IDirect_Motogaze_Sept14

8/10/2019 IDirect_Motogaze_Sept14

1/14CICI Securities Ltd.|Retail Equity Research

September 16 2014

toGaze September, 2014

Green shoots turning into steady growth!!!

Momentum continues as festive season ramp-up begins

August saw the momentum continuing as inventory ramp-up for the

festive season has begun. With expectations of strong festive seasongrowth as the economy revives, we expect a strong ramp-up in channel

inventory for September as well. Also, with the monsoon deficit reducing,

sentiment has picked up. The volume growth was led by the two-wheeler

(2-W) segment, which grew ~19% YoY to ~1.6 million units. The scooter

segment continued to lead the way and outperformed the industry with

~31% YoY growth aided by new product launches by Yamaha and TVS as

well as capacity expansion from HMSI. The motorcycle segment grew

~14% YoY with strong growth coming from market leader HMCL (up 24%

YoY). However, HMSI and BALs performance in the motorcycle segment

has been disappointing (~2%, ~4% YoY growth). The passenger vehicles

segment saw sustained growth and grew ~7% YoY. Domestic volumes

grew ~13% YoY while exports de-grew ~11% YoY. The overall utility

vehicle segment grew ~22% YoY. The CV segment is the only one to

witness a decline and de-grew ~4% YoY. However, the M&HCV segment

has seen a recovery and grew 12% YoY for the month. The LCV segment,

however, continued to witness pressure and fell ~11% YoY.

New launches in pre-festive season to set the tone!

With the auto industry finally showing signs of a recovery after nearly two

years of demand slump, the festive season is likely to be eagerly awaited

by OEMs. New launches and product refreshes are the key, going ahead,

as new product launches clearly aid in revival of sentiments by pulling

consumers to showrooms. Success of new products like Ecosport, Grande

i10, Celerio and huge bookings for the newly launched Mobilio are

testament to the same.Macro tailwinds likely to pick up with economic revival!

To provide a boost to the auto sector, excise duty cuts have been

extended by about six months to December. Going ahead, with an

improvement in overall economic activity, we believe macro headwinds

like currency, interest rate and inflation will turn positive and help the

industry. However, the dampener to our assumptions can be lower-than-

expected monsoons in the last leg, which may depress rural demand.

Industry outlook

We expect an improvement in demand sentiments and believe the overall

industry will grow 10-12% for FY15E. For the passenger vehicle segment,

we expect 7-9% growth while the M&HCV segment is likely to improve 5-7% with a major recovery likely in H2. The LCV segment is likely to

underperform the M&HCV segment and remain flat. The 2-W segment is

likely to grow ~11-13%, led by strong growth in the scooter segment and

macro factors helping discretionary spending. On a longer term basis, we

remain positive on the growth prospects of the industry with a rise in

incomes augmenting auto penetration levels in the country.

On the basis of index performance, for August, the BSE Auto index (1.6%)

has marginally underperformed the BSE Sensex (up 1.9%). Among our I-

direct auto coverage, we remain bullish on frontline OEM stocks like Tata

Motors, Bajaj Auto as well as Eicher Motors. Also, we believe valuations

for ancillary stocks are likely to remain on an uptrend as earnings grow onthe favourable impact of operating leverage on increased demand as well

as favourable raw material prices. We continue to remain positive on the

tyre sector.

ctor View

alweight

ume performance

mpany Gr. YoY(%)

o Motocorp 21.4aj Auto 7.9

Motors 46.6

uti Suzuki 26.9

a Motors -17.6

hindra and Mahindra -7.2

ok Leyland 16.7

y players & industry volume growth Aug14 (%)

17.2

-8.0

26.9

20.1

46.6

21.4

7.9

-17.6

16.7

-7.2

0.2

-1.1

3.2

9.3

-2.7

12.1

5.5

5.4

4.4

6.6

Industry

HMCL

BAL

TVS

HMSI

Maruti

TML

M&M

Hyundai

ALL

YoY gr

MoM gr

rce: Siam

y players & industry volume growth YTD (%)

4.6

28.2

30.6

17.2

.0

-7.8

13.7

11.8

-3.8

-7.4

Industry

HMCL

BAL

TVS

HMSI

Maruti

TML

M&M

Hyundai

ALL

rce: Siam

alysts name

shant Vass

[email protected]

nil Shah

[email protected]


2/14ICICI Securities Ltd.|Retail Equity Research

Page 2

Two & three wheeler industry

The domestic two-wheeler industry saw ~19% YoY growth to 1.34 million

units in August as major OEMs have pushed inventory in the system on

expectations of a strong festive season. The scooter segment continued to

outperform the industry with growth of ~31% YoY while the motorcycle

segment witnessed growth of ~10% YoY.

