Published on 5/03/2018 3:05:12 PM | Source: Motilal Oswal Securities Ltd

Auto Sector Update - Motilal Oswal

Posted in Expert Views| #Auto Sector #Expert Views #Motilal Oswal

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Maruti Suzuki

Dispatches up 15% YoY to 149.8k units (in-line)

Domestic sales grew by 14.2% YoY and exports by 24.9% YoY

* MSIL’s Feb-18 wholesales came in line at 149.8k units (+15% YoY, -1% MoM). YTDFY18 growth was at 13.2%, with a residual monthly run-rate of 164.7k units.

* Domestic volumes grew 14.2% YoY to 137.9k (est. of 143.8k), led by continued growth in the compact (+31.5% YoY) and UV (+13.8% YoY) segments.

* Growth in the compact segment was led by new Swift, Baleno and new Dzire, while that in UVs was led by Brezza and new S-cross.

* Ciaz sales declined 16.8% YoY to 4.9k units (est. of 5.1k units).

* Export volumes were better than estimate at 11.9k units (+24.9% YoY, +10.9% MoM).

* The stock trades at 24x/18.8x FY19E/20E earnings. Maintain Buy.

Tata Motors

Wholesales of 63.8k units in line with estimate of 64.3k

CV sales grew 30.7% YoY to 45.9k units (in-line)

* Tata Motors’ Feb-18 sales grew 34% YoY to 63.8k units (in line with est. of 64.3k units).

* PV sales increased 43.3% YoY, as car segment volumes grew 16.8% YoY and UV segment volumes rose 153% YoY due to healthy demand of Nexon.

* Total CV volumes increased 30.7% YoY to 45.9k units (in-line), led by an increase in both LCV and HCV sales by 39.5% and 22.1%, respectively.

* The stock trades at 6.4x/6.3x FY19E/20E consol. EPS. Maintain Buy.

Bajaj Auto

Feb-18 dispatches at 357.9k units (est. of 344k); +30.8% YoY

Domestic volumes up 34.5% YoY to 214k units (above est. of 198.5k)

* BJAUT’s Feb-18 sales increased 30.8% YoY to 357.9k units (est. of 344k units). Domestic volume increased 34.5% YoY to 214k (est. of 198.5k), while exports rose 25.7% YoY to 143.9k (est. of 145.5k).

* Overall motorcycle volumes increased 21.5% YoY. Domestic motorcycle dispatches increased ~23% YoY to 175.5k units. Motorcycle exports grew ~19% YoY to 122k units.

* 3W volumes remained strong, increasing 111% YoY overall. Domestic 3W volume continued its positive trajectory, with growth of 129% YoY to 38.5k units. 3W exports rose 86% YoY to 21.8k units.

* Speaking on monthly volume, Mr S Ravikumar, President, Business Development said, “As far as domestic motorcycle is concerned, there has been a cause of worry for us a couple of months back. Now with the Discover twins that have been launched, in the month of February itself, we have built-out almost about some 27k units in domestic and with Avengers refreshed and the Cruise 220 is taking the market very nicely, people are liking it a lot and there again the numbers are kicking in”.

* The stock trades at 17.4x/15x FY19E/20E consol. EPS. Maintain Buy.

Mahindra & Mahindra

Wholesales of 71.6k units above estimate of 66.3k units

UV volume up 16.2% YoY; Tractor volume up 36.5% YoY

* MM’s volumes grew 23.8% YoY to 71.6k units (est. of 66.3k units), as all segments reported growth during the month.

* Tractors sales increased 36.5% YoY to 20.5k units (est. of 18k units), as domestic and export volumes increased 39% and 3%, respectively.

* UV sales (incl. pick-ups) stood at 44.3k units (+16.2% YoY), above estimate of 42k units.

* Momentum in pick-ups continued with 27.4% YoY growth, while passenger utility vehicles reported growth of 7.4% YoY.

* LCV (>3.5t) sales grew by ~56% YoY and M&HCV sales by 16% YoY.

* 3W volumes increased ~50% YoY to 5.1k units (est. of 4.5k units).

* Speaking on the monthly performance, Rajan Wadhera, President, Automotive Sector, M&M Ltd. said, “We are happy with our February performance with the business having registered a growth of 19%. This performance comes on the back of a sustained momentum and demand, both in the personal and commercial vehicle segments, which we believe will also continue in the month of March.”

* Rajesh Jejurikar, President - Farm Equipment Sector, Mahindra & Mahindra Ltd. said, “We have sold 19,280 tractors during February 2018 with a growth of 39% over last year. With the announcement of record horticulture production and increased Union budget allocations to rural and agriculture sector, we expect the growth momentum to continue in the coming months. In the exports market, we have sold 1,203 tractors during the month."

* The stock trades at 18.8x/16.6x FY19E/20E. Maintain Buy.


RE, VECV Feb-18 dispatches in line

RE volume grew 25% YoY to 73.1k units; VECV volume up 26% YoY to 6.8k units

* RE Feb-18 volume was in line at 73.1k units (+25% YoY).

* RE exports of 1.7k units were flat YoY.

* VECV's volumes increased 26.3% YoY to 6.8k units (in-line).

* Domestic LMD and HD segments grew 40.3% YoY and 13.9% YoY, respectively. Buses volume declined 22.3% YoY.

* VECV exports grew ~84% YoY to 1,013 units (est. of 750 units).

* The stock trades at 26.3x/20.8x FY19E/20E consol. EPS. Maintain Buy.

Hero MotoCorp

Vols up 20% YoY to 629.6k (above est. of 602.5k)

* HMCL’s Feb-18 volumes of 629,597 units (+20% YoY) were above our estimates of 602.5k units.

* The company showcased its premium motorcycle ‘XPulse’ and its new range of 125cc scooters ‘Maestro Edge 125’ and ‘Duet 125’ at Auto Expo 2018. It had also unveiled its premium motorcycle ‘Xtreme 200R’ recently. These products would be available in the market over the next few months.

* HMCL trades at 17.9/16.8x FY19E/20E EPS. Maintain Neutral

Ashok Leyland

Dispatches in line at 18.2k units

MHCVs grew 21.2% YoY, while LCVs rose 62.7% YoY

* AL’s Feb-18 wholesale dispatches were in-line at 18.2k units (+29.2% YoY).

* M&HCV volumes, which account for 75% of total volumes, grew 21.2% YoY (+0.6% MoM) to 13.7k units (est. of 13.5k units).

* LCVs (Dost) grew 62.7% YoY to 4.5k units (est. of 4.4k).

* The stock trades at 22.6x/18.3x FY19E/20E EPS, and at 12.3x/10.2x EV/EBITDA. Maintain Buy

TVS Motor

Feb-18 wholesales up 37.5% YoY to 290.7k units

Domestic sales grew by 34% YoY, exports up 53.2% YoY

* Wholesales of 290.7k units (+37.5% YoY) were above estimate of 272k.

* Domestic volumes grew 34% YoY, while exports (20% of volumes) rose 53.2% YoY.

* Motorcycle volumes grew 92% YoY to 113.3k units (est. of 95k units).

* Scooter volumes increased 35.6% YoY to 93.6k units (est. of 87k units).

* Moped dispatches declined 5.3% YoY to 74.1k units (est. of 81k).

* 3W volumes increased 86.3% YoY, with growth across domestic and export sales.

* Total exports grew 53.2% YoY, led by growth in 2W and 3W exports.

* The stock trades at 26.9x/20x FY19E/20E EPS. Maintain Neutral.

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