,509 2.9 36,470 3.0 163,490 4.5 406,259 -4.5
% of Domestic e W 83 80 82 81 79
Total Goods 7,833 8,959 -12.6 7,816 0.2 37,431 -13.4 107,017 6.3
% of Domestic 3W 17 20 18 19 21
1T 251 1,952 -87.1 330 -23.9 1,095 -73.0 17,704 -17.6
% of Goods Vehicle 3 22 4 3 17
Exports 26,710 32,329 -17.4 21,063 26.8 107,752 -35.0 361,753 34.0
% of Total 3W 37 42 32 35 41
Total 3W 72,096 77,797 -7.3 65,349 10.3 308,673 -15.5 875,029 9.9
Source: SI AM/MOSL
32,000
44,000
56,000
68,000
80,000
92,000
Apr Ma y Jun Jul Aug Se p Oct Nov Dec Jan Feb Ma r
FY11 FY12 FY13
0%
25%
50%
75%
100%
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Pas s e nge r Goods
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
22/32
Dashboard
October 2012 22
Three wheelers: passenger segment market share
Three wheelers: goods segment market share
Bajaj Auto continues to
dominate passenger
segment
... Piaggio continues to
lead in the goods
segment
0%
25%
50%
75%
100%
Apr08
Jun08
Aug08
Oct
08
Dec08
Feb
09
Apr09
Jun09
Aug09
Oct
09
Dec09
Feb
10
Apr10
Jun10
Aug10
Oct
10
Dec10
Feb
11
Apr11
Jun11
Aug11
Oct11
Dec11
Feb
12
Apr12
Jun12
Aug12
Baja j Auto Pi aggi o M&M TVS Others
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
23/32
Dashboard
October 2012 23
Sector Gauge Cars and UVsPassenger cars remain sluggish, while UVs continue to grow
Passenger vehicles: Volume snapshot Mar-12
Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTD FY13 Chg (%) FY12 Chg (%)
Total Domestic PVs 184,238 191,914 -4.0 204,969 -10.1 1,046,382 7.1 2,617,373 4.6
% of Total PVs 83 79 81 82 84
Total Cars 118,022 145,066 -18.6 143,496 -17.8 748,861 0.5 2,017,194 2.3
% of Domes tic PVs 64 76 70 72 77
A1 & A2 84,939 104,142 -18.4 100,643 -15.6 537,305 -3.6 1,511,941 -1.7
% of Ca rs 72 72 70 72 75
A3 26,547 35,390 -25.0 36,929 -28.1 180,517 12.7 451,949 21.4
% of Ca rs 22 24 26 24 22
A4 & above 6,536 5,534 18.1 5,924 10.3 31,039 14.2 53,304 -12.6
% of Ca rs 6 4 4 4 3
UVs 45,062 26,425 70.5 44,878 0.4 207,651 55.9 365,418 15.6
% of Domestic PVs 24 14 22 20 14MPVs 21,154 20,423 3.6 16,595 27.5 89,870 -9.4 234,761 9.9
% of Domestic PVs 11 11 8 9 9
Exports 36,848 49,646 -25.8 47,882 -23.0 223,534 1.3 507,743 14.3
% of Total PVs 17 21 19 18 16
Total PVs 221,086 241,560 -8.5 252,851 -12.6 1,269,916 6.0 3,125,116 6.1
Source: SI AM/MOSL
Cars: domestic volume (units)
UVs & MPVs: domestic volume (units)
Volumes remain
sluggish
Volumes improve
led by Ertiga, Duster and
Quanto
16,000
28,000
40,000
52,000
64,000
76,000
Apr May Jun Jul Aug Se p Oct Nov Dec Jan Feb Ma r
FY11 FY12 FY13
80,000
120,000
160,000
200,000
240,000
Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Feb Mar
FY11 FY12 FY13
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
24/32
Dashboard
October 2012 24
0%
25%
50%
75%
100%
Apr08
Jun08
Aug08
Oct08
Dec08
Feb
09
Apr09
Jun09
Aug09
Oct09
Dec09
Feb
10
Apr10
Jun10
Aug10
Oct10
Dec10
Feb
11
Apr11
Jun11
Aug11
Oct11
Dec11
Feb
12
Apr12
Jun12
Aug12
Ma ruti TataMotor Hyunda i GM Honda
20,000
29,000
38,000
47,000
56,000
65,000
Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r
FY11 FY12 FY13
Passenger vehicles: export volume (units)
Cars: domestic market share
UVs: domestic market share
Passenger vehicles: segment mix
Export volumes
pick-up
Maruti's market share
improves, driven
by Ertiga
A2 dominates the
passenger vehicles
segment
Maruti's market share
impacted by Manesar
lock-out
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