The three-wheeler industry at 91,726 units has grown ~37% YoY with the

domestic segment growing ~24% YoY while the export market has seen

~60% YoY growth (led by BAL, which witnessed ~70% YoY growth).

Market share movement

According to data released by the Society of Indian Automobile

Manufacturers (Siam), the domestic market share of two and three-

wheeler players is as below for August 2014.

Exhibit 1:

Domestic market share movement in two-wheelers

15.2

42.7

11.7

22.2

8.1

11.7

41.8

12.7

25.1

8.8

11.4

41.4

12.9

25.6

8.7

0

5

10

15

20

25

30

35

40

45

Bajaj Auto Hero Motocorp TVS motor HMSI Others

(%)

Aug-13 Jul-14 Aug-14

Source: Siam, Data used is YTD

Exhibit 2:

Domestic market share movement in three-wheelers

41.6

35.2

11.4

11.8

46.4

31.9

9.8

11.9

46.4

31.8

9.9

11.9

0 5 10 15 20 25 30 35 40 45 50

Bajaj Auto

Piaggio

M&M

Others

(%)



The 2-W segment has seen a bit of a turnaround in

fortunes with the festive season showing good growth.

Segment leader HMCL has shown good growth even as

aggressive competitor HMSI has gained market share with

enhanced production capacity ensuring lower waiting

periods

The domestic 3W market has started improving from the

start of the year and is up ~17% YTD



Page 3

Exhibit 3:Domestic market share movement in motorcycles

21.2

52.8

5.4

14.517.0

53.9

5.9

15.816.6

53.8

6.0

16.0

0

10

20

30

40

50

60

Bajaj Auto Hero Motocorp TVS motor Honda

(%)


Source: Company, ICICIdirect.com Research

Exhibit 4:

Domestic market share movement in scooters/scooterettes

20.5

12.5

50.7

16.417.3 15.1

53.7

13.916.3 15.6

54.8

13.3

-5

5

15

25

35

45

55

Hero Motocorp TVS Motors Honda Others

(%)



Hero MotoCorp continues to be the market leader in the

executive and economy segments. High fuel prices and an

overall reduction in discretionary spending have started to

hit this segment. The market seems to be moving in favour

of MNC OEMs like HMSI, Suzuki and Yamaha that have

shifted the focus to the economy segment

HMSI continues to be the clear leader in the scooter

segment. The scooter segment remains one of the fastest

growing segments in the entire automobile industry. HMCL

has continued to gain market share in the scooter segment

while TVS has continuously lost market share



Page 4

Exhibit 5:

Market share movement in executive motorcycle segment*

20.5

56.1

7.1

16.3

0

10

20

30

40

50

60

70

Aug-1

2

Sep-1

2

Oct-12

Nov-1

2

Dec-1

2

Jan-1

3

Fe

b-1

3

Mar-13

Apr-13

May-1

3

Jun-1

3

Ju

l-13

Aug-1

3

Sep-1

3

Oct-13

Nov-1

3

Dec-1

3

Jan-1

4

Fe

b-1

4

Mar-14

Apr-14

May-1

4

Jun-1

4

Ju

l-14

Aug-1

4

(%)

0

4

8

12

16

20

(%)

Bajaj Auto (RHS) Hero Motocorp TVS (RHS) HMSI (RHS)

Source: Siam * only top 4 two-wheeler OEMs

Exhibit 6:

Market share movement in greater than 125 cc segment

75.5

9.1

15.4

15.5

0

10

20

30

40

50

60

70

80

90

Aug-1

2

Sep-1

2

Oct-12

Nov-1

2

Dec-1

2

Jan-1

3

Fe

b-1

3

Mar-13

Apr-13

May-1

3

Jun-1

3

Ju

l-13

Aug-1

3

Sep-1

3

Oct-13

Nov-1

3

Dec-1

3

Jan-1

4

Fe

b-1

4

Mar-14

Apr-14

May-1

4

Jun-1

4

Ju

l-14

Aug-1

4

(%)

0

5

10

15

20

25

30

35

(%)

Bajaj Auto (LHS) Hero Motocorp (RHS) TVS (RHS) HMSI (RHS)

