Dashboard: Speedometer Data Track
Dashboard: Speedometer Data Track
Dashboard: Speedometer Data Track
Dashboard
The Monthly Auto Update
Speedometer
November 2011 relative performance
Sector overview and outlook ......................................................... 2 Hero Honda ................................................................................. 3 Bajaj Auto ................................................................................... 4 Maruti Suzuki .............................................................................. 6 Mahindra & Mahindra ................................................................... 8 Tata Motors ................................................................................ 10 TVS Motor ................................................................................. 12 Model wise volumes .................................................................... 13
Sensex
Special Report
8-Nov
15-Nov
22-Nov
29-Nov
Two-wheelers ............................................................................ 16 Three-wheelers .......................................................................... 18 Cars and UVs ............................................................................. 20 Commercial vehicles.................................................................... 22
Sensex
Tata Motors launched an all new Nano with improved mileage and power Honda Motorcycles launched a new variant of Unicorn Dazzler at INR66,198 Skoda launches the Yeti 4x2 at INR13.2 Lakhs
Feb-11
May-11
Aug-11
Nov-11
Comparative Valuation
CMP * (INR) Bajaj Auto 1,703 Hero MotoCorp 2,090 Mahindra & Mahindra 730 Maruti Suzuki 962 Tata Motors 183 * Price as on 1st December 2011 Rating Buy Buy Buy Buy Buy P/E (x) FY11 FY12E FY13E 18.8 15.7 13.7 20.8 17.3 13.9 15.0 15.8 11.9 11.8 16.8 11.6 6.8 6.7 5.9 EV/EBITDA (x) FY11 13.1 15.5 14.2 5.8 1.7 FY12E FY13E 10.7 8.6 10.7 8.1 13.2 11.5 8.3 5.7 1.5 1.1 RoE (%) FY11 FY12E FY13E 66.7 54.9 48.0 62.5 60.9 55.1 25.0 22.2 21.3 16.5 10.4 13.3 47.3 34.5 29.8 RoCE (%) FY11 FY12E FY13E 76.1 70.6 65.4 59.2 58.4 63.3 25.6 23.4 23.6 22.1 13.7 17.4 24.6 24.1 24.2 Source: Company/MOSL
Jinesh Gandhi (Jinesh@MotilalOswal.com); Tel: +91 22 3982 5416 Mansi Varma (Mansi.Varma@MotilalOswal.com) + 91 22 3982 5418
Dashboard
Data Track
Slowdown in Passenger cars while 2Ws continue to record robust growth: Impacted by macro-headwinds, passenger car segment is showing clear signs of slowdown. However, 2Ws, LCVs and UVs continue to record strong volume growth. Although volume outlook in the short term is impacted by macro headwinds, we believe long term volume outlook remains positive driven by strong economic growth, improved availability of finance, new product launches and exports potential. Softening in commodity cost to support margins in 2HFY12: EBITDA margins are estimated to improve in 2HFY12 as compared to 1HFY12, benefitting from easing commodity costs. However, increasing competitive intensity in some segments would restrict pricing power. We anticipate cost reduction measures, productivity improvement programs and high operating leverage to off-set impact of pricing pressures. Headwinds receding, although few uncertainties remain: With interest rate tightening cycle nearing end, we expect interest rate sensitive segments like passenger cars and M&HCVs to get some reprieve. This coupled with softening of commodity prices would result in stable cost of ownership. However, further increase in petrol prices and levy of an additional duty on diesel vehicle would negatively impact passenger vehicle demand in the short term. Also, competitive intensity is also set to remain high in all the segments. Valuation and view: Auto stock performance has been strong over the last six months with outperformance by all players, except Tata Motors and Maruti. With two key headwinds viz increase in interest rates and higher commodity prices expected to recede, we expect segments like car and CV to be biggest beneficiaries from these trends. We prefer players less vulnerable to competitive dynamics, enabling dilution of short-term headwinds - Hero MotoCorp, M&M and Tata Motors.
