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.
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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.…
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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