Source: Siam *only top three vehicle two-wheeler OEMs

The executive motorcycle segment continues to be

dominated by Hero MotoCorp. HMCL, BAL and TVS have

lost market share while HMSI has gained share

handsomely


5/14ICICI Securities Ltd. Retail Equity Research

Page 5

Hero MotoCorp (HERHON) Hero MotoCorp, the market leader in the 2-W segment, saw strong

volume growth (~21% YoY) as it is betting big on the festive

season growth, thereby pushing inventory to dealers

The domestic motorcycle segment at 5.0 lakh units grew ~24%

YoY while the domestic scooter segment has de-grown ~15%YoY as scooter exports for the month stood at ~12500 units

For the month, exports have continued at a neck-breaking growth

of ~130% YoY, albeit on a low base. Even MoM, the growth is

~75% with the scooter segment contributing most to this growth.

The management expects exports to start contributing more

meaningfully from this year as the markets seeded in the previous

year start showing traction in a few quarters

Exhibit 7:

Volume performance (in units)

Segment Aug-14 Aug-13 %chg Jul-14 %chg YTD'15 YTD'14 %chg

Motorcycles 499,380 404,278 23.5 472,996 5.6 2,495,103 2,228,708 12.0

Scooters 59,229 55,718 6.3 56,866 4.2 308,497 278,115 10.9

Total Sales 558,609 459,996 21.4 529,862 5.4 2,803,600 2,506,823 11.8

Exports(inc. above) 23,106 9,850 134.6 13,201 75.0 72,962 51,502 41.7

Exports (% of sales) 4.1 2.1 200 bps 2.5 164 bps 2.6 2.1 55 bps

Source: Company, Siam

Bajaj Auto (BAAUTO)

Over the past few months, Bajaj Autos volume performance in the

domestic markets has been under pressure as its entry-level

segment (125 cc < 150 cc segment has, however, done well in thedomestic markets and seen growth of ~20% YoY

The three-wheeler (3-W) segment has seen a strong rebound in

volumes in both the domestic and export markets. The domestic

segment saw ~43% YoY increase while the export market saw

~70% YoY jump (on a low base)

The slowdown in domestic markets has been offset by the strong

export growth. The contribution of exports, in volume terms,

stood at ~52%, compared to ~47% last year due to a decline in

domestic volumes and the low base of last year. On a YTD basis,

exports contribution stands at ~48%

Exhibit 8:



Total 2-wheeler sales 284,302 278,583 2.1 267,841 6.1 1,427,001 1,385,562 3.0

2W exports 146,955 1 27,594 15.2 142,788 2.9 674,017 509,745 32.2

2W domestic sales 137,347 150,989 -9.0 125,053 9.8 752,984 875,817 -14.0

Total 3-wheeler sales 52,538 33,605 56.3 51,451 2.1 217,561 187,228 16.2

3W exports 28,172 16,566 70.1 26,967 4.5 112,832 107,001 5.4

3w domestic sales 24,366 17,039 43.0 24,484 -0.5 104,729 80,227 30.5

Total Sales 336,840 312,188 7.9 319,292 5.5 1,644,562 1,572,790 4.6

Total Domestic Sales 161,713 168,028 -3.8 149,537 8.1 857,713 956,044 -10.3

Total Exports 175,127 144,160 21.5 169,755 3.2 786,849 616,746 27.6

Exports as % of sales 52.0 46.2 581 bps 53.2 117 bps 47.8 39.2 863 bps


ero MotoCorp: Sales volumes

404

409

565

473

462

495

450

456

506

537

480

473

499

5660

61

57

63

66

55

6865 66

6157 59

0

10

20

30

4050

60

70

80

0

100

200

300

400

500

600

Aug'13

Oct'13

Dec'13

Feb'14

Apr'14

Jun'14

Aug'14

('000s)

('000s)

Motorcycles Scooters

urce: Siam, ICICIdirect.com Research

ajaj Auto: Sales volumes

279 324348

279

261281

273

271 300313

262

268284

34

44 37

32

37 37403432 38

43 51 53

5253

4444

45

39

4543

51

43

36

40

46

0

50

100

150

200

250

300

350

400

Aug'13

Oct'13

Dec'13

Feb'14

Apr'14

Jun'14

Aug'14

('000s)

30

35

40

45

50

55

(%)

Two-Wheelers Three-Wheelers % exports

ource: Siam, ICICIdirect.com Research



Page 6

TVS Motors (TVSSUZ) Overall sales at ~2.3 lakh units grew ~46% YoY, with the moped

segment growing ~32% YoY growth on a low base while other

segments boosted by new launches have also done well.