25/32
Dashboard
October 2012 25
Sector Gauge Commercial vehiclesLCVs remains strong, while M&HCV declines
M&HCVs: domestic volume - buses (units)
M&HCVs: Domestic volume - goods (units)
M&HCV volumes
remains muted
Commercial vehicles: Volume snapshot Mar-12
Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTD FY13 Chg (%) FY12 Chg (%)
Total Domestic CVs 66,766 64,242 3.9 65,008 2.7 314,982 4.6 809,278 18.4
% of Total CVs 91 91 88 90 90
Total M&HCV 25,003 27,442 -8.9 23,171 7.9 114,222 -11.9 348,869 8.0
% of Domestic CVs 37 43 36 36 43
Goods 21,103 23,440 -10.0 18,833 12.1 92,552 -16.2 299,287 8.8
% of M&HCVs 84 85 81 81 86
Pa ssenger 3,900 4,002 -2.5 4,338 -10.1 21,670 12.7 49,582 3.3
% of M&HCVs 16 15 19 19 14
Total LCVs 41,763 36,800 13.5 41,837 -0.2 200,760 17.0 460,409 27.7
% of Domestic CVs 63 57 64 64 57
Goods 37,970 32,801 15.8 36,778 3.2 177,405 18.0 411,229 30.2
% of LCVs 57 51 57 56 51Pa ssenger 3,793 3,999 -5.2 5,059 -25.0 23,355 10.3 49,180 9.8
% of LCVs 6 6 8 7 6
Exports 6,759 6,703 0.8 8,491 -20.4 36,292 7.8 92,327 24.8
% of Total CVs 9 9 12 10 10
Total CVs 73,525 70,945 3.6 73,499 0.0 351,274 4.9 901,605 19.0
Source: SI AM/MOSL
0
8,000
16,000
24,000
32,000
40,000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Fe b Ma r
FY11 FY12 FY13
0
1,500
3,000
4,500
6,000
7,500
Apr Ma y Jun Jul Aug Se p Oct Nov Dec Jan Fe b Mar
FY11 FY12 FY13
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
26/32
Dashboard
October 2012 26
M&HCVs: domestic market share, goods (%)
M&HCVs: domestic market share, buses (%)
LCVs: domestic volumes (units)
LCVs continue
robust growth
Tata Motors continue
to dominate M&HCV
goods segment
0%
25%
50%
75%
100%
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Ta ta M oto r A sho kLe yl a nd Ei ch e r
0%
25%
50%
75%
100%
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Ta ta Moto r As h okLe yl an d Ei che r S wa ra j
0
10,000
20,000
30,000
40,000
50,000
60,000
Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Mar
FY13 FY11 FY12
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
27/32
Dashboard
October 2012 27
LCVs: domestic market share (%)
Goods: segment-wise break-up (%)
Tata Motors dominates
the domestic LCV
segment
LCVs contribution
to CVs increased
0%
25%
50%
75%
100%
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
LCVs
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
28/32
Dashboard
October 2012 28
News and Events
M&M launches Quanto (mini-SUV) at INR582k; receives 3,200 bookings
since launch
M&M launched its mini SUV Quanto with starting price of INR582k (ex-showroom
Thane). It is the smallest UV in Mahindras stable with sub-4 mtr in length and powered
by 1.4-litre diesel engine (3 cylinders) and thus qualifies for lower excise duty of 12%
(v/s 24%/27% for above 4mtr vehicle/ & >1.5ltr engine). It has a seating capacity of 7
people, including 2 in the last row. Quanto is based on Ingenio platform, on which
Xylo is made. Between Xylo and Quanto, M&M currently has capacity of ~7,000 units/
mth at its Chakan plant. On the occasion of the launch, Dr Pawan Goenka, President,
Automotive & Farm Equipment sectors, Mahindra & Mahindra: With the Quanto,
Mahindra is aiming to fill a need gap in the Indian automotive market for a versatileand compact SUV. We expect the Quanto to offer an exciting upgrade at a premium to
customers who are otherwise looking for premium diesel hatchbacks or entry level
diesel sedans.
