NEUTRAL. Automobiles. India

Transcription

1 Automobiles India NEUTRAL FEBRUARY 01, 2017 UPDATE BSE-30: 28,142 PV and CV recover in January Passenger vehicle volumes recovered sharply in January 2017 and we reckon industry likely grew by double digits yoy. Commercial vehicle industry, particularly heavy truck industry, also likely grew in single digit in January 2017 mainly led by pre-buying ahead of change in emission norms in April Two-wheeler volumes are likely to remain weak in the near term due to high proportion of cash sales. Passenger vehicles: Maruti reports 26% yoy growth in domestic volumes in January 2017 As per our calculations, passenger vehicle industry volumes grew in strong double digit (on yoy basis) in January Most of the large OEMs have reported strong yoy growth in wholesale volumes. For Maruti, overall volumes grew by 27% yoy in January 2017 led by 26% yoy growth in domestic volumes and 45% yoy growth in exports. Volumes were strong across all segments; event entry segment volumes were up 11% yoy. We note that inventory levels for Maruti were extremely low at the end of December (34,000 units), so wholesale volumes will likely remain strong over the next two months as well. In terms of other OEMs, Hyundai reported 11% yoy growth in domestic volumes, Toyota volumes were up 21% yoy. Ford, Nissan, Renault and Tata Motors also reported double-digit yoy growth in volumes while Honda s volumes continued to remain weak and declined by 9% yoy. M&M s UV volumes down 9% yoy and tractor volumes up 6% yoy in January 2017 M&M reported 6% yoy decline in total volumes in January 2017 as automotive volumes remain weak even there was some growth in tractor segment. Passenger vehicle segment volumes for the company declined by 9% yoy while commercial vehicle volumes were down 3% yoy. Tractor volumes improved by 6% yoy due to strong rabi sowing season. MHCV industry recovered in January 2017 We reckon MHCV industry volumes (dispatches) grew in low single digits in January 2017 led by pre-buying of trucks due to change in emission norms in April We could see single-digit growth in industry volumes over the next two months but reckon industry volumes will come under pressure post April 2017 once pre-buying effect is over. In terms of OEMs, Tata Motors reported 8% yoy decline in CV volumes mainly led by steep decline in LCV volumes while Ashok Leyland and Volvo-Eicher CV volumes grew 7% and 11% yoy respectively. Hero Motocorp reported a steep 14% yoy decline in volumes in January 2017 Hero Motocorp reported a 14% yoy decline in wholesale volumes and we reckon retail volumes also declined by similar levels for the company. The dealer inventory levels are still quite high, ~5 weeks as per our channel checks, thus we expect volumes to remain weak in the next two months. Bajaj Auto and TVS Motors are yet to report their monthly numbers yet but we expect weak volumes from both these companies as well. Hitesh Goel hitesh.goel@kotak.com Mumbai: Nishit Jalan nishit.jalan@kotak.com Mumbai: Kotak Institutional Equities Research kotak.research@kotak.com Mumbai: For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

