Automobiles
Apr-17 Sales Estimates
PV to outperform 2W and CV
Strong demand of new products to drive PV sales
PV to continue its growth momentum and outperform the auto industry growth in Apr-17.
2W and CVs volume is expected to decline in Apr-17 YoY and MoM. Our channel check
suggests, retail off-take in 2W segment is expected to remain weak followed by pre-buy of
BS-3 vehicles in the previous month.
Key highlights:
Maruti Suzuki is expected to outperform the PV industry, while we expect Ashok
Leyland and TVS to outperform the CV and 2W industry respectively.
PVs to continue its growth trajectory and outperform auto industry growth led by
MISL, which we expect to report ~8% growth in its overall volumes in Apr-17. The
growth in MSIL volumes will be led by strong demand of Baleno and Brezza. Our
channel check indicates these models still enjoys healthy waiting period of 5-7weeks.
Tata Motors PV segment is expected to maintain strong growth momentum driven by
Tiago and complimented by newly launched Tigor.
In the 2W segment, we expect TVSL is likely to record a 5.9% YoY increase in volumes
led by strong growth in its scooters and mopeds portfolio. While, HMCL’s volumes are
expected to decline 5.3% YoY, we expect Bajaj Auto volumes to decline sharply by
17.8% led by decline in domestic 2W and 3W volumes.
Our channel check suggests, retail off-take in 2W volumes are expected to remain
weak followed by pre-buy of BS-3 vehicles in the previous month.
We expect RE volumes to grow at ~25% YoY growth in Apr-17 at 60k units. Situation in
2Ws is expected to improve on a MoM basis as demonetization impact wanes off,
however as indicted by management of 2W OEM, situation is improving gradually.
CV players are expected to record decline in sales due to pre buying effect on account
of change in emission norms. We expect TTMT and AL to report double digit decline in
their CV volumes by 21% and 23% respectively.
We prefer 4Ws over 2Ws and CVs due to stronger volume growth and stable
competitive environment. While we expect 2W volumes to benefit from rural recovery
in near term, competitive intensity remains high in segment witnessing changing
customer preferences. For CVs, we expect volumes to remain muted atleast for next 2-
3 quarters due to pre-buying, GST implementation and cost inflation with relatively
weak freight availability.
Our top-picks are Tata Motors, Maruti Suzuki and Amara Raja. We also like M&M as
best bet on rural market recovery.
Sector Update | 28 April 2017
Automobiles | Update
”company is planning
massive investment into
India over the next four
years and expects to launch
eight new models in next
four yeras.” Rakesh
Srivastava, Director (Sales
and Marketing) at Hyundai
Motor India
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Jigar Shah
(Jigar.Shah@MotilalOswal.com); +91 22 6129 1534
3
sto
2017
Inve
April
rs are advised to refer through important disclosures made at the last page of the Research Report.
1
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Automobiles | Update
Snapshot of volumes for Mar17
YoY
Company Sales
Maruti Suzuki
LCVs
C (Vans)
A2 (Compacts)
A3 (Sedan)
A4
UV (Ertiga, S-Cross)
Total Domestic
Export
Mahindra & Mahindra
UV (incl. pick-ups)
LCV
Verito
Three-Wheelers
Tractors
Tata Motors
HCV's
LCV's
CV's
Cars
UV's
Hero MotoCorp
Bajaj Auto
Motorcycles
Total Two-Wheelers
Three-Wheelers
Domestic
Exports
Ashok Leyland
CV (ex LCV)
LCV (Nissan JV)
TVS Motor
Motorcycles
Scooters
Mopeds
Three-Wheelers
Total Domestic
Total Exports
