Sector Update| 02 January 2017
Automobiles | Update
rrrrrrr
CMP: INR5,466
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
MSIL IN
302.1
1,651/24.2
5972/3202
6/33/16
Automobiles
TP: INR6,093 (+12%)
Buy
Below est at 117.9k units (v/s est. 124k), decline of ~1%YoY
Exports and new launches cushion demonetization impact
MSIL’s Dec-16 wholesales were below est at ~117,908 units (v/s est 123,960 units), 1%
YoY decline (-13% MoM). Our FY17 estimates indicate a 10% growth implying a 15.5%
residual growth rate or ~128.2k/month of run rate.
Domestic volumes declined by 4% YoY (-16% MoM) to 106k (v/s est 113k) due to the
impact of demonetization. The decline in domestic volumes was partially offset due to
waiting periods of Baleno and Brezza which account for ~15% of domestic volumes.
Mini segment was the worst hit due to demonetization, with volumes declining by
15% YoY.
The compact segment too declined by 9% YoY. Waiting period of Baleno restricted
further fall of the compact segment.
Dzire Tour declined by 29% YoY to 2559 units (v/s 3614 units in Dec-15).
Mid-size segment was driven by Ciaz with a 31% YoY growth. Ciaz clocked in 3711
units (v/s 2841 units in Dec-15).
UVs continued their momentum, with a 75% YoY growth, primarily aided by
incremental volumes of Vitarra Brezza, which enjoys a waiting period of 6-7 months.
Incremental volumes of Brezza, Baleno supported by robust growth in the mid size
segment (Ciaz) partially insulated the impact of demonetization on MSIL’s Dec-16
volumes.
We estimate retail volumes in Dec-16 to have grown by 8-10% on a YoY basis to 178k.
Export volumes surprised with a ~47% YoY growth to 11,494 units (v/s est 10,500
units) led by robust sales of Baleno to Japan and Europe.
The stock trades at 21.2x/17.5x FY17E/18E consolidated EPS of ~INR257/312. Maintain
Buy.
Snapshot of volumes for Dec 2016
Dec-16
Total volume
Domestic
LCVs
C (Vans)
A2 (Compacts)
A3 (Sedan)
A4
UV (Ertiga, S-Cross)
Export
Dec-15
YoY
(%)
-1.0
-4.4
0.0
-17.1
-10.2
-13.5
NA
75.3
47.1
Nov-16
135,550
126,325
105
12,238
77,133
19,634
0
17,215
9,225
MoM (%)
-13.0
-15.8
NA
-24.6
-17.3
-12.0
NA
-6.6
24.6
FY17-YTD
FY16-YTD
Chg
(%)
FY17
estimate
YoY Resi-dual Gr.
(%)
(%)
15.5
14.9
Residual
Monthly
Run rate
138,748
127,715
117,908 119,149
106,414 111,333
26
0
9,224
11,122
63,822 71,088
17,270 19,955
0
0
16,072
9,168
11,494
7,816
1,154,164 1,068,846 8.0 1,570,408 9.9
1,061,873 971,958
9.3 1,445,018 10.7
294
0
NA
112,007
107,581
4.1
612,150
583,468
4.9
194,168
216,985 -10.5
0
0
NA
143,254
63,924 124.1
92,291
96,888
-4.7 125,390
1.2
22.8
11,033
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.