Comparative Valuation
CMP * (INR) Bajaj Auto 1,703 Hero MotoCorp 2,090 Mahindra & Mahindra 730 Maruti Suzuki 962 Tata Motors 183 * Price as on 1st December 2011
December 2011
P/E (x) FY11 FY12E FY13E 18.8 15.7 13.7 20.8 17.3 13.9 15.0 15.8 11.9 11.8 16.8 11.6 6.8 6.7 5.9
EV/EBITDA (x) FY11 13.1 15.5 14.2 5.8 1.7 FY12E FY13E 10.7 8.6 10.7 8.1 13.2 11.5 8.3 5.7 1.5 1.1
RoE (%) FY11 FY12E FY13E 66.7 54.9 48.0 62.5 60.9 55.1 25.0 22.2 21.3 16.5 10.4 13.3 47.3 34.5 29.8
RoCE (%) FY11 FY12E FY13E 76.1 70.6 65.4 59.2 58.4 63.3 25.6 23.4 23.6 22.1 13.7 17.4 24.6 24.1 24.2 Source: Company/MOSL
Dashboard
Data Track
Hero MotoCorp
Above estimate at 536,772 units (+27% YoY, 5% MoM, v/s est 510,000); Buy
536,772 421,366
4,122,902 3,446,722
Highlights
Strong volume growth of 27% YoY
Hero MotoCorp volumes grew by 27.4% YoY (5% MoM) to 536,772 units (v/s est 510,000). We estimate volume growth of 16.1% for FY12, implying residual growth of 9.8% and residual monthly run-rate of 537,078 units. Its scooter brand 'Pleasure' continues to grow strongly and contributes over 33,000 units/month. Commenting on its performance Mr Anil Dua, Sr VP (Marketing & Sales) said "Our sales continue to set new benchmarks in the industry. We have been maintaining five-lakhplus sales since August 2011, when we had launched our new brand identity. This 27 per cent growth in the post-festive month of November is significant as it comes after our record retail sales in the month of October." It is debottlenecking existing capacities by 0.7m units to 7m units by Mar-12, with large part of de-bottlenecking happening at Haridwar While it has not yet finalized on location . of 4th plant, it is confident to make it operational by 4QFY13. We model volume growth of 16.1% for FY12 to 6.27m units (due to capacity constraint), and 50bp contraction in EBITDA margins (adjusted for change in royalty accounting) to 11.3%. The stock trades at 17.3x FY12E EPS of INR121.1 and 13.9x FY13 EPS of INR150.5. Buy.
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Source: Company/MOSL
M.Cap. (USD b)
December 2011
8.1
3/13E 276,233
30,049
Dashboard
Data Track
Bajaj Auto
Below estimates at 374,477 units v/s est 382,000 (+ 25% YoY, -5% MoM); Buy
Total volume 374,477 299,231 Motorcycles 331,967 265,036 Total Two-Wheeler 331,967 265,036 Three-Wheelers 42,510 34,195
4,515,035 18.1 21.5 3,998,359 18.0 22.6 3,998,359 18.0 22.7 516,676 18.3 13.0 Source: Company/MOSL
Highlights
Strong growth in exports drive overall volume growth of 25% YoY
Bajaj Auto's total volumes grew 25% YoY (5.3% MoM de-growth) to 374,477 units (v/s est of 382,000 units), driven by strong growth in export volumes. Domestic volumes grew by 18% YoY to 245,221 units (v/s est of 257,000 units). Based on our volume growth estimates, implied residual growth is 21.5% and residual monthly run-rate of 372,083 units. Motorcycle volumes grew by 25% YoY (5% MoM de-growth) to 331,967 units (v/s est 340,000). We model FY12 2W volume growth of 18% to ~4m, implying residual runrate of 331,225 units (~23% residual growth). 3-wheeler volumes grew by 24% YoY (4% MoM de-growth) to 42,150 units (v/s est 42,000 units). We model 18.3% YoY growth to ~0.52m in FY12, implying residual runrate of 40,858 units (13% residual growth). Exports grew by 42% YoY (2% MoM de-growth) to 129,256 units (v/s est 125,000). The export momentum continued despite withdrawal of DEPB incentive from 1st October. The company maintained its volumes guidance of 4m motorcycles and 0.5m three wheelers for FY12. The management indicated 2HFY12 EBITDA margins to be better than 2QFY12 margins of 20.1%, driven by a) benefit of weak INR, b) full benefit of higher export incentives and export price increase and c) full benefit of domestic price increase. We estimate 2HFY12 EBITDA margins of 20.3% against 19.6% in 1HFY12. Our FY12 estimates factor in volume growth of 18.1% (18% for 2W & 18.3% for 3W) and 50bp decline in EBITDA margins to 19.9%. The stock trades at 15.7x FY12E EPS of INR108.5 and 13.7x FY13E EPS of INR124. Maintain Buy.
