June 2019 Results Preview | July 2019
Automobiles
Demand weakens further across segments
OEM margins to contract sequentially for fourth straight quarter, hit four-
year low
All auto segments continued facing demand headwinds in 1QFY20 – a trend that has
worsened from the previous quarter. A high base, liquidity issues and slowdown
amidst elections led to further weakness in volumes.
EBITDA margin for our OEM (ex-JLR) universe is likely to contract for the fourth
consecutive quarter by 310bp YoY (-70bp QoQ) to 10.7% due to higher variable
marketing expenses and operating deleverage. While almost all OEMs are likely to
witness YoY margin contraction, MM and TVSL are expected to deliver a sequential
margin recovery of 80bp and 20bp, respectively.
We have lowered our FY20/21 EPS estimates for all companies under coverage, with
the highest FY20 EPS cut for AL (~18%), CEAT (~17%), MSIL (~13.5%) and MM (~12%).
The least EPS cut is for BJAUT (~3%), TTMT (~4%), MCIE (~4%) and EXID (~5%).
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High base, liquidity issues, weak sentiment hurt demand:
All auto segments
continued facing demand headwinds even in 1QFY20 – continuing the trend of weak
retails in the previous quarter. Retail demand further deteriorated due to liquidity
issues, weak consumer sentiment and slowdown amidst the general elections.
Consequently, inventories are at record levels across segments (highest in the 2W
segment at 60-70 days), despite production cuts.
Operating deleverage, higher variable marketing spend to exert margin pressures:
EBITDA margin for our OEM (ex-JLR) universe is likely to contract for the fourth
consecutive quarter by 310bp YoY (-70bp QoQ) to 10.7% due to higher variable
marketing expenses and operating deleverage. While almost all OEMs are likely to
witness YoY margin contraction, MM and TVSL are expected to deliver a sequential
margin recovery of 80bp and 20bp, respectively. Consequently, PAT is expected to
decline (by a significant 40% YoY or 28% QoQ) for second consecutive quarter, led
by a sharp drop in AL, TTMT, MSIL and EIM.
Cycles within cycles – expect volatility in volumes over next 12-15 months:
We
expect short cycles within cycles, led by macro issues (monsoon, liquidity, etc.) and
the BS-6 implementation, leading to volatile volumes over the next 12-15 months.
Considering substantial cost inflation under BS6 (particularly for 2Ws and CVs), we
estimate ~4% volume CAGR for 2Ws, flat volumes for 4Ws, 1-2% for CVs and 6-7%
for tractors over FY19-21 (assuming normal monsoon). As a result, we have lowered
our FY20/21 EPS estimates for all companies under coverage, with the highest FY20
EPS cut for AL (~18%), CEAT (~17%), MSIL (~13.5%) and MM (~12%). The least EPS
cut is for BJAUT (~3%), TTMT (~4%), MCIE (~4%) and EXID (~5%).
Valuation and view
Near-term headwinds notwithstanding, our preference remains for PVs over
CVs/2Ws. In our view, PVs are likely to be least impacted by BS-6 transition and have
less risk of EVs and competition, which, in turn, would reflect in better earnings
growth. Our top picks in autos are MSIL and MSS among large caps, and AL, ENDU
and EXID among midcaps.
Company name
Amara Raja Batteries
Ashok Leyland
Bajaj Auto
Bharat Forge
BOSCH
CEAT
Eicher Motors
Endurance technologies
Escorts
Exide Industries
Hero MotoCorp
Mahindra & Mahindra
Maruti Suzuki
Motherson Sumi
Tata Motors
TVS Motor Company
Jinesh Gandhi – Research Analyst
(Jinesh@MotilalOswal.com); +91 22 6129 1524
Investors are
July 2019
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.
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Exhibit 1: Summary of expected quarterly performance (INR m)
Sector
Automobiles
Amara Raja Batt.
Ashok Leyland
Bajaj Auto
Bharat Forge
Bosch
CEAT
Eicher Motors
Endurance Tech.
Escorts
Exide Inds.