BharatBenz starts commercial sales of its heavy duty trucks in India
Daimler India Commercial Vehicles (DICV), the 100% Indian subsidiary of Daimler AG,
launched three heavy duty trucks under the BharatBenz brand. The three trucks
launched, are the first in a range of 17 models that Bharat Benz plans to launch over
the next 17 month. Speaking on the occasion, Marc Llistosella, Managing Director and
CEO, DICV said: Today is an important milestone for all of us at Daimler and Indiantrucking. From today, Indian truck buyers will have a new choice. A choice, for trucks
that are more fuel efficient, more reliable and in the end makes them more successful.
BharatBenz is here, and we are proud to have delivered on the promise we made
since 2010 - to launch our trucks in September 2012. We will drive the change in the
Indian market with a whole new product, sales and service experience for our
customers.
All new Range Rover revealed at Paris Motor Show
Land Rover has revealed the all-new Range Rover (4 th generation) at the Paris
International Motor Show. Designed and engineered at Land Rovers developmentcentres in the UK, the worlds first SUV with a lightweight all-aluminium body, the
new Range Rover will be produced in a state-of-the-art new low-energy
manufacturing facility at Solihull, UK. Over 370 million has been invested in the
Solihull plant to create the worlds largest aluminium body shop. Presenting the new
Range Rover, John Edwards, Land Rover Global Brand Director said This is a vehicle
that will take us to the next level of success. Range Rover is our flagship and a true
British success story, designed, engineered and built in Britain. Its distinctive design,
breadth of capability and class-leading refinement and comfort has always made it
unique. When we asked our customers what they wanted us to change, they told us
dont change it, just make it better. We set out to create not just the worlds finestluxury SUV, but the worlds finest luxury vehicle.
Major developments in the auto sector
September 2012
Range Rover (4th generation)
M&M launches Quanto
BharatBenz HCV truck
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
29/32
Dashboard
October 2012 29
Yamaha launches Ray scooter, eyes 1m and 2.8m units in India by 2014 &
2018 respectively
Yamaha entered the Indian scooter market with the launch of its new scooter Ray
priced at INR46,000 (ex-showroom Delhi). It is an automatic scooter powered by a
new 113cc engine that makes 7.1PS at 7500rpm and 8.1Nm of torque. The company
claims a 0-60kmph time of 12s and a fuel efficiency of 62.1kmpl. It was also reported
that Hiroyuki Suzuki, Chief Executive & MD at India Yamaha Motors said the company
plans to sell 0.65m units by next year from current 0.4m units. Yamaha is targeting 20%
share in the scooter segment by 2016, he added. It was also mentioned that Yamaha
has started exporting bikes to few Latin American countries and may increase export
volumes in coming years. By 2014, Yamaha aims to sell 1m units and subsequently
touch 2.8m by 2018. The companys proposed Chennai manufacturing plant will be
operational by 2014 and total production capacity will touch 2.8m by 2018, according
to the reports.
