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Automobile Sector
Healthy growth despite macro concerns
Automakers reported healthy sales performance in November 2011 after posting lackluster volumes in the festive month of October 2011. During November 2011, two-wheelers, utility vehicles (UV) and light commercial vehicles (LCV) sustained their strong volume momentum; however, passenger car (PC) sales continued to remain mixed and were driven by higher discounts, diesel variants of models and new launches. Hero MotoCorp, Mahindra and Mahindra and Tata Motors posted volumes that were better than our expectations; whereas, Maruti Suzuki and TVS Motor registered weaker volumes. Going ahead, we expect two-wheeler and LCV sales to continue to grow at a healthy rate; however, demand in the passenger vehicle (PV) segment is likely to remain subdued as higher interest rates and rising fuel prices continue to dampen consumer sentiments. Tata Motors (TTMT) registered a robust 40.6% yoy increase (13% mom) in total sales to 76,823 units, which came in ahead of our estimates. Growth was driven by strong growth across the PV and commercial vehicle (CV) segments. The CV segment grew better than our expectations by 25.3% yoy (15.5% mom), driven by impressive 37.9% yoy (30.6% mom) growth in the LCV segment. The PV segment witnessed growth of 78.5% yoy (8.7% mom), led largely by a substantial increase in Nano dispatches (6,401 units vs. 509 units in November 2010). Maruti Suzuki (MSIL) continued with its poor performance as total volumes fell by 18.5% yoy due to a 19.2% and 11.4% yoy decline in domestic and exports sales, respectively. The companys overall performance continued to be impacted by the slowdown in the PV industry on account of high interest rates and increasing fuel prices. Sales volume in the vans, mini and compact segments registered a 34.5%, 27.2% and 3.7% yoy decline, respectively, during the month. Mahindra and Mahindra (MM) recorded a robust 30.4% yoy increase in total volumes on account of strong performance by the automotive segment, which grew by 52.7% yoy (down 1.9% mom). The automotive segments performance was driven by continued momentum in the four-wheeler pick-up segment and strong growth in the UV segment backed by the successful launch of XUV5OO. The tractor segment posted a muted performance as domestic tractor volumes were impacted due to seasonality related to the festival season. Two-wheelers and three-wheelers: Bajaj Auto (BJAUT) reported in-line growth of 25.1% yoy (down 5.3% mom) in total volumes to 374,477 units, led by strong exports performance, which grew by robust 42.2% yoy (down 2% mom). HMCL reported better-than-expected 27.4% yoy (4.8% mom) growth in total volumes on account of increased dispatches at the dealer level. TVSL, however, posted lower-than-expected 11.8% yoy growth mainly due to sluggish sales in the motorcycle segment, which witnessed a marginal decline of 0.6% yoy. Scooter and moped sales, on the other hand, maintained their growth trajectory during the month.
Tata Motors
TTMT recorded better-than-expected 40.6% yoy growth, led by strong performance in the CV and PV segments TTMT registered a robust 40.6% yoy increase (13% mom) in total sales to 76,823 units, which came in ahead of our estimates. Growth was driven by strong performance across the PV and CV segments. The CV segment grew better than our expectations at 25.3% yoy (15.5% mom), driven by impressive 37.9% yoy (30.6% mom) growth in the LCV segment. The M&HCV segment maintained its steady growth rate and registered an increase of 7.1% yoy. Sequentially M&HCV volumes fell by 5%. The PV segment witnessed growth of 78.5% yoy (8.7% mom), led largely by a substantial increase in Nano dispatches (6,401 units vs. 509 units in November 2010). Indigo and UV also registered strong 91.1% and 33% yoy growth during the month.
November November % chg 2010 2011 76,823 16,999 31,740 48,739 4,222 23,862 28,084 4,349 54,622 15,873 23,016 38,889 3,175 12,558 15,733 4,203
YTD FY2012
YTD % chg FY2011 9.0 8.1 26.3 18.6 20.1 (6.0) 7.5
40.6 544,493 499,492 7.1 138,443 128,102 37.9 222,785 176,361 25.3 361,228 304,463 33.0 31,386 26,130
90.0 151,879 168,899 (10.1) 78.5 183,265 195,029 3.5 39,598 36,851
December 2, 2011
Maruti Suzuki
Total volumes declined by 18.5% yoy as the industry continues to witness sluggish growth, especially in the small car segment MSIL continued its poor sales performance in November 2011, as total volumes declined by 18.5% yoy due to a 19.2% and 11.4% yoy decline in domestic and exports sales, respectively. The companys overall performance continued to be impacted by the slowdown in the passenger vehicle industry on account of high interest rates and increasing fuel prices. Sequentially, volumes jumped by 65.1% yoy, primarily due to resumption in production at the Gurgaon and Manesar plants. The company expects to achieve full production at Manesar plant B by January 2012. Sales volume in the vans, mini and compact segments registered a 34.5%, 27.2% and 3.7% yoy decline, respectively, during the month. During the month, MSIL increased the prices of diesel cars by up to `10,000/vehicle to offset the impact of an appreciating yen and rising input costs.