Hero Motocorp
Mahindra & Mahindra
Maruti Suzuki
Motherson Sumi
Tata Motors
TVS Motor
Sector Aggregate
CMP (INR)
631
90
2,895
463
16,704
928
19,647
1,099
572
208
2,587
670
6,530
127
162
435
RECO
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
Neutral
Neutral
Sales (INR M)
Var %
Jun-19
YoY
17,431
-2.0
58,277
-6.9
75,726
2.1
17,105
15.6
28,909
-10.0
17,746
4.0
23,339
-8.4
19,775
6.3
13,875
-8.2
28,234
1.8
80,962
-8.1
125,100
-6.3
190,978
-15.0
168,596
14.1
564,859
-15.3
44,718
7.3
1,475,631
-8.2
Var %
QoQ
11.3
-34.1
2.4
2.5
5.2
0.8
-6.6
4.1
-15.0
8.6
2.7
-9.4
-11.0
-1.8
-34.6
2.0
-19.7
EBDITA (INR M)
Var % Var %
Jun-19
YoY
QoQ
2,631
19.5
8.7
4,943
-26.4 -49.8
11,733
-8.4
1.0
4,918
14.7
1.4
5,421
-13.7
4.9
1,508
-14.2
-7.1
6,245
-22.9
-8.8
2,864
5.5
-11.8
1,464
-21.1 -22.9
4,109
5.1
10.1
10,804
-21.6
1.0
17,971
-14.8
-3.8
19,428
-42.0 -14.2
12,241
-13.3
-1.5
42,023
-16.8 -47.6
3,215
0.1
4.3
151,517 -18.9 -23.8
Net Profit (INR M)
Var % Var %
Jun-19
YoY
QoQ
1,338
18.4
12.1
2,408
-44.7 -63.6
10,836
-2.8
1.6
2,725
16.2
-9.0
3,693
-14.3 -10.3
510
-30.5 -23.7
4,096
-28.9 -24.8
1,199
-3.7
-19.3
931
-22.1 -23.3
2,276
8.4
8.0
7,309
-19.6
0.1
9,989
-19.3
-4.9
13,722 -30.5 -23.6
4,192
-5.4
2.3
-11,832 Loss
PL
1,414
-3.6
5.6
54,807 -12.2 -44.7
Exhibit 2: Volume snapshot for 1QFY20 ('000 units)
Two wheelers
Three wheelers
Passenger cars
UVs & MPVs
Total PVs
M&HCV
LCV
Total CVs
Tractors
Total (ex Tractor)
1QFY20
5,921
273
589
294
883
79
136
215
182
7,292
1QFY19
6,524
305
710
327
1,037
100
148
248
219
8,114
YoY (%)
-9.2
-10.6
-16.9
-10.3
-14.8
-21.4
-8.1
-13.5
-17.0
-10.1
4QFY19
5,395
317
654
354
1,008
123
176
299
156
7,019
QoQ (%)
9.8
-14.0
-9.9
-17.1
-12.4
-36.1
-22.6
-28.2
16.3
3.9
FY19
24,389
1,263
2,725
1,316
4,041
438
638
1,077
775
30,769
FY18
5,921
273
589
294
883
79
136
215
182
7,292
YoY (%)
311.9
363.2
362.2
348.2
357.6
456.6
369.5
401.5
326.5
322.0
Exhibit 3: Trend in segment-wise EBITDA margins (%)
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
Exhibit 4: Commodity prices cool off sequentially
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2W
Cars
CVs
Steel
Source: Company, MOFSL
Lead
Copper
Alu
Rubber
Source: Company, MOFSL
July 2019
2
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Exhibit 5: Trend in key currencies v/s INR (Indexed)
USD
120
GBP
JPY
Exhibit 6: Margins (ex-JLR) to contract YoY/QoQ
Aggregate (excld JLR)
17
14
Aggregate (incl JLR)
100
11
8
80
Source: Bloomberg, MOFSL
Source: Company, MOFSL
Exhibit 7: Revised estimates
Rev
169
158
16
240
41
13
6
793
31
22
524
61
52
40
10
16
5
FY20E
Old
174
177
18
277
46
14
7
877
33
24
578
73
58
43
11
17
6
Chg (%)
-3.3
-10.6
-11.1
-13.5
-12.3
-3.7
-17.8
-9.6
-5.4
-7.2
-9.5
-17.0
-9.5
-6.1
-5.3
-4.1
-6.6
Rev
186
179
21
304
43
15
5
942
35
23
636
79
54
46
12
19
7
FY21E
Old
190
185
23
334
46
15
6
1,007
38
24
674
91
60
49
12
19
7
Chg (%)
-2.0
-3.3
-10.0
-9.2
-6.7
2.3
-14.6
-6.4
-8.1
-5.0
-5.5
-13.5
-11.4
-6.3
-5.6
-2.5
1.8
Bajaj Auto
Hero MotoCorp
TVS Motor
Maruti *
M&M *
Tata Motors *
Ashok Leyland
Eicher Motors *
Amara Raja
Bharat Forge *
BOSCH
Ceat
Escorts
Endurance Tech*