Automobiles | Update
CMP: INR1,225
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
MM IN
592.6
697.9/10.3
1509/1092
6/-14/-5
TP: INR1,534 (+25%)
Buy
Above est at 50,410 units(v/s est ~38,200) flat YoY
Tractors surprise with 9% YoY growth while UVs decline on demonetization
impact
Dec-16 volumes were flat YoY at ~50,410 units (v/s est 38,200 units), as growth in
tractor sales was offset by decline in automobiles. Our FY17 estimates indicate a 9%
growth implying an 4% residual decline or ~63.9k/month of run rate.
Tractor sales were
above
estimates at 14,047 units (v/s est 11,000 units), registering a
9% YoY growth (-19% MoM) on the back of good rabi sowing coupled with increase in
MSP’s. Domestic tractor sales were at 12,619 units (+8% YoY), while exports at 1428
units grew by 21% YoY.
Commenting on the monthly performance, Rajesh Jejurikar, President & Chief
Executive, Farm Equipment and Two Wheeler Division, Mahindra & Mahindra Ltd.
said, "In December 2016 we had a growth of 8% over December 2015, with sales of
12619 tractors in the domestic market. With good progress in rabi sowing and
increased MSP’s, we expect to see the growth momentum to continue in the coming
months. In the export market, we sold 1,428 tractors with a growth of 21% over
December 2015 ”
UV (incl pick-ups) declined by ~3% YoY to 31,898 units (v/s est ~23.2k).
Pick-ups grew by 14% YoY while passenger utility vehicles declined by 8% YoY
impacted by demonetization.
LCV grew by 30% YoY while MHCV sales declined by 10% YoY. Decline in MHCV could
be due to postponement of demand as liquidity crunch affected fleet operators.
3W sales declined by 17% YoY to 3,458 units (v/s est ~3250 units)
Speaking on the monthly performance, Pravin Shah, Chief Executive, Automotive
Division, M&M. said, "The auto industry continues to go through challenging times,
grappling with the short term effect of demonetization as well as reduced and
postponed purchase decision. However we believe there will be a gradual pick-up in
demand starting next few months. We do hope that the implementation of GSTalong
with some right initiatives taken by the Government in the upcoming Union Budget on
1 February will provide a veritable boost to the auto industry and the economy in
general. I believe, this coupled with stable fuel prices and reduced inflation and
interest rates, will fuel the automotive industry’s growth going forward.”
The stock trades at 19.9x/17.8x FY17E/18E consolidated EPS. Maintain Buy
st
Snapshot of volumes for Dec 2016
Dec-16
Total volume
UV (incl. pick-ups)
LCV
Three-Wheelers
Tractors
50,410
31,898
1,007
3,458
14,047
Dec-15 YoY (%)
50,783
32,803
935
4,177
12,868
-0.7
-2.8
7.7
-17.2
9.2
Nov-16
49,761
27,739
807
3,953
17,262
MoM (%)
1.3
15.0
24.8
-12.5
-18.6
FY17-YTD
579,965
317,137
9,327
40,762
212,739
FY16-YTD
523,015
302,012
8,388
42,345
170,270
Chg
(%)
10.9
5.0
11.2
-3.7
24.9
FY17
estimate
771,953
441,389
11,773
56,075
262,717
YoY Resi-dual Gr.
(%)
(%)
9.1
4.0
-2.9
2.0
23.0
4.0
1.5
-34.6
21.2
15.4
Residual
Monthly
Run rate
63,996
41,417
815
5,104
16,659
2 January 2017
2

Automobiles | Update
CMP: INR81
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
AL IN
2,845.9
226.2/3.4
113 / 74
7/-10/-10
TP: INR89 (+10%)
Buy
Above est ,with 12% YoY decline to ~10.7k (v/s est 8.7k)
MHCV’s decline 10% YoY; while LCVs witness a sharp fall of 20% YoY
Dec-16 volumes declined by 12% YoY (+12% MoM) to 10,731 units (v/s est. 8,700) as
both MHCVs and LCVs declined on the back of demonetization impact.
M&HCV volumes which account for 82% of the total volumes declined by 9.5% YoY
(+27% MoM) to 8,782 units (v/s est 6,250 units). Majority of large fleet operators have
delayed their purchases on account of liquidity crunch.
LCVs (Dost & Stile) at 1,949 units (v/s est 2,450 units) witnessed a sharp decline of 20%
YoY.
Our FY17 estimates indicate a 2.4% growth implying a 5% residual growth or
~15.4k/month of run rate.
The stock trades at 16.1x/12.1x FY17E/FY18E EPS and at ~9.7/7.7x EV/EBITDA.
Maintain Buy.
Snapshot of volumes for Dec 2016
Dec-16
Total volume
CV (ex LCV)
LCV (Nissan JV)
10,731
8,782
1,949
Dec-15
12,154
9,703
2,451
YoY (%)
-11.7
-9.5
-20.5
Nov-16
9,574
6,928
2,646
MoM (%)
12.1
26.8
-26.3
FY17-YTD
97,447
74,655
22,792
FY16-YTD
2.4
1.9
3.9
Chg
(%)
1.0
0.2
3.8
Residual
FY17 YoY Resi-dual Gr.
Monthly
estimate (%)
(%)
Run rate
143,771
111,867
31,904
2.4
1.9
3.9
5.3
5.5
4.2
15,441
12,404
3,037
2 January 2017
3