PAT
EPS
EPS
End (INR m) (INR m) (INR) Gr. (%) 3/10A 119,210 18,175 62.8 128.3 3/11A 3/12E 3/13E 166,089 201,723 238,196 26,152 31,390 35,885 90.4 108.5 124.0 43.9 20.0 14.3
December 2011
Dashboard
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Market mix
Domestic 100% 75% Exports
50% 25% 0% Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Dec-08 Dec-09 Dec-10 Feb-11 Apr-08 Apr-09 Apr-10 Aug-08 Aug-09 Aug-10 Apr-11 Aug-11 Oct-11 Jun-08 Jun-09 Jun-10 Jun-11
Dashboard
Data Track
Maruti Suzuki
Nov-11 volumes decline 18% at 91,772 units; Production normalizes after strike in Oct-11; Buy
91,772 112,554 82,870 100,063 1,400 2,440 9,612 14,686 59,680 74,063 11,836 11,115 162 0 180 199 8,902 10,051
124,439
-10.0
24.4
Highlights
The key A2 segment de-grew by 19% YoY (74% MoM growth)
Maruti's Nov-11 volumes de-grew by 18% YoY (+65% MoM) to 91,772 units (est 92,500 units). While domestic volumes de-grew by 17% YoY (+61% MoM), exports de-grew 11% YoY (+115% MoM). Based on our volume growth estimates, implied residual growth rate is 4.6% and residual monthly run-rate is 115,676 units. While this will be driven by expectations of a recovery in demand in 4QFY12, coupled with higher availability of diesel engines from 20,000/month to ~30,000/month, our FY12 volume estimate would see 2-3% downgrade as the company indicated that the demand environment remains challenging with no recovery in sight. Nov-11 volumes are reflection of normalization of production at Manesar, Gurgaon and SPIL plant, after strike in Oct-11 which had an impact of ~40,000 units. Domestic volumes de-grew 17% YoY (61% MoM growth) to 82,870 units (v/s est 80,000 units). While C segment de-grew by 35% YoY (4% MoM), the key A2 segment de-grew by 19% YoY (74% MoM growth) to 59,680 units. Swift volumes increased to 17,273 units (v/s 7,857 units in Oct-11). Our channel check suggests a waiting period of 8-9 months on Swift Diesel and 2-3 months on Swift Petrol. Export volumes at 8,902 units (v/s est 12,500) de-grew by 11% YoY (+115% MoM). Hyundai Eon recorded volume of 7,418 units in Nov-11. Eon sales have not picked up as anticipated owing to its higher price along with discounts of upto INR25,000 on Alto. The management indicated that margins would come under further pressure in 3QFY12, as full impact of weak INR and QoQ drop in volumes (due to strike in Oct-11 and maintenance in Dec-11) has its full impact. We model 10% de-growth in FY12 volumes to 1.14m and EBITDA margin decline of 200bp to 7.8%. Further weakness in currency and muted demand are key risk to our estimates. The stock trades at 16.7x FY12 consol. EPS of INR57.8 and at 11.6x FY13E EPS of INR83.3. Maintain Buy.