Exide Industries
Mahindra CIE
Motherson Sumi
* Consolidated
Exhibit 8: EBITDA margin to shrink by ~310bp YoY - fourth consecutive quarter of contraction
BJAUT
HMCL
TVS Motor
MSIL
MM
TTMT (S/A)
TTMT (JLR) *
TTMT (Cons)
Ashok Leyland
Eicher (RE)
Eicher (VECV)
Eicher (Consol)
Agg. (ex JLR)
Volumes ('000 units)
1QFY20
YoY (%)
QoQ (%)
1,247
1.7
4.5
1,843
-12.4
3.5
923
-0.5
1.7
402
-18.0
-12.3
219
-9.1
-7.0
138
-22.0
-28.7
112
-14.9
-30.7
40
184
13
5,008
-6.0
-18.5
-18.3
-8.1
-33.5
-6.4
-36.5
-0.7
EBITDA margins (%)
1QFY20
YoY (bp)
QoQ (bp)
15.5
-180
-20
13.3
-230
-20
7.2
-50
20
10.2
-470
-40
14.4
-140
80
3.2
-550
-410
7.4
120
-240
7.4
-10
-180
8.5
-220
-270
27.3
-510
-50
6.2
-300
-230
27.3
-510
-50
10.8
-310
-70
Adj PAT (INR M)
1QFY20
YoY (%)
10,836
-2.8
7,309
-19.6
1,414
-3.6
13,722
-30.5
9,989
-19.3
-5,096
-142.9
-171
-18.4
-11,832
-37.8
2,408
-44.7
4,609
-22.0
462
-60.8
4,096
-28.9
44,677
-41.1
QoQ (%)
1.6
0.1
5.6
-23.6
-4.9
-391.2
-167.1
-155
-63.6
-4.1
-66.8
-24.8
-27.5
July 2019
3
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Exhibit 9:
Relative performance – three-month (%)
105
100
95
90
Nifty Index
MOSL Automobiles Index
Exhibit 10:
Relative performance – one-year (%)
115
100
85
70
Nifty Index
MOSL Automobiles Index
Source: Bloomberg, MOFSL
Source: Bloomberg, MOFSL
Exhibit 11:
Comparative valuation
Sector / Companies
Automobiles
Amara Raja Batt.
Ashok Leyland
Bajaj Auto
Bharat Forge
Bosch
CEAT
Endurance Tech.
Eicher Motors
Escorts
Exide Inds.
Hero Motocorp
Mahindra & Mahindra
Mahindra CIE
Maruti Suzuki
Motherson Sumi
Tata Motors
TVS Motor
Sector Aggregate
Mkt Cap
(USD B)
1.6
3.8
12.2
3.1
7.6
0.5
2.2
7.8
1.0
2.6
7.5
11.8
1.2
28.6
5.8
8.0
3.0
108.4
CMP
(INR)
631
90
2,895
463
16,704
928
1,099
19,647
572
208
2,587
670
226
6,530
127
162
435
RECO
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
Neutral
EPS (INR)
FY19 FY20E FY21E
28.3 31.5 35.0
6.9
6.0
5.3
165.9 168.6 186.2
22.2 23.2 25.6
541.9 523.6 636.5
63.6 60.7 78.9
36.2 40.2 46.3
813.9 793.3 942.3
53.2 52.4 53.5
9.1 10.3 11.5
169.5 158.1 178.6
42.7 40.6 42.7
14.1 16.4 18.9
247.7 240.0 303.6
5.1
5.5
7.3
-4.4 13.3 15.4
14.1 16.1 20.6
FY19
22.3
13.0
17.5
20.9
30.8
14.6
30.4
24.1
10.8
22.9
15.3
15.7
16.0
26.4
24.8
-37.3
30.8
23.7
PE (x)
PB (x)
ROE (%)
FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E
20.0 18.1 3.2
2.9
2.6 15.4 15.3 15.2
15.2 16.9 3.2
3.0
2.9 26.2 20.3 17.3
17.2 15.6 3.8
3.5
3.1 23.5 21.3 21.3
19.9 18.1 4.0
3.5
3.1 20.6 18.9 18.3
31.9 26.2 5.4
6.2
5.5 16.7 18.2 22.2
15.3 11.8 1.4
1.3
1.2 9.6
8.6 10.4
27.3 23.7 6.0
5.2
4.5 21.5 20.5 20.4
24.8 20.8 6.0
5.1
4.4 27.8 22.4 22.7
10.9 10.7 1.9
1.6
1.4 19.3 16.1 14.4
20.1 18.0 3.0
2.7
2.5 12.9 13.4 13.6
16.4 14.5 4.0
3.7
3.4 27.5 23.7 24.7
16.5 15.7 2.3
2.1
2.0 14.9 12.0 11.3
13.8 12.0 2.0
1.7
1.5 13.3 13.5 13.5
27.2 21.5 4.3
4.1
3.8 16.3 14.5 17.1
23.0 17.3 3.5
3.5
3.0 15.7 15.2 18.7
12.2 10.5 0.9
0.9
0.8 -1.9
7.2
7.8
27.0 21.1 6.2
5.3
4.4 21.5 21.1 22.9
20.2 17.5 3.1
2.9
2.6 13.0 14.2 14.9
July 2019
4
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Amara Raja Batteries
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E March
Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales (x)
22.9
3.7
12.1
1.8
22.3
3.2
11.3
1.6
20.0
2.9
10.0
1.5
18.1
2.6
8.8
1.3
2018
60.6
8.8
4.7
27.6
(1.5)
172
17.0
16.3
2019 2020E 2021E
67.9 71.7 78.6
9.5
4.8
28.3
2.6
195
15.4
14.9
10.7
5.4
31.5
11.2
217
15.3
14.7
11.9
6.0
35.0
11.0
242
15.2
14.5
AMRJ IN
170.8
108 / 2
908 / 573
0 / -24 / -30
CMP: INR631
TP: INR725 (+15%)
Buy
We expect AMRJ’s revenue to decline 2% YoY (+ 11.3% QoQ) to
INR17.4b, driven by growth in the automotive replacement and
industrial segments, though OEM revenues will decline.
Spot LME lead prices decreased by 8.6% QoQ (-18% YoY) in
1QFY20 to average INR131/kg.
EBITDA margin is likely to expand 270bp YoY (-40bp QoQ) to
15.1%.
We expect PAT to increase 18.4% YoY (+12.1% QoQ) to INR1.3b.
We lower our FY20/21 EPS estimates by 5%/8% to reflect for
weak demand environment.
The stock trades at 20x FY20E and 18.1x FY21E EPS; maintain
Buy.
Key issues to watch
Update on the demand environment for OEMs, auto
replacement and industrial battery segments.
Outlook for raw material cost trend and recent pricing action.
Update on competitive intensity in telecom segment and pricing
power thereof.
Strategy on technology sourcing post termination of JV with
Johnson Control.
Update on progress made on product development in lithium
ion battery space and plans going forward.
Update on capex program.
(INR Million)
FY19
FY20E
4QE
16,376
4.5
67.9
5.3
12.3
2,381
14.5
798
14
120
1,689
33.5
1,123
-5.9
67,931
12.1
68.4
4.9
13.0
9,518
14.0
2,612
70
468
7,304
33.8
4,835
2.6
71,720
5.6
67.4
5.0
13.2
10,715
14.9
3,008
70
450
8,087
33.5
5,378
11.2
Quarterly Performance
Y/E March (INR m)
Net Sales
YoY Change (%)
RM Cost (% of sales)
Staff Cost (% of sales)
Other Exp (% of sales)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax Rate (%)
Adj PAT
YoY Change (%)
E: MOFSL Estimates
1Q
17,787
18.8
71.5
4.7
11.4
2,203
12.4
630
15
137
1,695
33.3
1,130
13.2
FY19
2Q
17,531
22.8
69.1
5.3
12.1
2,366
13.5
643
18
142
1,848
34.9
1,202
-5.5
3Q
16,947
9.1
67.2
5.1
12.7
2,528
14.9
657
18
125
1,978
33.8
1,309
-2.6
4Q
15,667
-0.9
65.2
5.2
14.1
2,421
15.5
683
19
63
1,783
33.0
1,193
8.7
1QE
17,431
-2.0
67.0
5.1
12.8
2,631
15.1
700
19
100
2,013
33.5
1,338
18.4
FY20E
2QE
3QE
18,933
18,980
8.0
12.0
67.0
67.8
4.9
5.0
12.8
12.5
2,904
2,799
15.3
14.7
740
770
19
19
120
110
2,265
2,120
33.5
33.5
1,507
1,410
25.3
7.7
July 2019
5
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Ashok Leyland
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
AL IN
2927.1
264 / 4
137 / 78
0 / -20 / -43
CMP: INR90
TP: INR110 (+21%)
Buy
Financial Snapshot (INR b)
Y/E March
2018
2019 2020E 2021E
Sales
263.6 290.5 304.3 319.8
EBITDA
29.6 31.4 31.0 29.4
NP
17.4 20.4 17.5 15.7
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
6.0
37.1
24.8
26.1
23.4
15.2
3.7
7.7
2.7
6.9
16.6
28.4
26.2
24.0
13.0
3.2
8.2
3.8
6.0
-14.1
30.2
20.3
18.7
15.2
3.0
7.5
3.8
5.3
-10.4
31.5
17.3
15.8
16.9
2.9
8.3
3.8
Volumes fell by 6% YoY (+33.5% QoQ) to 39,608 units in 1QFY20,
as M&HCV sales declined 4% YoY. LCV sales, however, increased
12% YoY.