Motorcycle volumes grew ~36% YoY while the scooter segment

saw sustained momentum and grew ~84% YoY

The moped segment has witnessed growth with an overall

improvement in the demand scenario. However, the segment that

has hitherto been in a downturn till last year is seeing an increase

in demand and is up ~10% YTD

Export markets have continued to do well for TVS with the

segment growing ~28% YoY for the month. Three-wheeler

exports at ~8000 units grew ~32% YoY and have driven the sharp

growth in 3-W volumes this year

Exhibit 9:


Segment Aug-14 Aug-13 %chg Jul-14 %chg YTD'15 YTD'14 %chgMotorcycles 83,332 61,313 35.9 76,767 8.6 393,982 312,669 26.0

Scooters 67,240 36,478 84.3 60,619 10.9 284,376 175,501 62.0

Mopeds 67,090 50,678 32.4 56,742 18.2 311,603 284,169 9.7

Total 2-W Sales 217,662 148,469 46.6 194,128 12.1 989,961 772,339 28.2

3-Wheelers 9,820 7,063 39.0 8,964 9.5 43,766 31,363 39.5

Total Sales 227,482 155,532 46.3 203,092 12.0 1,033,727 803,702 28.6

Exports(incl. in above) 35,074 27,425 27.9 36,986 -5.2 169,623 125,724 34.9

Exports as % of sales 16.1 18.5 19.1 - 17.1 16.3


Honda Motorcycles and Scooters India (HMSI)

Overall sales have continued to grow strongly (~26% YoY) led bystrong scooter volumes as demand continues to be strong in the

segment. HMSI has benefitted by expanding its distribution

network and production volumes

Motorcycle segments have seen muted growth with ~4% YoY

growth overall, with domestic volumes growing ~6% YoY while

the scooter segment grew 48% YoY and has continued to

outperform the industry with strong growth momentum

Export markets have also done well but with HMSIs focus more

firm on the domestic markets, the segment remains a small part of

HMSIs volume pie (~4%)

Exhibit 10:



Motorcycles 162,715 156,629 3.9 157,746 3.2 769,966 639,426 20.4

Scooters 225,308 152,303 47.9 223,665 0.7 992,275 697,363 42.3

Total Sales 388,023 308,932 25.6 381,411 1.7 1,762,241 1,336,789 31.8

Exports(incl.above) 17,152 17,242 -0.5 12,000 42.9 68,248 57,645 18.4

Exports as % of sales 4.4 5.6 -116 bps 3.1 -315 bps 3.9 4.3 -44 bps


VS Motors : Scooter sales volumes

61 8

382

61

58 6

563 6

8 74 8

575

77 8

3

36

43

42

38

42 4

542 4

8 46

54

57 6

1 675

1

63

46

56

60 69 66 7

3

6

3 62

62 5

7 67

0

40

80

120

160

200

240

Aug'13

Oct'13

Dec'13

Fe

b'14

Apr'14

Jun'14

Aug'14

(%)

Motorcycles Scooters Mopeds


MSI: Motorcycles scooter sales volumes

157

163

183

151

125 1

63

152 1

90

138

160

151

158

153

152

166

193

168

171

181

176

202

176

195

172

224

218

0

50

100

150

200

250

300

350

400

450

Aug'13

Sep'13

Oct'13

Nov'13

Dec'13

Jan'14

Fe

b'14

Mar'14

Apr'14

May'14

Jun'14

Ju

l'14

Aug'14

(000s)

Motorcycles Scooters



7/14



Page 8

Exhibit 12:

Market share movement in A2 segment

38.441.0

30.5

56.452.6

64.3

0

10

20

30

40

50

60

70

Aug-1

2

Sep-1

2

Oct-12

Nov-1

2

Dec-1

2

Jan-1

3

Fe

b-1

3

Mar-13

Apr-13

May-1

3

Jun-1

3

Ju

l-13

Aug-1

3

Sep-1

3

Oct-13

Nov-1

3

Dec-1

3

Jan-1

4

Fe

b-1

4

Mar-14

Apr-14

May-1

4

Jun-1

4

Ju

l-14

Aug-1

4

(%)

Hyundai Maruti

Source: Siam, Top two PV OEMs considered

Exhibit 13:Domestic market share movement in commercial vehicles

12.3

22.4

52.7

12.512.8

25.4

47.5

14.313.3

25.4

47.5

13.8

0

10

20

30

40

50

60

ALL M&M Tata Motors Others

(%)


