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Auto Roundup Jan 18 - IndiaNotes.com
Auto Roundup Jan 18
LKP Securities | Published: 05 Feb, 2018  | Source : IndiaNotes.com

January  is seasonally a  strong  month for auto sales  wherein customers  who postpone their buying in  December start buying again.  But this year,  December was exceptionally strong. January sales numbers were stronger yoy as well as sequentially as demand in all the segments remained buoyant. Hero Moto Corp got back to >6 lakh number once again after weak December.    Bajaj deserves a special applause as this has been one of the highest growths since 2-3 years. New geographies like Iran and Turkey have also provided the necessary impetus for Bajaj Auto.  TVS reported splendid  domestic as well as  exports numbers as the new launch of Apache is doing well in domestic markets and  we learned that Nigeria, one of the biggest exports markets for Indian two wheeler makers is back on track of revival. On the 3W business segment, new permits opening in Maharashtra and other states like Delhi and Karnataka have led to a surge in domestic 3W sales. Even in the exports markets revival in African markets is leading to good 3W numbers. On the PV side, MSIL reported.  soft growth  as fuel prices moved up.  M&M, on the other hand has reported  robust  set of numbers  across the segments.  FES segment  outperformed this month  with a 37.5%  growth.  ALL  and  TaMo  both  reported  solid  CV  growth  on  low  base.and  macro  level  recovery.  Even  sequentially  they  reported  good  growth  despite  the  bump  up  we witnessed in December due to implementation of AC/blowers in MHCV from 1st of January.


Among the 2W pack, we like Hero (55% of rural volumes)  which is a proxy to the rural story and is expected to pan out well on good monsoons,  new launches, 7th Pay Commission and  slurry  of  new  launches  as  announced  by  the  management.  Bajaj  Auto  stock  looks  better  on  valuations  as  well  as  good  volume  demand  coming  up  with  recent  launch  of Dominar and another higher cc bike. TVS has been posting excellent sales performance but the double digit operating margins still look illusive, which is our major concern. We like MSIL on its sheer market leadership strength, new launches in the UV and the premium car segment,  its image of a car made for India, solid distribution network and lesser impacted due to DeMon and BS III ban.  With its recent new launches like Baleno,  Vitarra Brezza, Super Carry LCV and Ignis hatchback, we remain sanguine on MSIL. We like Ashok Leyland as it’s a prime beneficiary of the  CV cycle up move, which  has already started to look up on expected good monsoons and infra  cycle pick up.  FES segment  and strong subsidiary valuation will assist M&M to grow well from these levels, though UVs will disappoint on and off till new launches arrive. Viewing strong domestic sales and JLR strength, we like Tata  Motors. The most interesting driver for the industry will be the upcoming launches of the Electric Vehicles and the race for gaining market share in that segment. It can be anybody’s game in the coming years.…

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About LKP Securities

What started as one of India’s first securities brokerage houses in 1948 is today one of the country’s largest multi dimensional financial services group. LKP Securities is a Non Banking Finance Company (NBFC) registered with Reserve Bank of India & a listed public limited company having a networth of Rs.142 crores as on FY10. They are India's first financial group to be awarded the prestigious ISO 9002 certified KPMG Quality Registrar, USA, for certain businesses.

 

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