Hero Motocorp 550, , % 547, % Bajaj Auto 309, , % 309, % TVS 225, , % 220,046 2.

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1 2 nd December, 2015 Auto-Roundup November 2015 A mixed bag in November post super festive October Post a solid October, we saw a moderate November. On a sequential basis all the companies posted steep declines on expected lines. There was an aberration in October as companies pumped in inventories at the dealers ends in anticipation of a strong festive season, which obviously fades down in the consecutive month as retail sales move up higher than wholesale sales. In such cases, yoy comparison is more important, going by which we have seen the car and UV makers punching in solid sales performance. On a low base of last year, MSIL posted 10% growth in line with the new launch of Baleno, while M&M sold 21% higher yoy on the launch of TUV 3oo. Unlisted players like Hyundai, Ford, Renault, Honda too posted strong growths in November on launches of Kwid, Creta, Figo Aspire etc. Auto companies who have facilities in and around Chennai suffered heavy production losses on account of incessant rains over there. Managements stated that they would make up for those losses by working an extra shift or on Saturdays, but November witnessed losses for companies like Hyundai, TVS, Ashok Leyland, Eicher Motors, Daimler, Bharat Benz etc. Continuation of the same in December may impact the monthly sales which are as it is seasonally weak. On the 2W side, dullness in the rural economy lead all of them post weak or flattish sales. Bajaj faced the heat in the exports markets in Africa and South Asia. On the CV side of the industry, implementation of BSIV regulations at the start of October led to some moderation of MHCV growth as prices have increased by 3-4% since then. Going to the stocks, we are Neutral on all the 2 wheelers. Hero being a rural player, an uptick in those markets may lead to a change in our view. Bajaj is low on exports growth and is awaiting 3W permits in Maharashtra which may provide the much needed fillip. TVS got impacted by rains which we believe will make a good come back next month onwards. We like MSIL on its sheer market leadership strength, its image of a car made for India and its solid distribution network. We like Ashok Leyland as it s a prime beneficiary of the CV cycle up move and Tata Motors on expectations of JLR strength in non Chinese markets and domestic CV resilience. M&M saw a robust sales growth in October and November on the back of newly launched TUV3oo and strong CV sales. On the FES side, we have seen a good festive season, but sustainability is a question. Nov-15 Oct-15 % mom Nov-14 % yoy Hero Motocorp 550, , % 547, % Bajaj Auto 309, , % 309, % TVS 225, , % 220, % Maruti 120, , % 110, % M&M 63,307 79, % 49, % Auto 41,590 51, % 34, % Tractors 21,717 28, % 15, % Tata Motors 38,918 43, % 41, % Ashok Leyland total 8,971 9, % 7, % Escorts , % % Ashwin Patil ashwin_patil@lkpsec.com LKP Research

2 Hero MotoCorp: Weak post festive numbers rural improvement still looks far fetched Hero MotoCorp (Hero) s sales in Novemberr grew flattish yoy and 14% mom to 550,731 units in line with the current trend of lower 2W sales due to deficient rains and weak rural demand. October was an aberration due to festive demand. On YTD basis, the fall came down to 2.7% from 3.1% seen last month. Going forward, we believe that improvement in the rural economy will be the key monitorable. Total sales 550, , % 547, % 4,409,709 4,530, % Bajaj Auto : 3W and exports lead to flattish yoy sales growth Bajaj Auto s total sales remained flat in November to 309,673 units, while decreasing by 12.2% mom. Motorcycle sales have seen a growth of 3.4% yoy as competition started heating up. On a mom basis, sales de-grew 12.3% mom. Three wheeler sales fell by 18% yoy while dipping by 12% mom. The commercial vehicle sales included few units of the quadricycle Qute in the exports markets. Going forward, we expect to see a solid traction in the 3W segment as permits are about to open shortly and higher demand for Qute. However, quadricycles are facing stiff resistance from auto unions in the domestic markets. Exports markets remained stunted as they de-grew by 17% yoy, while improving by 7.6% mom with some demand pressure in Nigeria, Egypt and other South Asian countries. On YTD basis, total sales have gone down by 0.3% on concerns in the exports as well as domestic markets. Motorcycles 270, , % 261, % 2,357,951 2,372, % 3W 38,787 44, % 47, % 374, , % Total 309, , % 309, % 2,732,120 2,739, % Exports out of the above 137, , % 165, % 1,261,605 1,285, % Domestic 172, , % 143, % 1,470,515 1,453, %