Automobiles | Update
CMP: INR22,511
TP: INR28,755 (+28%)
Buy
RE (+42% YoY) and VECV(-20%YoY) above est
Bloomberg
Equity Shares (m)
M.Cap. (INRb)/(USDb)
EIM IN
27.2
611.4/9.1
RE bucks demonetization impact while VECV vols decline due to
demonetization impact
52-Week Range (INR)
26602/14818
1, 6, 12 Rel. Per (%)
-2/18/28
RE volumes grew ~42% YoY (flat MoM) to 57,398 units (v/s est. ~51,500 units).Our
FY17 estimates indicate a 30% growth implying a 17% residual growth or 57.8k
units/month.
VECV's overall volume declined by 20% YoY to 3,946 units (v/s est 3,654 units)
impacted by slowdown in LMD as well as HD truck volumes as large fleet operators
postponed their purchases on account of demonetization impact. Our FY17 estimate
indicates 16% growth implying a 20% residual growth or 6.1k units/month.
Domestic sales were at 3,246 units (v/s est. ~2,775 units) decline of 21% (+34.8%
MoM).
LMD volumes which accounted for 55% of domestic volumes were impacted the most
with a 28% YoY decline (+24% YoY) to 1,792 units (v/s est. 1,750 units).
HD volumes too declined by 13% YoY (+73% MoM) to 792 units (v/s est 450 units).
While bus volumes decreased 8% YoY to 662 units (v/s est 575 units).
VECV exports declined by 16% to 700 units (v/s est 879 units).
The stock trades at 37.0x/25.9x FY17E/FY18E EPS respectively. Maintain Buy.
Snapshot of volumes for Dec 2016
Dec-16
Royal Enfield
VECV
Domestic LMD
Domestic HD
Domestic Buses
Total Domestic
Exports
57,398
3,946
1,792
792
662
3,246
700
Dec-15
40,453
4,946
2,477
914
718
4,109
837
YoY
(%)
41.9
-20.2
-27.7
-13.3
-7.8
-21.0
-16.4
Nov-16
57,313
3,067
1,450
457
501
2,408
659
MoM (%)
0.1
28.7
23.6
73.3
32.1
34.8
6.2
FY17YTD
488,262
40,525
18,407
7,466
8,499
34,372
6,153
FY16YTD
359,968
35,507
17,446
5,863
7,339
30,648
4,859
Chg
(%)
35.6
14.1
5.5
27.3
15.8
12.2
26.6
FY17
estimate
661,762
58,866
26,957
11,316
12,174
50,447
8,419
YoY Resi-dual Gr.
(%)
(%)
30.2
15.9
9.1
25.4
15.6
14.0
29.3
17.1
20.1
17.6
21.7
15.2
18.0
37.1
Residual
Monthly
Run rate
57,833
6,114
2,850
1,283
1,225
5,358
755
2 January 2017
4

Automobiles | Update
CMP: INR487
YoY
Bloomberg
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
TTMT IN
3395.9
1304/20.4
599 / 266
11/8/20
TP: INR677 (+39%)
Buy
Above est at 40,944 units (v/s est 34.7k units), growth of 2%
PVs grew 35% YoY led by Tiago; Domestic CVs decline on the back of
demonetization impact
Tata Motors Dec-16 sales volumes grew by 2% YoY (+5% MoM) to 40,944 units (v/s est
34,750 units) led by a 35% growth in Passenger vehicle segment, while CVs posted a
decline on account of demonetization. Our FY17 estimates indicate a 7% growth
implying an 15% residual growth or 56.5k units/month of run rate.
There were some green shots in the form of growth in construction vehicles (+22%
YoY) and the bus segment (+59% YoY), driven by demand from Government/STU,
Intercity. Overall M&HCV sales (incl exports) declined ~7% YoY to 13,100 units (v/s est
10,250 units)
LCV sales (incl exports) declined by 13% YoY to 15,348 units (est ~14,000 units).
Total CV volumes declined by 10 % YoY (+16% MoM), reflecting the implications of
demonetization.
Car sales (incl exports) grew by 43% YoY (-4.8% MoM) to 10,240 units (v/s est 9000
units) led by a 40% YoY growth in the domestic market. Tata’s Tiago has a waiting
period of ~2 months.
UV sales (incl exports) were at 2256 units (est. 1,500 units).
The stock trades at 17.9x/8.9x FY17E/18E consol. EPS respectively. Maintain Buy.
Snapshot of volumes for Dec 2016
Dec-16
Total volume
HCV's
LCV's
CV's
Cars
UV's
40,944
13,100
15,348
28,448
10,240
2,256
Dec-15 YoY (%)
39,973
14,066
17,592
31,658
7,138
1,177
2.4
-6.9
-12.8
-10.1
43.5
91.7
Nov-16
38,900
10,464
14,074
24,538
11,636
2,726
MoM (%)
5.3
25.2
9.1
15.9
-12.0
-17.2
FY17-YTD
391,255
119,379
153,289
272,668
103,330
15,257
FY16-YTD
364,935
122,411
143,424
265,835
84,645
14,455
Chg
(%)
7.2
-2.5
6.9
2.6
22.1
5.5
FY17
estimate
549,645
175,708
212,233
387,941
141,183
20,520
YoY Resi-dual Gr.
(%)
(%)
7.4
-0.4
3.7
1.8
27.1
5.7
7.9
4.2
-3.9
-0.1
43.2
6.3
Residual
Monthly
Run rate
52,797
18,776
19,648
38,424
12,618
1,754
2 January 2017
5

