Sector Update| 01 February 2017
rrrrrrr
CMP: INR6,173
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
MSIL IN
302.1
1,865/27.4
6195 / 3202
10/25/43
Automobiles
TP: INR6,808 (Upside 10%)
Buy
Automobiles | Update
Sales up 27% YoY to 144.4k units (v/s est. 133.5k)
Domestic recovery back on track post demonetization; Exports lend support
MSIL’s Jan-17 wholesales were above est. at ~144,396 units (v/s est. 133,500, units),
27% YoY growth (+23% MoM). Our FY17 estimates indicate a 10% growth implying a
10% residual growth rate or ~135.9k/month of run rate.
Domestic volumes were up by 26% YoY (+26% MoM) to 133.9k (v/s est 122.5k)
indicating a sharp recovery post demonetization. Almost all segments showed robust
growth.
Mini segment which was under pressure post demonetization recovered with a 11%
YoY growth. This was post successive months of subdued growth.
The compact segment which accounts for ~40% of total domestic volumes increased
by 25% YoY. We expect growth in compact segment to be driven by Baleno (waiting
period of 24 weeks) along with incremental volumes of newly launches Ignis (8-10
weeks)
Dzire Tour declined by 15% YoY to 3001 units (v/s 2559 units in Dec-16).
Mid-size segment was driven by Ciaz with a 20% YoY growth. Ciaz clocked in 6530
units.
UV volumes doubled to ~16k units in Jan-17, primarily aided by incremental volumes
of Vitarra Brezza, which enjoys a waiting period of 18 weeks.
Domestic growth of 26% YoY for MSIL for Jan-17 was broad based with all segments
growing. Recovery in entry level car segment was also seen post demonetization
hiccup.
Export volumes surprised with a ~45% YoY growth to 10,462 units (v/s est 11,000
units)
The stock trades at 19.7x/16.3x FY18E/19E consolidated EPS of ~INR313/379. Maintain
Buy.
Snapshot of volumes for Jan-17
Jan-17
Jan-16
YoY
(%)
27.1
25.9
0.0
34.9
21.6
6.8
NA
101.0
44.8
Dec-16
117,908
106,414
26
9,224
63,822
17,270
0
16,072
11,494
MoM (%)
22.5
25.9
NA
53.7
23.4
42.0
NA
1.5
-9.0
FY17-YTD
FY16-YTD
Chg
(%)
FY17
estimate
YoY
(%)
Resi-dual Gr.
(%)
10.2
9.8
Residual
Monthly
Run rate
135,924
124,605
Total volume
144,396 113,606
Domestic
133,934 106,383
LCVs
166
0
C (Vans)
14,179 10,512
A2 (Compacts)
78,745 64,781
A3 (Sedan)
24,531 22,976
A4
0
0
UV (Ertiga, S-Cross) 16,313
8,114
Export
10,462
7,223
1,298,560 1,182,452 9.8 1,570,408 9.9
1,195,807 1,078,341 10.9 1,445,018 10.7
460
0
NA
126,186
118,093
6.9
690,895
648,249
6.6
218,699
239,961
-8.9
0
0
NA
159,567
72,038 121.5
102,753
104,111
-1.3 125,390
1.2
14.7
11,319
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Aditya Vora
(Aditya.Vora@MotilalOswal.com); +91 22 3078 4701
3 November 2014
1
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.