We expect realization to decrease marginally by 1% YoY (-1%
QoQ), led by higher discounts and increased LCV contribution.
Consequently, net revenue is likely to decrease by ~7% YoY (-34%
QoQ) to INR58.3b.
EBITDA margin is likely to contract 220bp YoY (-260bp QoQ) to
8.5% due to increasing costs.
EBITDA should decline 26.4% YoY (-50% QoQ) to INR4.9b.
Adj. PAT should decline 44.7% YoY (-63.6% QoQ) to INR2.4b.
We lower our FY20/21 EPS estimates by 18%/15% respectively, to
factor in for weaker volumes, higher discounts & negative
operating leverage.
The stock trades at EV/EBITDA of 7.5x FY20E and 8.3x FY21E
EBITDA. Maintain
Buy.
Key issues to watch
Update on CV demand and discount trends.
Update on LCVs, exports and defense business.
RM cost guidance and price hikes to mitigate the same.
Capex and investment guidance for FY20 and FY21.
FY20E
2QE
3QE
52,500 62,250
1.0
42.3
1,508
1,493
2.8
3.3
79,176 92,942
3.9
46.9
70.5
71.5
7.5
6.6
11.3
10.8
8,460 10,301
10.7
11.1
350
450
132
138
6,978
8,813
0
0
6,978
8,813
29.0
29.0
4,954
6,257
-8.7
62.3
(INR Million)
FY19
FY20E
4QE
49,421
-17.0
1,495
0.6
73,883
-16.5
71.6
7.9
10.6
7,321
9.9
313
136
5,473
0
5,473
29.0
3,886
-41.3
1,97,366
12.9
1,472
-2.3
2,90,550
10.2
71.2
7.2
10.8
31,357
10.8
1,099
704
25,517
549
24,968
20.6
20,268
16.4
2,03,779
3.2
1,493
1.4
3,04,277
4.7
71.0
7.8
11.0
31,024
10.2
1,313
527
24,655
0
24,655
29.0
17,505
-13.6
Quarterly Performance
1Q
42,127
47.9
1,487
-0.5
62,627
47.1
68.9
8.0
12.4
6,716
10.7
525
142
5,537
178
5,360
21.3
4,356
263.2
FY19
2Q
3Q
51,958 43,760
26.8
-6.1
1,467
1,445
-1.1
-6.3
76,211 63,252
25.4
-12.0
72.1
70.1
6.9
7.9
10.1
11.7
8,290
6,496
10.9
10.3
276
208
204
192
6,901
4,897
193
61
6,708
4,836
21.3
21.2
5,429
3,856
62.4
-20.8
4Q
59,521
1.3
1,486
-0.5
88,459
0.7
72.7
6.5
9.7
9,854
11.1
91
166
8,182
117
8,065
19.0
6,625
-11.2
1QE
39,608
-6.0
1,471
-1.0
58,277
-6.9
70.0
9.9
11.6
4,943
8.5
200
121
3,392
0
3,392
29.0
2,408
-44.7
Total Volumes (nos)
Growth %
Realizations (INR '000)
% change
Net operating revenues
Change (%)
RM/sales %
Staff/sales %
Other exp/sales %
EBITDA
EBITDA Margins(%)
Other Income
Interest
PBT before EO Item
EO Exp/(Inc)
PBT
Effective Tax Rate (%)
Adj. PAT
Change (%)
E: MOFSL Estimates
July 2019
6
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Bajaj Auto
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E MAR
Sales
EBITDA
NP
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
19.1
4.4
13.6
2.1
17.5
3.8
12.8
2.1
17.2
3.5
12.1
2.2
15.6
3.1
10.3
2.4
2018
252
48.4
43.8
151
7.3
660
24.2
22.0
2019 2020E 2021E
302
49.8
48.0
166
9.6
753
23.5
21.2
317
50.6
48.8
169
1.6
830
21.3
19.1
354
56.9
53.9
186
10.4
919
21.3
19.1
BJAUT IN
289.4
838 / 12
3214 / 2425
-4 / -5 / -12
CMP: INR2,895
TP: INR2,988 (+3%)
Neutral
Overall volumes increased 2% YoY (+4% QoQ) to ~1,247k units
due to a 2% YoY decline in domestic volume and 3% YoY increase
in export volume.