Automobiles | Update
CMP: INR 366
TP: INR415 (+13%)
Buy
In-line, at 184k (v/s est 189k), decline of 8% YoY
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
TVSL IN
475.1
174/2.6
418 / 256
1/22/26
Demonetization impact hits all segments except Mopeds
TVS Motor’s Dec-16 sales were in-line at 184,901 units (v/s est. 189,750 units), decline
of 8.5% YoY (-18% MoM). Domestic volumes declined by 9% YoY while exports too
declined by 6% YoY.
Our FY 17 estimate indicates 11% growth implying a residual growth of 10% or 241k
units/month of run rate.
Scooter volumes declined by 15% YoY (-24% MoM) to 55,536 units (v/s est. 60,000
units).
Motorcycle volumes fell by 18% YoY (-14% MoM) to 58,189 units (est 60k units).
Mopeds bucked the demonetization impact with a 14% YoY growth (-15% MoM) to
65,783 units (v/s est. 64.5k units). Strong moped growth is seen on the back of lower
base of FY16 along with improved sentiments on the back of normal monsoon.
3Ws continued their fall with a 33% YoY decline (-8% MoM) to 5,393 units (est 5,250
units), dragged down by weak exports (-33% YoY) while domestic 3Ws too declined by
31% YoY.
Total exports declined by 6% as 3W exports fell by 33% YoY while 2W exports
marginally increased by 1 % YoY.
The stock trades at 30.7x/22.2x FY17E/FY18E EPS. Maintain Buy.
Snapshot of volumes for Dec 2016
Dec-16
Total volume
Motorcycles
Scooters
Mopeds
Three-Wheelers
Domestic
Exports
Dec-15
YoY
(%)
chg
MoM
Nov-16
FY17-YTD
(%) chg
224,971
67,896
73,135
78,057
5,883
192,142
32,829
-17.8
-14.3
-24.1
-15.7
-8.3
-19.7
-6.5
FY16-YTD
(%)
chg
11.6
12.0
5.1
26.6
-39.8
16.4
-11.2
FY17
estimate
2,978,041
1,109,378
872,137
923,440
73,086
2,557,821
420,221
Gr.
(%)
Resi- Residual FY16 YTD
dual Monthly Monthly
Gr. (%) Run rate Run rate
241,984
82,411
75,093
78,058
6,422
206,618
35,367
250,232
95,794
71,873
76,585
5,980
215,330
34,902
184,901 202,021 -8.5
58,189 71,435 -18.5
55,536 65,025 -14.6
65,783 57,541 14.3
5,393
8,020 -32.8
154,207 169,315 -8.9
30,694 32,706 -6.2
2,252,088 2,018,826
769,579
862,146
646,857
615,374
689,266
544,497
53,819
89,376
1,937,967 1,665,089
353,737
314,121
11.2 10.1
9.1
0.1
7.3
14.3
25.0 20.7
-34.1 -10.2
15.0 10.7
-7.3
6.4
2 January 2017
6