3 TVS Motors : Sales impacted by heavy rains in Chennai Total sales grew by 2.4% yoy to 225,401 units in November as motorcycles fell by 4.9% yoy and 22.6% mom while scooters grew by 22.2% yoy and fell by 16.8% mom. Mopeds de-grew by 4.5% yoy and 10.5% mom. The new moped launch of XL100 is fetching good response. Motorcycle sales de-grew by a 4.9% yoy and 22.6% mom as incessant rains hit Chennai in major part of November and hit the sales of various auto manufacturers located there. TVS lost about 15,000 units of sales due to this. Excluding which the sales would have grown by 9-10%. Scooters sales zoomed by 22.2% yoy and as the sales of Jupiter and Zest were very strong in the month. 3W sales de-grew by 15.1% yoy as the both the domestic as well as exports saw a decline in mid-teens. Exports sales de-grew by 14.3% yoy to 33,621 units which can be again attributed to Chennai rains and weak demand in some of the export geographies. Motorcycles 82, , % 86, % 717, , % Scooters 76,043 91, % 62, % 568, , % Mopeds 59,500 66, % 62, % 496, , % Total 2W 217, , % 210, % 1,782,862 1,669, % 3W 7,695 10, % 9, % 81,120 71, % Total sales 225, , % 220, % 1,863,982 1,740, % Exports out of the above 33,621 41, % 39, % 320, , % 2W exports 27,216 32, % 31, % 249, , % 3W exports 6,405 9, % 7, % 70,764 58, %

4 Maruti Suzuki : In line show Maruti Suzuki India Ltd (MSIL) s sales in November grew by 9.7% yoy and declined by 10% mom to 120,824 units. The domestic sales grew by 10.6% yoy and dropped by 8.6% mom. The sequential fall was expected in line with the big bang October festive sales. The petrol segment this month saw a 4.7% yoy and 4.3% mom falls indicating competition building from the likes of Renault Kwid. The diesel segment however, grew by a strong 19.5% yoy and declined by 12.6% mom on expectations of diesel prices coming down and interest rates getting cut. Also the newly launched Baleno led this outperformance. Ciaz segment sales grew by 5.3% yoy at 5,509 units as demand for this new model along with the new hybrid launch of Ciaz moved up. UVs increased by 57% yoy and fell by 7.9% mom (on high base of last month) as the company launched compact SUV S-Cross vehicle couple of months earlier and is doing well in this festive season. Exports were at 10,225 units, a growth of just 1% yoy and a 22.2% fall mom. On YTD basis, total sales have grown by a handsome 13.6% which we expect to remain steady throughout the year with continued demand in the cars segment in India and upcoming launches in the ensuing months. Mini(Alto, Wagon R) 35,981 37, % 37, % 289, , % Compact(Swift, Ritz, Celerio, Dzire) 44,626 51, % 37, % 360, , % Super compact(dzire Tour) 3,363 3, % 1, % 24,461 10, % Mid size (SX4, Ciaz) 5,509 5, % 5, % 35,319 13, % Total passenger cars 89,479 97, % 82, % 709, , % Utility Vehicles 8,688 9, % 5, % 54,756 43, % Vans 12,432 13, % 12, % 96,459 85, % Total domestic sales 110, , % 100, % 860, , % Exports 10,225 13, % 10, % 89,072 80, % Total sales 120, , % 110, % 949, , %