Total motorcycle volume increased 4% YoY, while 3W volume
declined 20% YoY.
We expect realization to increase marginally by 0.4% YoY (-2%
QoQ), led by price increase. Consequently, net sales are expected
to increase by 2.1 YoY (+2.4% QoQ) to INR75.7b.
We expect EBITDA margin to contract by ~180bp YoY (-20bp QoQ)
to 15.5%.
We expect PAT to decline by 2.8% YoY (+1.6% QoQ) to INR10.8b.
We lower our FY21 volumes estimate by 1.5% and margins
estimate by 30bp to 16.4% to factor in lower volumes and adverse
mix. As a result, our EPS estimate for FY21 is down by 2%.
The stock trades at 17.2x FY20E and 15.6x FY21E EPS; maintain
Neutral.
Key issues to watch
Update on 2W demand outlook from urban and rural areas.
Price increase in domestic markets across segments.
Export demand outlook and pricing in key currency market.
Comments on 3W demand momentum in domestic market.
Update on EV strategy.
(INR Million)
Quarterly Performance
Volumes ('000 units)
Growth YoY (%)
Realization (INR/unit)
Growth YoY (%)
Net Sales
Change (%)
RM/Sales %
Staff cost/Sales %
Oth. Exp./Sales %
EBITDA
EBITDA Margins (%)
Other Income
Extraordinary Inc
Interest
Depreciation
PBT
Tax
Effective Tax Rate (%)
Adj. PAT
Change (%)
E: MOFSL Estimates
1Q
1,227
38.1
60,485
-1.3
74,193
36.3
71.4
4.2
7.1
12,814
17.3
4,044
0
3
700
16,156
5,003
31.0
11,152
17.8
FY19
2Q
1,339
25.0
59,815
-2.6
80,118
21.8
72.2
3.9
6.9
13,680
17.1
3,565
0
3
715
16,527
5,002
30.3
11,525
3.7
3Q
1,260
25.8
58,812
-7.8
74,094
16.0
72.8
4.3
7.4
11,561
15.6
4,700
0
36
634
15,591
4,572
29.3
11,019
15.7
4Q
1,194
14.2
61,958
-4.6
73,952
8.9
72.3
4.2
7.9
11,623
15.7
4,327
3,420
3
608
18,759
5,703
30.4
10,668
(1.2)
1QE
1,247
1.7
60,718
0.4
75,726
2.1
72.3
4.6
7.7
11,733
15.5
4,400
0
3
650
15,481
4,644
30.0
10,836
(2.8)
FY20E
2QE
3QE
1,395
1,392
4.1
10.5
60,870
61,175
1.8
4.0
84,914
85,155
6.0
14.9
72.5
72.4
4.2
4.2
7.2
7.3
13,693
13,842
16.1
16.3
4,000
3,950
0
0
3
3
660
710
17,030
17,079
5,109
5,124
30.0
30.0
11,921
11,955
3.4
8.5
4QE
1,163
-2.6
61,355
-1.0
71,351
-3.5
72.3
4.7
7.3
11,337
15.9
4,293
0
33
739
14,859
4,458
30.0
10,401
(2.5)
FY19
5,020
25.3
60,265
(4.0)
3,02,500
20.2
72.1
4.2
7.3
49,820
16.5
16,635
3,420
45
2,657
67,173
20,280
30.2
44,506
10.3
FY20
5,197
3.5
61,024
1.3
3,17,146
4.8
72.4
4.4
7.4
50,604
16.0
16,643
3,420
40
2,759
67,869
19,335
28.5
46,089
3.6
July 2019
7
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Bharat Forge
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E Mar
Sales
EBITDA
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
EV/Sales (x)
Consolidated
25.1
4.6
14.2
2.9
20.9
4.0
12.1
2.4
19.9
3.5
11.1
2.3
18.1
3.1
10.3
2.1
2018
17.2
8.6
18.4
40.7
19.6
2019 2020E 2021E
20.6
10.3
22.2
20.3
20.6
22.1
10.8
23.2
4.8
18.9
23.3
11.9
25.6
10.1
18.3
83.6 101.5 105.8 112.6
BHFC IN
465.7
215 / 3
693 / 431
0 / -17 / -38
CMP: INR463
TP: INR534 (+15%)
Buy
99.9 114.8 130.5 148.6
BHFC’s shipment tonnage is expected to decrease by 4.3% YoY
(+2% QoQ) to 63,944 tons, impacted by weakness in the domestic
auto segment. Weakness in domestic auto segment would be
offset by robust growth in the CV exports segment as well as non-
auto segment (both domestic and export).