December 2, 2011
November November 2011 2010 91,772 112,554 38,921 22,159 10,403 1,433 162 73,078 180 9,612 82,870 8,902 53,489 23,014 9,810 1,305 87,618 199 14,686 102,503 10,051
YTD YTD FY2012 FY2011 (18.5) 681,200 828,440 % chg (27.2) 298,830 361,887 (3.7) 133,533 176,328 6.0 9.8 (9.5) (34.5) (11.4) 60,787 11,662 336 4,296 69,815 13,241 4,428
% chg (17.8) (17.4) (24.3) (12.9) (11.9) (18.7) (3.0) (6.9) (16.9) (24.4)
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Nov-09
Nov-10
Sep-11
May-10
May-11
December 2, 2011
Nov-11
Jan-10
Jan-11
Jul-10
Mar-10
Mar-11
Jul-11
November November 2011 2010 58,249 16,686 13,362 5,889 1,127 1,095 2,563 40,722 16,175 1,352 17,527 44,659 11,447 7,699 4,468 876 676 1,500 26,666 16,975 1,018 17,993
% chg
YTD FY2012
YTD % chg FY2011 26.6 16.4 52.0 17.7 14.0 47.7 29.9 21.4 14.6 21.0
30.4 472,564 373,314 45.8 125,554 107,822 73.6 31.8 28.7 62.0 70.9 96,973 45,370 11,652 8,457 17,673 63,811 38,543 7,419 11,964
5,824 100.1
52.7 305,679 235,383 (4.7) 158,204 130,357 32.8 8,681 7,574 (2.6) 166,885 137,931
Source: Company, Angel Research; Note: UV+Four-wheel pick-up combined from November 2010
December 2, 2011
Bajaj Auto
BJAUT reported in-line volume numbers backed by strong growth in the exports market BJAUT reported an in-line 25.1% yoy (down 5.3% mom) growth in total volumes to 374,477 units, led by strong exports performance, which grew by robust 42.2% yoy (down 2% mom). Motorcycle sales grew by 25.3% yoy (down 5.4% mom) and three-wheeler volumes increased by 24.3% yoy (down 3.8% mom). Exports continued its strong momentum despite price increases carried out in October 2011 to offset the reduction in DEPB benefits.
25.1 3,026,703 2,598,953 25.3 2,673,458 2,306,697 24.3 353,245 292,229 832,487 42.2 1,112,702
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Nov-09
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May-10
Hero MotoCorp
HMCL registered better-than-expected growth in November; total volumes grew by 4.8% mom HMCL reported better-than-expected 27.4% yoy (4.8% mom) growth in total volumes to 536,772 units, led by increased dispatches at the dealer level. The company continues to do well across all product segments on account of new product launches and refreshed product ranges.
536,772
421,366
May-11
Nov-11
Sep-10
Sep-11
Jan-10
Jan-11
19.6
Nov-09
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Sep-10
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May-10
May-11
December 2, 2011
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TVS Motor
TVSL posted a weak performance in November 2011, owing to sluggish sales in the motorcycle segment; the three-wheeler segment posted its lowest volumes in FY2012 during the month TVSL reported lower-than-expected 11.8% yoy growth in its total volumes to 175,535 units mainly due to sluggish sales in the motorcycle segment, which witnessed a marginal decline of 0.6% yoy. However, on mom basis, total volumes declined by 4.5% qoq primarily due to a 17.2% fall in motorcycle sales. The company attributed lower volumes to slowdown in economic growth, high inflation, increased fuel prices and interest rates. The scooter and moped segment maintained its growth trajectory, albeit at a lower rate, posting 22.3% (down 6.6% mom) and 20.6% yoy (strong 15.8% mom jump) growth, respectively. Exports volume also continued its strong momentum, registering 53.1% yoy growth to 24,271 units. The three-wheeler segment posted a disappointing performance, reporting a 14.3% yoy (down 27.1% mom) fall to 2,706 units, mainly due to lower domestic volumes.
3,159 (14.3)
Jul-10
Mar-10
Nov-09
Nov-10
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Sep-10
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May-10
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Outlook
Considering the near-term macroeconomic challenges, we expect the auto industry to register a moderate volume CAGR of ~14% over FY2011-13E. However, we believe low penetration levels coupled with a healthy and sustainable economic environment and favorable demographics supported by increasing per capita income levels will drive long-term growth of the Indian auto industry. As such, we prefer stocks that have strong fundamentals, ability to deliver a strong top-line performance and are available at attractive valuations. We continue to prefer companies with a strong pricing power and high exposure to rural and export markets.
992 1,129
- 144,712 162,453
Source: Company, C-line, Angel Research; Note: Price as on December 2, 2011; *Consolidated financials
December 2, 2011
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December 2, 2011
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