PAT Con. EPS EPS Con. P/E P/CE (x) 10.6 11.7 16.7 11.6 (x) 8.3 8.4 10.4 7.8 P/BV (X) 2.3 2.0 1.8 1.6 EV/ EBITDA 5.4 5.7 8.2 5.7 RoE (%) 21.1 16.5 10.4 13.3 RoCE (%) 28.4 22.1 13.7 17.4
End (INR m) (INR m) (INR) Gr. (%) 3/10A 296,231 25,068 90.8 113.8 3/11A 3/12E 3/13E 369,199 350,804 411,489 23,101 15,817 22,836 82.4 57.8 83.3 -9.2 -29.9 44.2
Dashboard
115,000 100,000 85,000 70,000 55,000 40,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Market mix
100% 75% Domestic Sales Exports
Export contribution to volumes expected to fall to ~11% in FY12 from 14.5% in FY10
50% 25% 0% Oct-08 Oct-09 Oct-10 Feb-09 Dec-08 Feb-10 Dec-09 Dec-10 Feb-11 Apr-08 Aug-08 Apr-09 Aug-09 Apr-10 Aug-10 Apr-11 Aug-11 Oct-11 Jun-08 Jun-09 Jun-10 Jun-11
Dashboard
Data Track
722,188 22.4 14.9 359,075 23.0 8.3 12,739 15.0 17.0 18,254 65.0 43.9 71,463 15.0 10.6 260,657 22.0 23.8 Source: Company/MOSL
Highlights
Strong growth in 4Wheelers pick-ups and UVs drive volumes
M&M's volumes came at 58,249 units (v/s est 57,100), a growth of 30% YoY (20% MoM de-growth), driven by strong growth in UVs and 4-wheeler pick-up. Our FY12 volume growth estimate of 22.4% implies residual growth rate of 14.9% and residual monthly run-rate of 62,399 units. UV volumes improved 56% YoY (flat MoM) to 32,138 units (v/s est 26,500), driven by strong growth in UVs pick-up trucks. While passenger vehicles grew by 45% YoY to 17,813 units, pick-up trucks volumes grew by 73% YoY to 13,362 units. Our FY12 estimates factor in 23% YoY growth in UV volumes, implying residual growth of 8.8% and residual monthly run-rate of 29,837 units. Bolero volumes were stable MoM at 8,004 units, while Scorpio volumes increased to 4,646 units (v/s 4,173 units in Oct-11). XUV500 recorded despatches of 1,637 units (v/s 1,213 units in Oct-11). Tractor volumes de-grew 2.6% YoY (45% MoM) to 17,527 units (v/s est 23,000). November and December are seasonally weak months for tractors. Our FY12 estimates factor in 22% YoY volume growth, implying residual growth of 23.8% (run rate of 23,436). 3-wheeler volumes grew 32% YoY (7% MoM de-growth) to 5,889 units (v/s est 5,250). Our FY12 estimates factor in 15% volume growth for 3Ws, implying residual monthly run-rate of 6,523 units. Ssangyong Motors (SYMC) reported 15.5% YoY growth (~2% MoM decline) in volumes to 8,971 units. Our CY11 estimates factor in volumes of 119,713 units, implying residual run-rate of 15,377 units for December, which is 6,000 higher than the current run rate. Our FY12 estimates factor in 22.4% volume growth (23% for UVs & 22% for tractors) and EBITDA margins of 12.8% (v/s 14.7% in FY11). Based on our estimates, the stock trades at 12x FY13E consolidated EPS of INR60.9. Maintain Buy.
Year Net Sales S/A PAT S/A EPS End (INR m) (INR m) 3/10A 185,888 20,451 3/11A 234,944 3/12E 298,620 3/13E 340,685 25,732 27,301 31,039
RoE
RoCE
EV/
EV/
(INR) E P S ( IN R ) Gr (%) (x) P/E (x) (%) 34.3 40.8 61.9 21.3 17.9 26.1 43.1 45.7 52.0 48.2 45.7 60.9 18.1 -5.1 33.1 16.9 16.0 14.0 15.1 16.0 12.0 25.0 22.2 21.3
(%) Sales (x) EBITDA 25.4 2.3 14.0 25.6 23.4 23.6 1.9 1.5 1.3 12.4 11.2 9.6
Dashboard
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Source: Company/MOSL
Product mix
UVs 100% Tractors LCVs, 3-w heelers
75%
Tractors and UVs dominate the segment mix, but we expect the share of three wheelers and LCVs to increase
0% Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Feb-11 Dec-08 Dec-09 Dec-10 Apr-08 Apr-09 Apr-10 Aug-08 Aug-09 Aug-10 Apr-11 Aug-11 Oct-11 Jun-08 Jun-09 Jun-10 Jun-11 25% 50%
Source: Company/MOSL
December 2011
Dashboard
Data Track
Tata Motors
Above est at 76,823 units (+41% YoY, +13% MoM; v/s est 61,750) driven by strong growth in LCV and PVs
Source: Company/MOSL
Highlights
Volumes grew by 41% YoY driven by LCV and Passenger Cars