Eicher Motors
Royal Enfield
VECV
Domestic LMD
Domestic HD
Domestic Buses
Total Domestic
Exports
Apr-17
136,290
290
14,000
76,500
16,500
0
18,000
125,290
11,000
67,750
40,000
1,000
3,250
23,500
38,900
7,500
15,000
22,500
14,000
2,400
580,000
271,500
243,000
243,000
28,500
168,500
103,000
7,800
5,000
2,800
240,500
82,500
77,500
75,000
5,500
203,000
37,500
60,000
5,150
2,000
900
1,550
4,450
700
Apr-16
126,569
0
14,520
67,606
18,875
0
16,044
117,045
9,524
63,249
36,995
1,113
3,755
21,386
39,382
13,117
15,449
28,566
9,275
1,541
612,739
330,109
291,898
291,898
38,211
226,133
103,976
10,180
7,871
2,309
227,096
90,491
63,341
68,518
4,746
198,742
28,354
48,197
5,326
2,081
1,116
1,444
4,641
685
YoY (%) chg
7.7
-3.6
13.2
-12.6
12.2
7.0
15.5
7.1
8.1
-10.2
-13.4
9.9
-1.2
-42.8
-2.9
-21.2
50.9
55.7
-5.3
-17.8
-16.8
-16.8
-25.4
-25.5
-0.9
-23.4
-36.5
21
5.9
-8.8
22.4
9.5
15.9
2.1
32.3
24.5
-3.3
-3.9
-19.4
7.3
-4.1
2.2
MoM
MoM (%)
Mar-17
chg
139,763
-2.5
304
11,628
20.4
77,172
-0.9
20,584
-19.8
0
NA
18,311
-1.7
127,999
-2.1
11,764
-6.5
75,368
-10.1
48,395
-17.3
2,574
-61.1
5,062
19,337
57,145
20,548
20,714
41,262
13,282
2,601
609,951
272,197
244,235
244,235
27,962
169,279
102,918
18,682
15,258
3,424
255,043
94,373
84,173
71,135
5,362
217,879
37,164
60,113
7,088
2,947
1,646
1,817
6,410
678
-35.8
21.5
-31.9
-63.5
-27.6
-45.5
5.4
-7.7
-4.9
-0.3
-0.5
-0.5
1.9
-0.5
0.1
-58.2
-67.2
-18.2
-5.7
-12.6
-7.9
5.4
2.6
-6.8
0.9
-0.2
-27.3
-32.1
-45.3
-14.7
-30.6
3.2
FY18YTD
136,290
290
14,000
76,500
16,500
0
18,000
125,290
11,000
67,750
40,000
1,000
3,250
23,500
38,900
7,500
15,000
22,500
14,000
2,400
580,000
271,500
243,000
243,000
28,500
168,500
103,000
7,800
5,000
2,800
240,500
82,500
77,500
75,000
5,500
203,000
37,500
60,000
5,150
2,000
900
1,550
4,450
700
FY17YTD
126,569
0
14,520
67,606
18,875
0
16,044
117,045
9,524
63,249
36,995
1,113
3,755
21,386
39,382
13,117
15,449
28,566
9,275
1,541
612,739
330,109
291,898
291,898
38,211
226,133
103,976
10,180
7,871
2,309
227,096
90,491
63,341
68,518
4,746
198,742
28,354
(%) chg
7.7
-3.6
13.2
-12.6
0.0
12.2
7.0
15.5
7.1
8.1
-10.2
-13.4
9.9
-1.2
-42.8
-2.9
-21.2
50.9
55.7
-5.3
-17.8
-16.8
-16.8
-25.4
-25.5
-0.9
-23.4
-36.5
21
5.9
-8.8
22.4
9.5
15.9
2.1
32.3
48,197
24.5
5,326
-3.3
2,081
-3.9
1,116
-19.4
1,444
7.3
4,641
-4.1
685
2.2
Source: MOSL, Company
28 April 2017
2

Automobiles | Update
Comparative valuation
Auto OEM's
Bajaj Auto
Hero MotoCorp
TVS Motor
M&M
Maruti Suzuki
Tata Motors
Ashok Leyland
Eicher Motors
Auto Ancillaries
Bharat Forge
Exide Industries
Amara Raja Batteries
BOSCH
Endurance Tech
CMP
(INR)*
2,861
3,297
503
1,338
6,371
456
87
25,975
1,134
228
882
22,585
805
TP
(INR)
Buy
3,414
Neutral 3,390
Buy
581
Buy
1,573
Buy
7,349
Buy
619
Buy
98
Buy
28,811
Buy
1,266
Buy
270
Buy
1,084
Neutral 22,924
Buy
841
Rating
P/E (x)
EV/EBITDA (x)
FY18E FY19E FY18E FY19E
18.5
16.4
13.0
11.1
17.8
17.5
11.7
11.5
30.1
18.8
20.0
12.9
17.7
15.0
14.5
12.3
21.2
17.2
12.6
10.5
15.5
7.4
4.3
2.5
16.8
13.1
9.0
7.1
30.4
24.8
24.5
20.3
30.5
23.2
23.7
33.8
27.4
22.4
19.1
20.3
29.6
21.5
16.6
14.8
13.9
24.7
13.2
12.8
12.2
11.9
20.5
10.8
RoE (%)
FY18E FY19E
30.2
30.0
36.2
31.9
29.2
35.9
13.9
14.7
20.7
21.5
11.0
19.7
22.3
24.9
40.9
36.7
20.5
15.0
22.9
24.5
21.6
23.7
16.0
22.0
23.4
22.9
Div Yield (%) EPS CAGR (%)
FY18E FY19E
FY17-19E
2.6
3.1
14.1
2.7
2.7
4.6
0.6
0.9
50.9
1.5
1.5
20.5
0.9
1.1
22.1
0.1
0.1
131.9
2.3
2.6
24.9
0.6
0.7
30.5
0.9
1.0
0.6
0.6
0.4
0.9
1.0
0.7
0.7
0.8
41.6
19.1
21.7
27.2
29.6
Source: MOSL
28 April 2017
3

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4