5 Mahindra & Mahindra : Robustness across the board Total auto sales in November expanded by 21.3%yoy and declined by 19% mom to 41,590 units. In the domestic markets the sales have grown by 22.7%, which was brought down a bit by just 0.7% growth in exports albeit on a low base. UV sales grew by 37% yoy while dropping by 17.6% mom as the company launched the compact SUV TUV 3oo thus marking its much awaited entry into the high demand compact SUV segment CV sales in the month portrayed a very robust picture as sales grew by 17.3% yoy as the <3.5T LCV segment posted a 16.4% growth on the success of the June launch of <3T LCV Jeeto. MHCV sales have gone up by 75% yoy on a low base. 3W sales have fallen by 1.7% yoy and 18% mom. Exports showed a flattish growth as in this month they grew by 0.7% yoy at 2,207 units as markets like Africa and Asia are offering good demand. FES segment grew by a whopping 42% yoy, out of which the domestic sales grew by 46.5% yoy bucking the trend in the past months on low base and most probably on the back of expectations of a good Rabi crop. The sustainability of the same needs to be monitored. Auto segment Utility Vehicles 18,686 22, % 13, % 135, , % Cars+Vans 976 1, % % 9,487 12, % Total PV 19,662 24, % 14, % 145, , % LCV(<3.5 T) 14,014 17, % 12, % 101,178 96, % LCV (>3.5T) % % 4,245 3, % MHCV % % 3,208 1, % Total CV 14,801 18, % 12, % 108, , % 3 wheelers 4,920 5, % 5, % 38,168 39, % Total domestic sales 39,383 48, % 32, % 292, , % Total exports 2,207 2, % 2, % 21,249 18, % Total sales 41,590 51, % 34, % 313, , % FES Domestic 20,819 27, % 14, % 149, , % Exports % 1, % 8,077 8, % Total FES 21,717 28, % 15, % 157, , %

6 Ashok Leyland : Growth tapers on new pollution standards implementation Ashok Leyland (ALL) posted sales growth of 16% yoy and declined by 8.5% mom. The reduction in the yoy growth and the mom fall can be attributed to the BSIV norms implementation on October 1 st which would raise the truck prices by 3-4% thus impacting demand. Secondly, the incessant rains in Tamil Nadu leading to shutdown of plants around Chennai also led to some production losses thus impacting sales to an extent. MHCV sales increased by 21% yoy and declined by 12.3% mom LCV sales posted a 5.8% yoy growth in the month in line with the softness in that industry and increasing competition from M&M. Mom growth was 1.8% On YTD basis, total sales have gone up by 37.2%. MHCV 6,297 7, % 5, % 64,810 44, % LCV 2,674 2, % 2, % 19,489 17, % Total 8,971 9, % 7, % 84,299 61, % Tata Motors: Cars sales slide on the back of competitive launches, MHCV resilient Tata Motors (TAMO) s total sales in November fell by 6.7% yoy to 38,918 units as cars, LCVs and UVs sales fell thick and fast, while MHCV posted a strong growth. Domestic MHCV sales grew by 21.9% yoy to 11,524 units as the reversal in the CV cycle continued. However, BSIV implementation would have led to mom decline of 7.8%. Pick up in mining segment may lead to a strong boost to the tippers segment. LCV sales continued to lag with a de-growth of 16.6% yoy and 2.3% mom as the industry is still in weakness on financing issues and lower demand for last mile transportation. Cars segment de-grew by 10.8% yoy as the new competitive launches of Kwid, Baleno etc are taking toll on the Tata car sales. UV sales continued to decline (22.5% yoy) as the company is absent in the Q1 segment of compact UVs and is facing stiff competition from the likes of Hyundai Creta, M&M s TUV 3oo, Renault Duster, Maruti Ertiga and Ford Ecosport. Exports sales have also gone down by 16.8%. MHCV 11,524 12, % 9, % 96,185 76, % LCV 13,304 13, % 15, % 104, , % Total CVs 24,828 26, % 25, % 200, , % Cars 9,172 11, % 10, % 75,398 64, % Utility Vehicles 1,345 1, % 1, % 12,860 17, % Total PVs 10,517 12, % 12, % 88,258 82, % Exports 3,573 4, % 4, % 36,335 32, % Total sales 38,918 43, % 41, % 324, , %

7 Escorts : Improvement seen in November Domestic sales have grown by 12.2% on expectations of a good rabi season. On mom basis, however it was a fall of 19.6% Exports have dropped 88% yoy and 50% mom Total sales grew by 9.3% yoy to 4,706 units. These numbers have come post weak monsoons, but may improve further if the rabi crop turns out to be good. Nov-15 Oct-15 % mom Nov-14 % yoy YTD FY16 YTD FY15 % yoy Domestic 4,691 5, % 4, % 36,365 43, % Exports % % 516 1, % Total 4,706 5, % 4, % 36,881 45, % LKP Research

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