Total volumes grew by 41% YoY (13% MoM) to 76,823 units (v/s est 61,750 units), driven by LCV volume growth of 38% YoY (31% MoM) and Passengers cars growth of 90% YoY (10% MoM). CV volumes grew by 25% YoY (15.5% MoM) to 48,739 units (v/s est 43,750 units). M&HCV's volumes grew 7% YoY to 16,999 units (v/s est 17,750 units), whereas LCV volumes grew by 38% YoY to 31,740 units (v/s est 26,000 units). Our FY12 estimates factor in volume growth of 11.9% for CVs (incl exports), with 7.2% growth in M&HCV and 15.3% growth in LCVs. Car volumes were grew by 90% YoY (10% MoM) to 23,862 units (v/s est 14,500 units). Excluding Nano, domestic car volumes grew by 46% YoY (flat MoM). Nano volumes improved to 6,401 units (v/s 3,868 units in Oct-11). Our FY12 estimates factor in volume de-growth of 18.4% for passenger cars (incl exports). Indica and Indigo (including Manza) volumes remained firm at 10,926 and 6,213 units. UV volumes grew by 33% YoY (flat MoM) to 4,222 units (est 3,500 units). Our FY12 estimates factors in for volume growth of 1.9% (7.2% for M&HCVs & 15.3% for LCVs) and 200bp contraction in EBITDA margins to 7.9% in standalone operations. We would wait for sustenance of the improving trend in LCV and PV volumes before upgrading our FY12 volume estimates. JLR volumes are estimated at 286,000 (+17.3%) and EBITDA margins of 15.2% (-120bp). The stock trades at 5.9x FY13E consolidated EPS of INR31.2 and 9.6x FY13E normalized consolidated EPS (adj for R&D capitalization) of INR19. The DVR share trades at 3.1x FY13 consol EPS and 5.1x FY13 consol normalized EPS. Maintain Buy.
10
Dashboard
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28,000 24,000 20,000 16,000 12,000 8,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
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Mar
50% 25% 0% Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Dec-08 Dec-09 Dec-10 Feb-11 Apr-08 Apr-09 Apr-10 Aug-08 Aug-09 Aug-10 Apr-11 Aug-11 Oct-11 Jun-08 Jun-09 Jun-10 Jun-11
11
Dashboard
Data Track
TVS Motor
Volume growth 11.8% YoY driven by growth in mopeds and scooters
Snapshot of volumes for November
Nov-11 Nov-10 Total volume Motorcycles Scooters Mopeds 175,535 157,041 62,608 62,995 44,301 36,233 65,920 54,654 YoY (%) 11.8 -0.6 22.3 20.6 Oct-11 183,718 75,652 47,445 56,909 MoM (%) -4.5 -17.2 -6.6 15.8 YTDFY12 YTDFY11 Chg (%)
1,503,172 1,341,106 12.1 592,055 556,592 6.4 366,734 300,734 21.9 514,860 459,417 12.1 Source: Company/MOSL
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
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Mar
88,000 76,000 64,000 52,000 40,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Sales mix
Motorcycles 100% 75% 50% 25% 0% Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Dec-08 Dec-09 Dec-10 Feb-11 Apr-08 Apr-09 Apr-10 Aug-08 Aug-09 Aug-10 Apr-11 Aug-11 Oct-11 Jun-08 Jun-09 Jun-10 Jun-11 Scooters & Mopeds
12
Dashboard
Indica and Indigo (incl Manza) volumes remain firm at 10,926 and 6,213 units respectively
Swift volumes increased to 17,273 units while Alto and WagonR volumes normalize
Eon volumes have not picked up as anticipated, while i20 and Verna recorded robust volumes
Honda volumes were impacted by floods at Thailand Figo volumes increased to 6,106 units
December 2011
13
Dashboard
Special Report
Under Tata Motors parentage, JLR is all set to emerge as a bigger, better and stronger global luxury vehicle player. It is taking several initiatives to fortify its strength in luxury SUVs and improve its weak positioning in luxury car market. Outlook for luxury vehicles remains positive, JLR can drive secular growth. Land Rover commands strength; Evoque to drive growth, market share gains. Jaguar's niche presence offers significant headroom to grow. China a big opportunity; JLR's local presence will boost competitiveness. Improved volumes, market mix, cost efficiencies to offset cost push. TTMT's domestic CV business has seen reduced volatility driven by higher LCV contribution. Outlook for luxury vehicles positive, JLR can drive secular growth The luxury vehicle market will post CAGR of 8.9% to 9m units over 2011-15. We expect China and BRIKT (Brazil, Russia, India, Korea and Turkey) to be key growth drivers with CAGR of 11.4% and 8.6% respectively. Jaguar Land Rover's (JLR) luxury vehicle market share (~4% or 0.23m units), comprising 1.3% in luxury cars and 9.9% in luxury SUVs, is small compared with the top three players. JLR's weakness in cars offers headroom for growth, driven by planned launches over 2-3 years. JLR's entry in the lower luxury segment will give it access to higher volume segments, where it has no presence. Land Rover commands strength; Evoque to drive growth, market share In the global premium SUV segment, Land Rover's volumes are comparable with those of BMW (excluding X1), Mercedes