Source: Siam Data used is YTD

Exhibit 14:Segmental share in CVs

30.0

37.335.1

70.0

62.764.9

0

10

20

30

40

50

60

70

80

Sep-1

2

Oct-12

Nov-1

2

Dec-1

2

Jan-1

3

Fe

b-1

3

Mar-13

Apr-13

May-1

3

Jun-1

3

Ju

l-13

Aug-1

3

Sep-1

3

Oct-13

Nov-1

3

Dec-1

3

Jan-1

4

Fe

b-1

4

Mar-14

Apr-14

May-1

4

Jun-1

4

Ju

l-14

Aug-1

4

(%)

M&HCV LCV

Source: Siam

The A2 segment is the bread and butter category of the

passenger car segment. The segment had seen a drop in

volumes owing to a lack of options among diesel variants.

As discretionary consumption spending increases, the

segment will see a definitive improvement in volumes

Despite a slowdown in the M&HCV segment, LCVs had

continued to buck the trend and managed to grow.

However, in the past quarter, LCVs have also witnessed a

drop in volumes as the overall economic scenario has

shown little signs of improvement. Going ahead, with an

improvement in sentiment and a pick-up in

economic/industrial activity levels, we believe the CV

segment will pick up

The outperformance of the LCV segment in the past year,

coupled with a decline in the M&HCV segment has enabled

the LCV/MHCV ratio to quickly reach the 70:30 mark that is

the norm in most countries



Page 9

Maruti Suzuki India (MARUTI)

Maruti Suzukis overall volumes have grown ~27% YoY and

~10% MoM. Domestic volumes have grown ~30% YoY (on the

low base of last year) and have significantly outperformed the

domestic PV segment, which has grown ~5% YoY The A segment, viz. Alto, Wagon-R and Swift (including the Dzire

as per the new Siam classification) has grown ~34% YoY. Ertiga

has also seen strong growth in volumes for the month at ~5500

units, ~20% YoY increase

Exports grew sharply by ~27% YoY to ~12,500 units

Exhibit 15:Volume performance in units)


M800* 0 1,522 -100.0 0 NA - 7,826 -100.0

Omni, Eeco,Versa 9,990 7,956 25.6 11,680 -14.5 50,501 38,200 32.2

Alto, Wagon-R, Zen,

Swift,Ritz, Celerio, Dzire 81,445 61,009 33.5 53,915 51.1 310,435 259,520 19.6

SX4, Swift Dzire Tour 1,378 968 42.4 18,867 -92.7 71,715 67,216 6.7

Total Passengers 92,813 71,455 29.9 84,462 9.9 432,651 372,762 16.1

Gypsy, Vitara,Ertiga 5,491 4,563 20.3 5,631 -2.5 26,389 23,747 11.1

Total Domestic 98,304 76,018 29.3 90,093 9.1 459,040 396,509 15.8

Exports 12,472 11,305 10.3 11,287 10.5 53,010 40,547 30.7

Total Sales 110,776 87,323 26.9 101,380 9.3 512,050 437,056 17.2

Exports as % of sales 11.3 12.9 11.1 10.4 9.3

Source: Company, Siam. * estimates

Tata Motors (TELCO)

Tata Motors volumes continued to remain under pressure with

total sales of 40,883 units, a decline of ~18% YoY but an MoM

increase of ~2%

For Tata Motors, the domestic CV segment declined ~20% YoY,

even after echoing the poor demand scenario. The PV segment

has also been struggling and saw a decline of ~10% YoY.

However, the M&HCV segment grew ~16% indicating the

bottoming of demand after nearly three years of downturn

For August, JLR volumes grew only 2.4% YoY to ~31,650 units

reflecting strong demand for its products across geographies

Exhibit 16:Volume performance (in units)


Domestic MHCV sales 10,765 9,297 15.8 11,307 -4.8 52,647 53,319 -1.3

Domestic LCV Sales 18,766 27,717 -32.3 18,778 -0.1 91,554 140,115 -34.7

Domestic Pass.Car Sales 8,482 9,561 -11.3 6,949 22.1 34,587 48,190 -28.2

Domestic UV Sales 2,870 3,036 -5.5 2,585 11.0 11,886 12,604 -5.7

Exports 4,480 4,894 -8.5 4,363 2.7 19,070 20,606 -7.5

Total Sales 40,883 49,611 -17.6 39,619 3.2 190,674 254,251 -25.0

Jaguar Sales 4,658 5,222 -10.8 7,408 -37.1 31,650 30,973 2.2

Landrover Sales 26,992 25,673 5.1 32,059 -15.8 154,623 125,704 23.0

Total JLR Sales 31,650 30,895 2.4 39,467 -19.8 186,273 156,677 18.9

Source: Company, Siam *JLR February data is as per estimates

aruti Suzuki India: sales volumes

105

105

92

91 1

02

109

113

86 1

01 1

13

101

111

87

12.913.9

8.6

7.2

4.85.7

8.6

9.8

8.2

10.310.511.111.3

0

20

40

60

80

100

120

Aug'13

Oct'13

Dec'13

Feb'14

Apr'14

Jun'14

Aug'14

('000s)