2 India Automobiles Exhibit 1: Maruti Suzuki reported 27% yoy growth in volumes in January 2017 Maruti Suzuki monthly sales volume, March fiscal year-ends (units) M800, Alto, A-Star, Wagon R 34,206 35,495 36,678 31,906 33,105 27,712 35,051 35,490 44,395 33,929 38,886 31,527 37, , , , ,000 Swift, Baleno, Ritz, Celerio, Dzire 48,120 46,492 49,947 48,873 49,109 42,039 53,421 48,565 54,297 52,597 52,448 45,854 58, , , , ,397 Gypsy, Ertiga, S-Cross, Brezza 8,114 8,484 13,894 16,044 13,596 9,708 17,382 16,806 18,423 18,008 17,215 16,072 16,313 72, ,567 94, ,000 Omni and Eeco 10,512 12,482 12,896 14,520 12,164 9,874 14,748 12,831 13,618 12,790 12,238 9,224 14, , , , ,488 Ciaz 5,431 5,162 5,480 5,702 5,188 2,800 5,162 6,214 6,544 6,360 5,433 3,711 6,530 43,591 53,644 54,233 60,856 Light commercial vehicle Total domestic 106, , , , ,162 92, , , , , , , ,934 1,078,341 1,195, , ,717 1,305,351 1,447,242 Exports 7,223 9,336 10,450 9,524 9,872 6,707 11,338 12,280 11,822 10,029 9,225 11,494 10, , ,753 9,893 10, , ,897 Total volumes 113, , , , ,034 98, , , , , , , ,396 1,182,452 1,298, , ,289 1,429,248 1,571,139 M800, Alto, A-Star, Wagonr (4.3) (11.2) (8.7) (9.9) (5.6) (19.3) (7.2) (5.8) 24.8 (9.8) 8.1 (15.3) 10.9 (3.0) (0.7) Swift, Baleno, Ritz, Celerio, Dzire (13.5) (3.4) 9.3 (10.0) Gypsy, Ertiga, S-Cross, Brezza Omni and Eeco (5.6) (6.5) (1.6) (17.1) (5.6) Ciaz (9.6) (4.6) (24.3) (1.4) Total domestic (10.2) (4.4) Exports (34.6) (12.4) 33.4 (13.7) (20.8) (44.7) (23.7) (9.8) (1.3) Total volumes (2.6) (0.9) (13.9) (0.3) 12.2 (1.0) Exhibit 2: Mahindra & Mahindra reported 6% yoy decline in volumes in January 2017 Mahindra & Mahindra monthly sales volume, March fiscal year-ends (units) Passenger Uvs (incl. Verito) 22,088 23,718 26,885 22,655 19,635 17,070 17,356 18,246 20,537 24,737 13,217 16,698 20, , ,247 25,302 21, , ,530 Commercial Vehicles 14,385 13,864 17,438 12,947 13,109 13,538 13,168 13,993 16,081 18,059 12,644 14,154 13, , ,583 15,651 20, , ,248 3-wheelers 4,220 3,766 4,644 3,755 3,869 4,381 4,781 4,705 5,927 5,933 3,953 3,458 3,056 46,565 43,818 4,205 5,579 54,975 54,975 Exports (Auto sector) 3,096 2,654 3,751 2,506 4,043 4,020 4,153 3,647 3,585 3,279 2,685 2,053 2,261 29,628 32,232 3,203 6,405 36,033 45,041 Auto division 43,789 44,002 52,718 41,863 40,656 39,009 39,458 40,591 46,130 52,008 32,499 36,363 39, , ,880 48,360 53, , ,795 Tractors (Dom + Exp) 15,065 13,574 14,682 21,386 23,018 30,191 17,553 13,543 30,562 45,177 17,262 14,047 15, , ,648 14,128 22, , ,396 Total 58,854 57,576 67,400 63,249 63,674 69,200 57,011 54,134 76,692 97,185 49,761 50,410 55, , ,528 62,488 75, , ,191 Passenger Uvs (incl. Verito) (32.8) (8.2) (9.0) 2.4 (16.4) (1.6) Commercial vehicles (3.7) (14.6) 13.5 (3.4) wheelers (6.8) (9.4) (3.4) (6.1) 6.6 (4.0) 4.0 (1.1) (19.7) (17.2) (27.6) (5.9) Exports (Auto sector) 7.3 (14.7) (6.7) (33.3) (27.0) Auto division (21.9) (4.1) (10.2) Tractors (Dom + Exp) (20.5) Total (21.4) (0.7) (6.2) Exhibit 3: Tata Motors reported 2% yoy volume decline in January 2017 Tata Motors monthly sales volume, March fiscal year-ends (units) MHCVs 16,454 16,674 20,538 13,117 15,276 12,395 12,457 12,213 14,675 15,628 11,504 13, , ,766 LCVs 19,499 18,641 23,665 15,449 15,960 19,247 16,839 17,004 18,992 20,430 14,326 15, , ,493 Total CVs 35,953 35,315 44,203 28,566 31,236 31,642 29,296 29,217 33,667 36,058 25,830 29,805 33, , ,459 39,759 38, , ,259 UVs 1,460 1,771 1,678 1, ,465 1,906 1,700 2,004 1,302 1,310 19,364 17,430 Cars 9,622 9,588 7,176 9,275 7,925 11,807 12,399 11,938 13,281 14,751 11,768 9, , ,035 Total PVs 11,082 11,359 8,854 10,816 8,835 12,634 13,864 13,844 14,981 16,755 13,070 11,139 13, , ,145 10,107 12, , ,465 Total sales 47,035 46,674 53,057 39,382 40,071 44,276 43,160 43,061 48,648 52,813 38,900 40,944 46, , ,604 49,866 51, , ,724 MHCVs (7.4) (7.8) (11.7) (14.8) 11.8 (9.6) (1.4) (3.0) LCVs (8.1) (9.4) 5.0 Total CVs (0.6) (8.8) (5.9) (7.8) 2.2 (2.2) 1.3 UVs (1.4) (11.9) (22.3) 19.6 (54.0) (55.4) (24.5) (3.8) 11.3 (10.0) Cars (18.5) (19.6) (45.7) 3.0 (15.0) Total PVs (16.6) (18.5) (42.4) 5.1 (21.8) Total sales (0.0) 2.4 (1.5) KOTAK INSTITUTIONAL EQUITIES RESEARCH