TVS launches 125cc Phoenix motorcycle, plans to increase market share to 17%
To strengthen its position in the executive motorcycle segment, TVS Motor has
launched Phoenix 125cc motorcycle. The company claims that the motorcycle has got
a host of new features with a powerful engine which under standard test conditions
returns a mileage of 67 kmpl. It would compete with Hero MotoCorps Super
Splendour, Glamour125cc, Bajaj Autos Discover 125cc and Hondas CB Shine 125cc.
M&M planning to invest INR15b on a new platform in collaboration with
Ssangyong Motors
Mahindra & Mahindra will reportedly invest INR15b on a new platform to be developed
in collaboration with its Korean subsidiary Ssangyong Motors. According to a media
report, Pawan Goenka, President, Automotive & Farm Equipment Sectors, Mahindra
& Mahindra said This joint development will be taken up over the next three years.
While this investment will be on one platform, we will invest more on joint
development on other range. The report mentioned that Goenka said, We will launch
Rexton, a high-end SUV from the SsangYong stable by Diwali. This will be in a segment
that is higher than our successful SUV XUV 500.
Nissan launches Evalia; plans to launch 10 new models by 2017 including
two Datsun branded vehicles
Nissan has launched its MUV Evalia priced between INR0.85m-0.99m (ex- showroom
Delhi). Mated to a 5-speed manual transmission, the front-wheel drive MPV is
powered by a 1.5-litre dCi diesel engine that produces 85PS of power and 200Nm of
torque and can accommodate 8 occupants. Nissan claims that the Evalia can hit 60km/
h in 12.7 seconds owing to its monocoque construction that gives it a lower kerb
weight compared to competing MPVs. The ARAI figure stands at 19.3kmpl which
reportedly translates to a 50% better overall efficiency compared to competition.
Nissan aims to sell about 2,000-2,500/month units of Evalia and plans to expand
production capacity either through new plants or the existing plant. The Japanese
auto maker is now firming up further expansion plans in India and announced its
intentions to launch 10 new models by March 2017, including two Datsun branded
vehicles as well.
Nissan launches Evalia
Ssangyong Motors (Rexton)
TVS launches 125cc Phoenix
Yamaha launches Ray scooter
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
30/32
Dashboard
October 2012 30
Volvo Eicher JV planning to invest INR10b by 2013
VE Commercial Vehicles Ltd has reportedly said it will invest INR10b by 2013 on various
activities, including expansion of engine production capacity, launch new products
and enhancing R&D. The reports quoted VEVC Managing Director Siddhartha Lal as
saying We have set a capex of INR10b for 2012 and 2013. Our investment plans are on
track and there is no downturn effect on it. According to the reports, the firm has a
capacity to produce 60,000 engines a year. It is setting up a new plant to roll out 100k
engines, which is based on Volvo technology, every year. The new plant will be
commissioned by the middle of next year, Lal added.
Volkswagen India planning to invest INR7b in next two years
Volkswagen Group has stated that it will invest 100 million euros (over INR7b) in India
in the next two years for upgrading products and facilities, according to the reports.
The reports quoted Volkswagen Group Chief Representative, India, John Chacko as
saying We need investments in improving our facilities, doing minor model changes
for our exports and other areas. We are investing about 100 million euros for the
entire group in the next two years in India. Chacko stated that As a group we had
planned to invest INR20b that is on hold since lots of policy decisions are confusing.
We are however still putting pressure on Maharashtra government on various policy
issues.
Toyota Kirloskar Motor to invest INR9b on expanding production capacity
to 310k units per annum
Toyota Kirloskar Motor (TKM) will reportedly invest INR9b in India to increase the
production capacity at its Bangalore facility from current 210k to 310k units/per annum
by March next year. Toyota Kirloskar Motor Vice-Chairman Vikram Kirloskar was quoted
as saying We will invest INR9b to expand the capacity of our Bangalore plant by
March next year. The production capacity will increase to 3.1 lakh annually from the
2.1 lakh units at present.
