Two-wheeler firms, Tata Motors shine
While most auto majors saw volumes go up 25-30 per cent over the year-ago quarter on a sequential basis, Maruti Suzuki and M&M experienced the sharpest drop of 14 per cent and four per cent, respectively, due to their annual plant maintenance shutdowns and component shortages. The stars of the June show were Tata Motors and two-wheeler makers.
While Tata Motors saw medium and heavy commercial vehicle (M&HCV) grow by half to 15,000 units, its passenger vehicle sales were up 63 per cent on higher despatches of Nano from the Sanand plant, which has come onstream. Two-wheeler maker Bajaj Auto’s strong sales were helped by a 68 per cent growth rate in its motorcycle segment and rising exports. Its two key brands Pulsar and Discover, which account for 70 per cent of sales, continue to be the star performers.
Despite a high base, Hero Honda had its fourth straight month of 400,000-plus sales due to strong motorcycle as well scooter (Pleasure) sales. TVS Motors saw a 37 per cent growth in despatches on the back of higher numbers for its recently launched Jive motorcycle and Wega scooter.
|
ROBUST EARNINGS GROWTH
|
|
in Rs crore
|
Quarter ended June 2010 (E)
|
FY12E
P/E (x)
|
|
Sales
|
% chg
|
PAT
|
% chg
|
|
Ashok Leyland
|
2,051
|
125.0
|
129.0
|
NA
|
13.4
|
|
Bajaj Auto
|
3,708
|
59.0
|
592.0
|
91.0
|
15.7
|
|
Hero Honda
|
4,256
|
12.0
|
602.0
|
20.0
|
15.4
|
|
Maruti Suzuki
|
8,538
|
35.0
|
685.0
|
17.0
|
13.4
|
|
M&M
|
5,119
|
21.0
|
501.0
|
25.0
|
15.3
|
|
Tata Motors
|
10,060
|
57.0
|
430.0
|
120.0
|
10.6
|
|
% chg is y-o-y; E: Estimates Source: Angel Research, Citi Research
|
M&M’s tractor sales, which are normally robust in June due to rural demand, fell 13.5 per cent due to capacity constraints. The management believes that demand continues to be robust for the farm equipment segment.
Future concerns
Analysts say the increase in interest rates, and subsequent rise equated monthly instalments, higher fuel costs, higher raw material cost and price increases may impact demand, though there are no signs of this happening as of now. While volumes are likely to be robust if monsoon is normal and industrial production continues to be strong, volume growth is likely to drop due to the high base-effect in the second half of the current financial year.
The hike in raw material costs will, according to Sharekhan, lead to a marginal drop of 23 basis points in operating profit margins for companies in the June quarter vis-à-vis the year-ago period. The research firm believes a higher scale of operations, coupled with price hikes undertaken by the companies, will help cushion the impact. The sequential impact, however, will be over a percentage point, according to the firm.
Given a 40 per cent growth in volumes, sales should grow upwards of 35 per cent for the auto companies in the quarter. Higher volumes will also reflect in the bottom line growth for most companies - in the region of 30 per cent. Among auto companies, most analysts are betting on Maruti Suzuki to do well on the back of high volumes, expected price increases in this quarter and launch of new variants. The stock is expected to return about 20 per cent from these levels.
|