Benz and Audi. Within Land Rover brand, Range Rover portfolio enjoys a relatively more premium image. The luxury SUV segment registered 11.6% CAGR over CY00-10 and we expect it to post 9.7% CAGR over CY10-15. JLR's launch of Evoque in the high volume potential compact luxury SUV segment will be a key growth driver over 2-3 years. Jaguar's niche offers significant headroom for growth Land Rover competes well with the top three luxury SUV makers, but Jaguar's volumes lag its peers. It has just three models and seems to be weak, with volumes of only ~54,000 units (1.3% market share). Jaguar's small product range and absence in the high volume, entry-level luxury segment are major reasons for its comparatively smaller size. We foresee strong potential for Jaguar in the entry-level luxury segment (D2), a market of over 1.1m units a year. Jaguar can leverage its brand heritage to gain market share in the luxury car segment. JLR's European peers sell ~1m cars in the segment in which Jaguar is present and ~1.2m units in the compact luxury car segment, which Jaguar plans to enter by CY14. Evoque key to growth, can add volumes of 70,000-80,000 a year Evoque is positioned as the smallest, lightest and most fuel efficient Range Rover. Range Rover intends to leverage its brand heritage to enter a lower priced, high volume potential luxury compact SUV segment. Evoque has garnered high interest with ~20,000 order backlog (after ~15,000 dispatches) and the management expects volumes of 70,000-80,000 a year.
December 2011
14
Dashboard
The compact SUV segment is expected to post CAGR of ~36% over 2010-15 to 0.7m units. Evoque enjoys distinct brand positioning and is not expected to cannibalize the existing product. Some deterioration in Land Rover's product mix is expected, the impact of which would be offset by higher volumes. China a big opportunity for JLR; Local presence to improve competitiveness In 10 years' time, China is expected to account for 22% (2.1m units) of global premium vehicle volumes from 13% currently. China's luxury vehicle market will post 11.4% CAGR over next 10 years. Premium pricing compared with other markets and a better product mix will result in higher realizations and make China one of the most profitable luxury vehicle markets. With its strong growth potential, luxury carmakers are increasing their presence in China. Since JLR is a small player in China (4% market share) the market offers potential to ramp-up volumes. JLR will increase its China presence by almost doubling its dealer network to 100 by CY11 and set up a manufacturing presence (through a JV as mandated by Chinese law) to circumvent high import duty. Improving volumes, market mix, cost efficiencies to offset cost push We estimate JLR's overall volumes will grow 17% YoY to ~286,000 units in FY12 and realizations will improve by 7% in FY12 due to an improved market mix. It will expand regional coverage in emerging economies with growing sales potential, especially in China, its most profitable market. We expect short-term EBITDA margins to contract due to high raw material and marketing costs. However, the benefits of higher operating leverage, cost efficiency and a better market mix will kick-in in the medium term. We expect JLR to generate free cash flow of GBP364m and GBP582m in FY12 and FY13, respectively, despite annual capex of GBP1.5b.
Also refer our Detailed Report dated 25 November 2011
Domestic business a key contributor with high visibility JLR is the largest contributor to Tata Motors' (TTMT) consolidated performance, contributing ~23% to normalized EBITDA and 46% to fair value estimates. TTMT's domestic business, in which CVs are key contributor, offers better visibility. The increasing contribution of LCVs to CV volumes (~60% currently v/s ~49% in FY08) reduces the cyclicality of the CV business. We expect TTMT's passenger vehicle (PV) business to underperform the domestic PV industry and lose market share. Valuation and view TTMT's stock corrected ~26% over the past six months and underperformed the Sensex by 13%. As a result, valuations at 11.5x FY12 and 9x FY13 normalized EPS for ordinary share, and 6.3x FY12 and 4.9x FY13 normalized EPS for DVR shares is very attractive. Buy with target price of INR235 (SOTP) for the ordinary share.