Italian truck maker Iveco looking re-enter Indian truck market
It has been reported that the Italian truck maker Iveco, a part of the EUR59.6b Fiat
Group, is making a second attempt to enter the fast-growing truck market in India.
The report stated the company CEO Alfredo Altavilla said that, Iveco is scouting for alocal partner and India is on the top of its priority list. He was quoted as saying The
only way to be successful in India is to have a strong local partner. India is one of the
important markets in the World; it is the topmost on my priority list.
It was reported that the Iveco had a 15 percent stake in Indias second-largest truck
maker, Ashok Leyland till 2006, before it sold off its share to the promoter, Hinduja
Group, for INR6b. Iveco was instrumental in offering the technology support to Ashok
Leyland, but it has never existed as a standalone brand in India. In 2007, the company
also entered into an MoU with Tata Motors but the MoU did not fructify into a formal
agreement, according to the report.
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
31/32
Timely analysis and insights on
all economic data releases and
developments
Our findings and conclusions
based on primary research, so as
to uncover perception and
discover reality
Highlights of interactions with
corporate CEOs. The focus here is
not so much numbers, but what's
behind them
Takeaways and insights from
visits to plant sites, construction
sites, new retail outlets, etc,
with the relevant pictures
What various subject matter
experts have to say on wide-
ranging topics e.g. telecom
policy to terrorism, rural
economy to black economy
Highlights of interactions with
politicians and bureaucrats for
insights into policy matters for
the economy and various sectors
This will highlight the bright
spots in an otherwise bleakscenario in the economy or any
sector or company Our whistleblower series to
highlight concerns which are
likely to have significant
implications for growthNotes from analysts' diary during
their extended travels, meeting
managements, visiting sites,
conducting channel checks
Sector Periodicals
Product Gallery
-
7/31/2019 AUTO-20121003-MOSL-DB-PG032
32/32
DisclosuresThis report is for personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement
to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form.
Unauthorized disclosure, use, dissemination or copying (either whole o r partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates
or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and furthe r agrees to hold MOSt
or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
The information contained herein is based on publicly available data or other sources believed to be reliable. Wh ile we would endeavour to update the information here in on reasonable basis, MOSt and/or its
affiliates are under no ob ligation to update the information. Also there may be regula tory, compliance, or other reasons that may prevent MOSt and /or its affiliates from doing so. MOSt o r any of its affiliates or
employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the info rmation contained in this report . MOSt or any of its aff iliates
or employees do not provide, at any time, any express or implied warranty of any kind, rega rding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness
for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision
based on this report or for any necessary explanation of its contents.
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest
Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Disclosure of Interest Statement Companies where there is interest
1. Analyst ownership of the stock None2. Group/Directors ownership of the stock Hero MotoCorp
3. Broking relationship with company covered None
4. Investment Banking relationship with company covered None
Analyst CertificationThe views expressed in this research report accu rately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation o f the research analyst(s) was, is, or
will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research ana lysts, strategists, or research associates principally responsible
for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.
Regional Disclosures (outside India)This report is not directed or intended for distribution to or use by any person or entity residen t in a state, country or any jurisdiction, where such distribution, pub lication, availability or use would be contrary to
law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For U.K.
This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (FinancialPromotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity to
which this document relates is only available to investment professionals and will be engaged in only with such persons.
For U.S.MOSt is not a registered broker-dealer in the United States (U.S.) and, therefore, is not subject to U.S. rules. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange
Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S.,
Motilal Oswal has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo"). Any business interaction pursuant to this report will have to be executed
within the provisions of this Chaperoning agreement
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major
institutional investors and will be engaged in only with major institutional investors.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, Marco
Polo and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
Motilal Oswal Securities LtdMotilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: [email protected]