Automobiles | Update
CMP: INR2,597
TP: INR3,215 (+24%)
Buy
Dec-16 below est at 225k (v/s est 238.5k); decline of 22%YoY
Bloomberg
Equity Shares (m)
BJAUT IN
289.4
3Ws worst hit as both domestic and exports decline
BJAUT’s Dec 16 sales were below est, at 225,529 units (v/s est ~238,500), decline of
22% YoY. Domestic volumes declined by 17% YoY (-22% MoM) while exports
plummeted 27% YoY. Our FY17 estimates indicate a 4% decline implying a residual
decline of of 2.8% or 282k units/month of run rate.
Domestic volumes at ~119.8k units (v/s est 129.5k units), declined by 17% YoY.
Motorcycle volumes declined by 11% YoY due to the impact of demonetization. The
fall in motorcycles was not as steep as other segments primarily due to new launches.
Total motorcycle volumes declined by 18% YoY (-14.5% MoM) to 203.3k units (v/s est
~207.5k units) pulled down by 24% YoY decline in exports as African markets (Nigeria
and Egypt) continued to face currency headwinds.
Exports witnessed a sharp decline of ~27% YoY (-8% MoM) to ~105k units (v/s est
~109k). Though the company clocked 20000 units plus in retails in Nigeria, other
major African market Egypt continued to face currency headwinds.
3Ws volumes registered the sharpest fall amongst all the segments at ~22.2k units (v/s
est 31k units) as both domestic as well as exports declined by 44% YoY and 46% YoY
respectively. Domestic 3W sales were at ~13060 units, while exports sales breached
the 10,000 unit mark at 9157 units
The stock trades at 19.5x/16.3x FY17E/18E EPS. Maintain Buy.
M.Cap. (INR b) / (USD b) 787.0/11.5
52-Week Range (INR) 3122 / 2173
1, 6, 12 Rel. Per (%)
-5/1/1
Snapshot of volumes for Dec 2016
Dec-16
Total volume
Motorcycles
Three-Wheelers
Domestic
Exports
225,529
203,312
22,217
119,725
105,804
Dec-15 YoY (%)
289,003
247,782
41,221
143,526
145,477
-22.0
-17.9
-46.1
-16.6
-27.3
Nov-16
269,948
237,757
32,191
154,523
115,425
MoM (%)
-16.5
-14.5
-31.0
-22.5
-8.3
FY17-YTD
2,878,237
2,518,915
359,322
1,791,041
1,087,196
FY16-YTD
Chg
(%)
FY17
estimate
Residual
YoY Resi-dual Gr.
Monthly
(%)
(%)
Run rate
-2.8
-1.8
-9.0
-7.6
5.0
282,598
246,308
36,291
166,296
116,303
3,021,123 -4.7
2,605,733 -3.3
415,390 -13.5
1,614,041 11.0
1,407,082 -22.7
3,726,032 -4.3
3,257,838 -3.0
468,195 -12.5
2,289,928
6.3
1,436,104 -17.4
2 January 2017
7

Automobiles | Update
CMP: INR3,029
TP: INR3,634 (+20%)
Buy
In-line at ~330k (v/s est ~345k) – Decline of 34% YoY
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
HMCL IN
199.7
604.8/8.9
3740 / 2375
-6/-1/11
Demonetization impact derails Dec-16 volumes
HMCL’s Dec-16 volumes declined 34% YoY (-31% MoM), to 330,202 units (v/s est
345,000).
Our FY17 estimates indicate a 1% growth implying a residual decline of 4.3% or 549k
units/month of run rate
The stock trades at 17.9/15.8x FY17/18 EPS. Maintain Buy.
Snapshot of volumes for Dec 2016
Dec-16
Total volume
330,202
Dec-15
499,665
YoY (%)
-33.9
Nov-16
479,856
MoM (%)
-31.2
FY17-YTD
FY16-YTD
Chg
(%)
2.7
FY17
estimate
6,690,239
Residual
YoY Resi-dual Gr.
Monthly
(%)
(%)
Run rate
0.9
-4.3
549,380
5,042,098 4,910,602
2 January 2017
8

Automobiles | Update
NOTES
2 January 2017
9

This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it and/or
its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or
Automobiles | Update
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to
you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment
objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek
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In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Varun Kumar
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Contact : (+65) 68189232
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Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
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