Tata Motors: Financial & Valuation Summary
Bloomberg Actual Eq. Shares (m) CMP (Rs) 52-Week Range 1,6,12 Rel. Perf. (%) M.Cap. (US$ b)
Year
Sales
Adj. PAT Adj. EPS (Rs m) 15,051 90,695 90,878 (Rs) 4.5 27.1 27.1 31.2
Norm.
P/E
EV/
EV/
EPS (Rs) ^ Ratio P/E (x) (%) (%) Sales (x) EBITDA (x) -4.2 40.7 -43.1 18.3 10.7 0.4 4.0 17.3 14.8 19.0 6.8 6.7 5.9 10.6 12.4 9.6 47.3 24.6 34.5 24.1 29.8 24.2 0.3 0.2 0.1 1.7 1.5 1.1
15
Dashboard
Sector Gauge
Two-wheelers
Volume growth continues
1,150,000 1,000,000 850,000 700,000 550,000 400,000 May Aug Nov Mar Jun Sep Jan Feb Jul Dec Apr Oct
75%
50%
25%
0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Aug-11 Apr-08 Apr-09 Apr-10 Apr-11 Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Feb-11 Dec-08 Dec-09 Dec-10 Oct-11
December 2011
16
Dashboard
Encouraging response to the Discover150cc helped Bajaj Auto to improve market share in the >125cc
50% 25% 0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Aug-11
Aug-11
Apr-08
Apr-09
Apr-10
Apr-11
Oct-08
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50% 25% 0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Aug-11
Feb
Apr-08
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160,000 140,000 120,000 100,000 80,000 60,000 May Aug Nov Mar Jun Sep Dec Jan Apr Jul Oct
Feb-11
Dec-08
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December 2011
Oct-11
17
Dashboard
Sector Gauge
Three-wheelers
Volumes driven by strong growth in export markets
Mar-11 FY11 Chg (%) 526,030 19.5 66 426,133 21.9 81 99,897 10.2 19 79,467 9.0 80 20,430 15.2 20 269,968 55.8 34 795,998 29.7 Source: SIAM/MOSL
68,000 56,000 44,000 32,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
100%
75%
0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Aug-11 Apr-08 Apr-09 Apr-10 Apr-11 Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Feb-11 Dec-08 Dec-09 Dec-10 Oct-11
December 2011
18
Dashboard
100%
75%
50%
25%
Apr-08
Apr-09
Apr-10
Apr-11
Oct-08
Oct-09
Oct-10
Feb-09
Feb-10
100% 75% 50% 25% 0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Apr-08 Apr-09 Apr-10 Apr-11 Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Feb-11 Dec-08 Dec-09 Dec-10 Oct-11
Feb-11
Dec-08
Dec-09
Dec-10
Oct-11
December 2011
19
Dashboard
Sector Gauge
Oct-11 volumes impacted due to demand slow down and strike at Maruti's plant
160,000
120,000
80,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
52,000 40,000 28,000 16,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
December 2011
20
Dashboard
40,000 35,000 30,000 25,000 20,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Maruti
TataMotor
Hyundai
GM
Honda
Apr-08
Apr-09
Apr-10
Apr-11
Oct-08
Oct-09
Oct-10
Feb-09
Feb-10
75% 50% 25% 0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Apr-08 Apr-09 Apr-10 Apr-11 Oct-08 Oct-09 Oct-10 Feb-09 Feb-10 Feb-11 Dec-08 Dec-09 Dec-10 Oct-11
50% 25% 0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Aug-11 Apr-08 Apr-09 Apr-10 Feb-09 Feb-10 Feb-11 Apr-11 Oct-08 Oct-09 Oct-10 Dec-08 Dec-09 Dec-10 Oct-11
Feb-11
Dec-08
Dec-09
Dec-10
Oct-11
December 2011
21
Dashboard
Sector Gauge
Commercial vehicles
LCV growth remains strong
% of Total CVs
Total M&HCV
91
27,024
88
21,807
88
31,004
90
187,491 8.2 11.9 -10.3 26.8 29.7 8.8 25.2 18.7
90
322,928 31.8 36.3 10.9 24.1 24.8 19.7 67.3
% of Domestic CVs
Goods
44
24,208
42
18,321
44
27,326
43
162,025
48
275,211
% of M&HCVs
Passenger
90
2,816
84
3,486
88
3,678
86
25,466
85
47,717
% of M&HCVs
Total LCVs
10
34,776
16
30,151
12
39,630
14
244,957
15
356,121
% of Domestic CVs
Goods
56
31,080
58
26,637
56
35,585
0
215,783
0
314,932
% of LCVs
Passenger
50
3,696
51
3,514
50
4,045
50
29,174
46
41,189
% of LCVs
Exports
6
5,793
7
7,323
6
9,527
7
49,199
6
75,311
% of Total CVs
Total CVs
9
67,593
12
59,281