Net realization is expected to increase 20.8% YoY (+0.5% QoQ) to
~INR267.5k/ton led by favorable mix and currency.
As a result, net revenue would increase 15.6% YoY (+2.5% QoQ) to
~INR17b.
EBITDA margin is likely to shrink ~20bp YoY (-30bp QoQ) to 28.8%.
PAT is expected to increase by 16.2% YoY (-9% QoQ) to INR2.7b.
We lower our EPS estimates by 7%/5% for FY20/21 to factor in
weaker domestic M&HCV volumes as well as US Class 8 trucks.
The stock trades at 19.9x FY20E and 18.1x FY21E EPS; Maintain
Buy.
Key issues to watch
Update on FY20 outlook for Class 8 trucks & India CVs.
New order wins and ramp-up of past order wins.
Update on emerging businesses like defense, aerospace, rail etc.
Update on capex plans.
S/A Quarterly
1Q
66,815
21.3
221.5
1.6
14,797
23.2
36.1
8.3
26.6
4,288
29.0
343
253
824
2
0
3,552
34.0
2,345
33.9
2,345
33.9
FY19
2Q
3Q
69,683 66,764
18.8
2.6
241.0
253.5
12.4
18.6
16,792 16,925
33.5
21.7
39.1
36.8
7.3
7.2
25.4
27.2
4,754
4,869
28.3
28.8
338
478
321
136
914
907
410
-389
0
0
3,447
4,694
34.0
34.0
2,275
3,098
11.7
35.8
2,275
3,098
11.7
35.8
4Q
62,690
-3.6
266.2
18.1
16,686
13.8
37.3
7.1
26.5
4,849
29.1
501
315
821
-323
0
4,538
34.0
2,995
198.5
2,995
63.1
1QE
63,944
-4.3
267.5
20.8
17,105
15.6
37.0
7.7
26.5
4,918
28.8
400
310
910
0
0
4,098
33.5
2,725
16.2
2,725
16.2
FY20E
2QE
3QE
67,141 70,498
-3.6
5.6
264.8
262.2
9.9
3.4
17,781 18,483
5.9
9.2
37.2
37.2
7.6
7.4
26.4
26.4
5,140
5,353
28.9
29.0
365
475
300
300
945
998
0
0
0
0
4,260
4,530
33.5
33.5
2,833
3,012
24.5
-2.8
2,833
3,012
24.5
-2.8
4QE
61,710
-1.6
271.0
1.8
16,724
0.2
37.0
7.8
27.7
4,605
27.5
530
306
1022
0
0
3,806
33.5
2,531
-15.5
2,531
-15.5
(INRMillion)
FY19
2,65,952
9.9
245.2
11.7
65,200
22.6
37.4
7.5
26.4
18,761
28.8
1,660
1,024
3,466
-300
0
16,231
34.0
10,713
51.5
10,713
35.5
FY20E
2,63,292
-1.0
266.2
8.6
70,092
7.5
37.1
7.6
26.7
20,016
28.6
1,770
1,216
3,875
0
0
16,694
33.5
11,102
3.6
11,102
3.6
Tonnage
Change (%)
Realization (INR '000/ton)
Change (%)
Net operating income
Change (%)
RM/Sales (%)
Staff Cost (% of Sales)
Other Exp. (% of Sales)
EBITDA
EBITDA Margins (%)
Non-Operating Income
Interest
Depreciation
Fx loss/(gain)
EO Exp / (Inc)
PBT after EO items
Eff. Tax Rate (%)
Rep. PAT
Change (%)
Adj. PAT
Change (%)
E: MOFSL Estimates
July 2019
8
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Bosch
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E Mar
Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
EV/Sales (x)
35.6
5.1
23.5
4.2
30.8
5.4
22.2
3.9
31.9
6.2
21.6
3.9
26.2
5.5
17.0
3.2
FY18
20.9
14.3
-0.7
15.3
22.8
FY19 FY20E FY21E
21.6
16.0
15.3
16.7
24.6
22.9
15.4
-3.4
18.2
27.0
28.9
18.8
21.6
22.2
33.1
116.9 122.6 128.2 151.9
BOS IN
31.4
525 / 8
22400 / 16067
-3 / -25 / -17
CMP: INR16,704
TP: 17,542 (+5%)
Neutral
469.8 541.9 523.6 636.5
3,270 3,095 2,674 3,051
Net revenue is expected to decline by 10% YoY (+5.2% QoQ) to
INR28.9b, impacted by weakness in CV, tractors and PV segments.