0

2

4

6

810

12

14

16

(%)

Total Sales Export %


ta Motors: Domestic sales volume

37.0

37.0

37.0

30.1

28.4

29.1

28.2 3

8.1

26.1

28.2 3

7.5

38.3

37.5

12

.6

13

.4

14.7

10.7

9.5 1

1.4

11.8

13.1

7.8 9

.3

8.4 9.

5

11

.4

0

10

20

30

40

50

60

Aug'13

Oct'13

Dec'13

Feb'14

Apr'14

Jun'14

Aug'14

(000s)

CV Sales PV Sales

urce: Company, ICICIdirect.com Research

guar Land Rover sales volume

38

.6

39

.0 43

.3

30

.9 35

.9

36

.2 40

.7

38

.640

.1

39

.0

36

.0 39

.5

31

.7

0

20

40

60

80

100

Aug'13

Sep'13

Oct'13

Nov'13

Dec'13

Jan'14

Fe

b'14

Mar'14

Apr'14

May'14

Jun'14

Ju

l'14

Aug'14

(

)

10

15

20

25

30

35

40

45

50

55

60

(000's

)

% Jaguar % LR JLR total volumes(RHS)

rce: Company, ICICIdirect.com Research



Page 10

Mahindra and Mahindra (MAHMAH)

M&Ms volumes have underperformed the overall industry. Its

core UV segment declined ~12% YoY while the overall UV

segment (including exports) has grown ~22% YoY. However, ex-

Mobilio, the segment is up ~4% YoY, thus indicating the need for

faster launch of new models for the segment Old warhorses Bolero and Scorpio (together contributing over

10,000 units) continued to drive the bulk of volumes for M&M even

as newer products have struggled to maintain their expected run

rates. The Verito family has seen a continued slump in volumes

despite the launch of Verito Vibe. Automotive exports saw a

decline of ~26% YoY

The farm equipment segment has been doing well for M&M in the

past year. However, fears of lower than average monsoons are

likely to have dented domestic volumes, which have remained flat

for the month at ~13,700 units. Tractor exports, however, have

improved and increased 107.3% YoY, ~24% MoM to 1028 units

Ashok Leyland (ASHLEY)

Ashok Leylands (ALL) overall volumes have grown handsomely

by ~16% YoY. The M&HCV segment continued to show an

improvement in volumes (~2% MoM growth, ~18% YoY) while

the LCV segment saw volumes at ~2450 units, up ~11% YoY

The M&HCV goods segment saw ~37% YoY growth while the

M&HCV passenger segment witnessed a decline of ~8% YoY.

Exports have seen strong volume offtake and grew ~75% YoY to

~1000 units

Exhibit 17:



UVs 13,870 15,821 -12.3 14,420 -3.8 80,508 91,575 -12.1

4-Wheeler pickups 12,975 13,718 -5.4 12,472 4.0 64,098 70,481 -9.1

M & HCV 597 471 26.8 725 -17.7 3,913 3,800 3.0

Verito+Verito Vibe 270 955 -71.7 288 -6.3 1,353 4,343 -68.8

Total 4wheeler Sales 27,712 30,010 -7.7 27,905 -0.7 149,872 165,856 -9.6

3-Wheeler 5,433 5,149 5.5 5,142 5.7 22,383 22,006 1.7

Total Domestic Auto Sales 33,145 35,159 -5.7 33,047 0.3 172,255 187,862 -8.3

Exports 2,030 2,738 -25.9 2,520 -19.4 11,101 10,115 9.7

Total Auto Sales 35,175 37,897 -7.2 35,567 -1.1 183,356 197,977 -7.4


Tractors - Domestic 13,733 13,543 1.4 16,379 -16.2 102,032 102,704 -0.7 - Exports 1,273 615 107.0 1,028 23.8 4,936 4,500 9.7

Total Tractors 15,006 14,158 6.0 17,407 -13.8 106,968 107,204 -0.2



Exhibit 18:

Volume performance (in units)Segment Aug-14 Aug-13 %chg Jul-14 %chg YTD'15 YTD'14 %chg

M&HCV Passenger 1,869 2,037 -8.2 1,547 20.8 7,367 10,158 -27.5 oo s , , 36.7 , - . 19,123 15,907 20.2

LCV 2,451 2,200 11.4 2,061 18.9 9,475 11,504 -17.6

Passenger Vehicles 50 0 NA 50 0.0 169 - NA

Total Sales 8,336 7,139 16.8 7,817 6.6 36,134 37,569 -3.8

Exports 1,010 577 75.0 884 14.3 4,431 3,615 22.6



hindra and Mahindra: Sales volume

37

.9 43

.3

50

.6

39

.3

39

.6 42

.7

42

.2

51

.6

36

.337

.9

38

.5

35

.6

35

.2

15

20

25

30

35

40

45

50

55

Aug'13

Sep'13

Oct'13

Nov'13

Dec'13

Jan'14

Fe

b'14

Mar'14

Apr'14

May'14

Jun'14

Ju

l'14

Aug'14

(

)

rce: SIAM, ICICIdirect.com Research

hindra and Mahindra: Tractor sales

14

.2

26

.6

38

.3

23

.1

17

.0 20

.1

17

.6

17

.7 20

.7 23

.9 29

.9

17

.4

15

.0

0

5

10

15

20

25

30

3540

Aug'13

Sep'13

Oct'13

Nov'13

Dec'13

Jan'14

Fe

b'14

Mar'14

Apr'14

May'14

Jun'14

Ju

l'14

Aug'14

(000s)

rce: SIAM, ICICIdirect.com Research

hok Leyland: Total sales

4.9

4.7

4.1

2.7 3

.9 5.5

5.5

7.7

4.5 4

.9 5.5

5.75.8

2.2 2.5

2.3

2.5

2.3

2

.2

2

.3

2.5

1.3 1

.7 1.9

2

.1 2.5

0

2

4

6

8

10

12

Aug'13

Sep'13

Oct'13

Nov'13

Dec'13

Jan'14

Feb'14

Mar'14

Apr'14

May'14

Jun'14

Jul'14

Aug'14

(000's)

M&HCV LCV

rce: Siam, ICICIdirect.com Research



Page 11

News & views

Maruti Suzuki opened bookings for the upcoming Ciaz sedan onSeptember 5. Since then, it has already received 3,000 orders and 10,000

inquiries. With an expected launch in the first week of October, the Ciaz

will be available in both petrol and diesel engine options. Maruti Suzuki

has claimed that the Ciaz will be the most fuel efficient sedan in thecountry. While the petrol variant would give a mileage of 20.7 kmpl, the

diesel variant mileage is expected to be 26.2 kmpl

Bajaj Auto has launched the KTM RC series of super sports motorcyclesRSC 390 and RC 200. The bikes have been launched at introductory prices

of | 1.60 lakh for RC 200 and | 2.05 lakh for RC 390 (ex-showroom, Delhi)

Hero MotoCorp plans to invest | 1,600 crore to set up a newmanufacturing plant in southern India. As per sources, Hero MotoCorp has

signed a preliminary agreement with the Andhra Pradesh government to

set up the plant, spread across 600 acres, which can produce up to 1.8

million vehicles annually.



Page 12

ICICIdirect.com Research Universe (Auto & Auto ancillary)CMP M Cap

(|) TP(|) Rating (| Cr) FY14E FY15E FY16E FY14E FY15E FY16E FY14E FY15E FY16E FY14E FY15E FY16E FY14E FY15E FY16E

Amara Raja (AMARAJ) 636 590 Hold 10,855 21.5 25.4 33.7 29.5 25.0 18.8 15.6 12.1 9.0 34.3 33.1 33.9 27.0 25.3 26.1

Apollo Tyre (APOTYR) 211 270 Buy 10,619 20.0 21.8 24.5 10.6 9.7 8.6 6.3 6.0 5.4 23.7 20.2 19.1 22.0 19.6 18.2

Ashok Leyland (ASHLEY) 42 32 Hold 11,922 0.1 0.2 1.5 381.8 180.1 28.9 84.5 19.7 10.6 NM 2.7 8.7 0.7 1.3 7.6Bajaj Auto (BAAUTO) 2,334 2,400 Buy 67,551 112.1 124.1 153.3 20.8 18.8 15.2 12.8 11.4 8.8 40.6 37.8 40.1 33.8 32.2 33.5