3 Automobiles India Exhibit 4: Ashok Leyland reported 7% yoy growth in volumes in January 2017 Ashok Leyland monthly sales volume, March fiscal year-ends (units) LCV 2,678 2,605 3,462 2,309 2,406 2,423 2,310 2,696 3,094 2,959 2,646 1,949 2,816 24,628 25,608 2,988 2,498 30,603 30,603 MHCV 11,208 10,798 13,240 7,873 7,469 8,685 8,182 8,201 8,963 9,574 6,928 8,782 12,056 85,725 86,713 12,015 11, , ,777 Total CVs 13,886 13,403 16,702 10,182 9,875 11,108 10,492 10,897 12,057 12,533 9,574 10,731 14, , ,321 15,003 14, , ,380 LCV (1.0) (20.5) (16.4) - MHCV (7.4) (8.0) (26.1) (9.5) (4.0) 0.0 Total CVs (5.1) (5.7) (18.4) (11.7) (6.5) 0.0 Exhibit 5: VECV reported 20% yoy growth in total volumes in January; domestic MHCV volumes are up 7% yoy VECV monthly sales volume, March fiscal year-ends (units) Domestic sales LCV 842 1,114 1,630 1,491 1,649 1,479 1,099 1,076 1,134 1, ,041 10,199 11,621 MHCV 2,573 3,150 4,314 3,150 3,056 2,777 2,565 2,374 3,014 2,733 1,771 2,454 2,755 23,871 26,649 Total 3,415 4,264 5,944 4,641 4,705 4,256 3,664 3,450 4,148 3,854 2,408 3,348 3,796 34,070 38,270 5,104 4,615 44,278 47,500 Export sales LCV ,046 2,142 MHCV ,105 4,664 Total , ,151 6, ,097 6,512 9,000 Total sales 3,707 4,936 6,633 5,326 5,710 4,878 4,315 4,100 4,734 4,449 3,067 4,048 4,449 39,221 45,076 5,785 5,712 50,790 56,500 LCV (2.4) (7.0) (3.1) MHCV (20.2) (23.1) Total domestic (17.1) (18.6) (9.6) 7.3 Export sales LCV (60.3) (36.2) (30.0) 88.2 (3.7) (70.9) MHCV Total exports (18.2) (1.5) (16.4) Total sales (13.2) (18.2) (1.3) 11.2 Exhibit 6: Hero MotoCorp reported 14% yoy decline in total volumes in January 2017 Hero MotoCorp monthly sales volume, March fiscal year-ends (units) Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan E E E Total sales 563, , , , , , , , , , , , ,088 5,473,950 5,529, , ,228 6,632,152 6,723, (12.9) (33.9) (13.5) Exhibit 7: Royal Enfield reported 25% yoy volume growth in January 2017 Royal Enfield monthly sales volume, March fiscal year-ends (units) Royal Enfield 47,710 49,156 51,320 48,197 48,604 50,682 53,378 55,721 57,842 59,127 57,313 57,398 59, , ,938 50,238 61, , ,000 Domestic 47,140 47,567 50,059 47,037 47,232 49,060 52,128 54,735 56,958 58,379 55,843 56,316 58, , ,821 Exports 570 1,589 1,261 1,160 1,372 1,622 1, ,470 1,082 1,543 6,513 12,117 Royal Enfield Domestic Exports (26.0) KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

4 Disclosures "I, Hitesh Goel, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report." Kotak Institutional Equities Research coverage universe Distribution of ratings/investment banking relationships 70% Percentage of companies covered by Kotak Institutional Equities, within the specified category. 60% 50% 40% 30% 20% 10% 0% 36.8% 26.3% 20.0% 16.8% 1.1% 4.2% 2.1% 2.1% BUY ADD REDUCE SELL Percentage of companies within each category for which Kotak Institutional Equities and or its affiliates has provided investment banking services within the previous 12 months. * The above categories are defined as follows: Buy = We expect this stock to deliver more than 15% returns over the next 12 months; Add = We expect this stock to deliver 5-15% returns over the next 12 months; Reduce = We expect this stock to deliver -5-+5% returns over the next 12 months; Sell = We expect this stock to deliver less than -5% returns over the next 12 months. Our target prices are also on a 12-month horizon basis. These ratings are used illustratively to comply with applicable regulations. As of 31/12/2016 Kotak Institutional Equities Investment Research had investment ratings on 190 equity securities. Source: Kotak Institutional Equities As of December 31, 2016 Ratings and other definitions/identifiers Definitions of rating BUY. We expect this stock to deliver more than 15% returns over the next 12 months. ADD. We expect this stock to deliver 5-15% returns over the next 12 months. REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months. SELL. We expect this stock to deliver <-5% returns over the next 12 months. Our target prices are also on a 12-month horizon basis. Other definitions Coverage view. The coverage view represents each analyst s overall fundamental outlook on the Sector. The coverage view will consist of one of the following designations: Attractive, Neutral, Cautious. Other ratings/identifiers NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. CS = Coverage Suspended. Kotak Securities has suspended coverage of this company. NC = Not Covered. Kotak Securities does not cover this company. RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. NA = Not Available or Not Applicable. The information is not available for display or is not applicable. NM = Not Meaningful. The information is not meaningful and is therefore excluded. 4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

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