12
80,161
10
481,647
10
754,360 30.8 Source: SIAM/MOSL
3,000 1,500 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
December 2011
22
Dashboard
50% 25% 0% Jun-08 Jun-09 Jun-10 Aug-08 Aug-09 Aug-10 Jun-11 Aug-11
Aug-11
Apr-08
Apr-09
Apr-10
Apr-11
Oct-08
Oct-09
Oct-10
Feb-09
Feb-10
TataMotor
AshokLeyland
Eicher
Sw araj
Apr-08
Apr-09
Apr-10
Feb-11
Dec-08
Dec-09
Dec-10
30,000 20,000 10,000 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Apr-11
Oct-11
December 2011
23
December 2011
increase in contribution
to CVs
100%
25%
Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09
50%
75%
0% Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 LCVs Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 <16T Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 <12T <35T
Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11
Dashboard
24
Dashboard
Tata Motors launched an all new Nano with improved mileage and power
Tata Motors has given Nano a facelift, with a more powerful engine and new features, while keeping the prices same. Tata Motors announced "Making the Tata Nano even more desirable, the car's 624cc engine has been made more powerful, delivering an impressive 38 PS of power (earlier 35 PS) and 51 Nm of torque (earlier 48 Nm)." Despite delivering more power, the car will become more fuel efficient. Nano will now give a mileage of 25.4 km per litre of petrol compared to 23.6 km a litre earlier. Despite adding all these features, the company has not raised the prices of the car. The entry-level variant of the Nano will now have features like booster-assisted brakes, which were available only in the mid and topend variants.
Honda Motorcycle & Scooter India (HMSI) has launched a new variant of its 150 cc bike CB Unicorn Dazzler, priced up to INR66,198 (ex-showroom, Delhi). The new Deluxe variant of CB Unicorn Dazzler will be available by the end of November, 2011. Technical specifications of both standard and deluxe variants will remain the same. The deluxe variant is priced at INR66,198 and the standard variant is priced at INR65,198 (ex-showroom, Delhi). Driven by a 150cc engine, the CB Unicorn Dazzler has a power of 14 BHP and comes with tubeless tyres and alloy wheels.
December 2011
25
Dashboard
Suzuki Motorcycles launches the luxury cruiser Intruder M800 at INR8.88 lakh
Unicorn Dazzler
Suzuki Motorcycle India launched its cruiser bike Intruder M800 priced at INR8.88 lakh (exshowroom Delhi). Suzuki currently sells other superbike models, such as the 1350 cc Hayabusa at INR13 lakh, Intruder M 1800 cc priced at INR13.25 lakh, GSX-R1000 at INR13.75 lakh and Bandit 1200S at INR8.8 lakh in India. The new bike that would compete with few models of American bike company Harley Davidson will be powered by a 805 cc fuelinjected liquid-cooled, 8-valve V-Twin engine and has been launched in 12 cities, including Delhi, Bangalore, Hyderabad, Chennai, Mumbai, Pune and Ahmedabad.
Petrol price cut by INR0.78 per litre; second reduction in two weeks
With global crude rates coming down, petrol prices were cut by INR0.78 per litre from 1st December, the second reduction in two weeks. Petrol price in Delhi will now cost INR65.64 per litre as against INR66.42 a litre earlier. Petrol in Mumbai will cost INR70.65 a litre, down by INR0.82 per litre. The reduction came on back of a 3.2% or INR2.22 per litre cut in rates effected from November 16. This was the first cut in retail prices in nearly three years and the first since prices were decontrolled in June 2010. Before that, oil companies on November 4 raised petrol price by INR1.80 a litre as fall in rupee's value against the dollar increased the cost of oil imports.
December 2011
26
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