Balkrishna Ind. (BALIND) 792 870 Buy 7,657 50.5 54.8 67.0 15.4 14.2 11.6 11.0 9.1 7.1 17.2 17.1 19.7 25.9 17.2 17.1

Bosch (MICO) 14,963 15,450 Hold 46,984 281.8 366.3 492.2 48.6 37.4 27.9 31.4 25.2 18.4 14.1 16.0 18.2 14.1 15.8 19.5

Eicher Motors (EICMOT)` 12,175 13,000 Buy 32,884 145.9 262.9 384.0 83.4 46.3 31.7 46.1 21.7 14.3 18.3 25.1 29.7 19.2 26.9 29.5

Escorts (ESCORT)* 157 103 Sell 1,867 20.5 11.9 17.1 5.7 9.9 6.8 4.1 5.9 4.4 13.7 8.3 10.7 13.4 7.3 9.7

Exide Industries (EXIIND) 178 148 Hold 15,139 5.7 7.9 9.5 31.1 22.5 18.7 16.0 12.3 10.2 18.5 22.3 23.2 13.1 16.1 17.1

Hero Mototcorp (HERHON) 2,809 2,600 Hold 56,093 105.6 136.4 173.3 26.6 20.6 16.2 13.0 14.6 13.5 43.4 49.2 53.6 37.7 40.8 43.0

JK Tyre & Ind (JKIND) 390 477 Buy 1,599 58.0 85.4 109.4 6.7 4.6 3.6 4.3 4.0 3.4 19.2 20.0 21.8 24.0 25.9 25.4

M&M (MAHMAH) 1,364 1,322 Hold 80,537 56.5 67.8 72.7 24.1 20.1 18.8 15.5 12.3 11.0 18.5 20.4 19.8 22.1 20.2 18.6

Mahindra CIE (MAHAUT)* 210 175 Buy 6,833 1.5 6.4 10.1 144.7 32.7 20.8 14.0 10.1 8.0 2.0 8.2 12.6 4.7 8.0 11.7

Maruti Suzuki (MARUTI) 2,974 2,450 Hold 89,874 92.1 105.1 144.1 32.3 28.3 20.6 13.4 11.8 8.8 13.3 13.5 16.9 13.3 13.4 15.9

Motherson (MOTSUM) 437 360 Hold 38,539 8.7 14.6 22.2 50.3 29.8 19.7 12.6 9.3 6.9 24.2 32.1 36.4 25.9 36.5 40.3

Tata Motors (TELCO) 508 560 Buy 157,021 43.3 61.6 73.5 10.3 7.3 6.1 4.6 4.0 3.4 21.7 23.2 23.2 21.3 23.7 22.5

Wabco India (WABTVS) 3,850 3,700 Hold 7,315 62.0 79.2 137.0 62.1 48.6 28.1 36.4 27.0 16.8 15.6 16.9 23.0 17.7 20.7 27.6

Sector / Company

RoE (%)EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)

Source: ICICIdirect.com Research *Year ending September


13/14ICICI Securities Ltd. Retail Equity Research

Page 13

Exhibit 19:

Auto raw material index

190

210

80

100

120

140

160

180

200

220

240

Feb-09

Jul-09

Dec-09

May-10

Oct-10

Mar-11

Aug-11

Jan-12

Jun-12

Nov-12

Apr-13

Sep-13

Feb-14

Jul-14

Source: Bloomberg, Reuters, Company, ICICIdirect.com Research

Exhibit 2 :Currency movements

80

90

100

110

120

130

140

150

160

Jun-11

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Dec-12

Mar-13

Jun-13

Sep-13

Dec-13

Mar-14

Jun-14

US$INR US$JPY US$EUR

Volatility in the currency markets is impacting raw material prices for companies with

imported components and lower natural hedges.

Source: Company, ICICIdirect.com Research

The in-house raw material index reflects the combination of

various input materials (steel, rubber, aluminium, plastics)

for OEMs, which have February 2009 as base year at 100.

The chart shows a declining trend in raw material prices,

which is a positive for the industry.


14/14

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them

as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional

target price is defined as the analysts' valuation for a stock.

Sector view:

Over weight compared to index

Equal weight compared to index

Under weight compared to index

Index here refers to BSE 500

Pankaj Pandey Head Research [email protected]

ICICIdirect.com Research Desk

ICICI Securities Limited

1st Floor, Akruti Trade Centre,Road No 7, MIDC,Andheri (East)

Mumbai 400 093

[email protected]

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