EBITDA margin is expected to contract 80bp YoY (flat QoQ) to
18.8% due to operating deleverage.
EBITDA is projected to decline by 14% YoY (+4.9% QoQ) to
INR5.4b.
Adjusted PAT is likely to decline 14.3% YoY to INR3.7b (-10.3%
QoQ).
We are lowering our EPS estimates for FY20/21 by ~9.5%/5.5%
each to factor in the cut in volume estimates for PVs, CVs and
tractors.
Neutral.
Key issues to watch
Outlook on impact of slowdown in auto segment.
Update on demand environment in aftermarket business.
Update on any developments in the BSVI opportunity.
Quarterly performance (S/A)
Y/E March
1Q
Net Sales
YoY Change (%)
RM Cost (% of sales)
Staff Cost (% of sales)
Other Expenses (% of sales)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO expense
Extra-Ord expense
PBT after EO Expense
Tax
Tax Rate (%)
Reported PAT
Adj PAT
YoY Change (%)
E: MOFSL Estimates
32,122
21.3
54.4
10.9
15.1
6,282
19.6
939
0
1,147
6,489
0
6,489
2,179
33.6
4,310
4,310
42.4
FY19
2Q
32,011
13.8
56.7
10.6
14.0
5,962
18.6
950
0
1,395
6,407
0
6,407
2,207
34.4
4,200
4,200
18.9
3Q
30,955
0.8
55.5
10.9
19.9
4,226
13.7
1,012
102
1,786
4,899
0
4,899
1,545
31.5
3,354
3,354
19.3
4Q
27,492
-12.9
54.3
12.4
14.5
5,165
18.8
1,144
31
1,625
5,615
0
5,615
1,498
26.7
4,117
4,117
-17.4
1QE
28,909
-10.0
54.3
12.0
15.0
5,421
18.8
1,075
25
1,150
5,471
0
5,471
1,778
32.5
3,693
3,693
-14.3
FY20
2QE
32,651
2.0
55.0
11.0
15.0
6,204
19.0
1,150
25
1,180
6,209
0
6,209
2,018
32.5
4,191
4,191
-0.2
3QE
37,146
20.0
55.0
10.0
19.5
5,758
15.5
1,198
25
1,230
5,765
0
5,765
1,874
32.5
3,891
3,891
16.0
4QE
29,503
7.3
54.4
12.2
14.5
5,564
18.9
1,129
25
1,022
5,432
0
5,432
1,765
32.5
3,666
3,666
-10.9
(INR Million)
FY19
FY20
1,22,579
4.9
55.3
11.2
15.9
21,635
17.7
4,045
133
5,953
23,410
0
23,410
7,430
31.7
15,980
15,980
11.5
1,28,210
4.6
54.7
11.2
16.2
22,946
17.9
4,552
100
4,582
22,876
0
22,876
7,435
32.5
15,441
15,441
-3.4
July 2019
9
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Ceat
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR Billion)
Y/E March
Sales
EBITDA
NP
EPS (Rs)
EPS Gr. (%)
BV/Share
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales (x)
14.5
1.4
7.0
0.7
14.6
1.4
8.0
0.7
15.3
1.3
8.6
0.8
11.8
1.2
7.4
0.7
2018
62.8
6.1
2.6
64.0
-30.3
10.3
8.8
2019 2020E 2021E
69.8
6.4
2.6
63.6
-0.5
9.6
7.7
77.4
7.0
2.5
60.7
-4.6
8.6
6.3
88.2
8.9
3.2
78.9
30.0
10.4
7.1
CEAT IN
40.5
38 / 1
1455 / 872
-5 / -40 / -39
CMP: INR928
TP: INR1,169 (+26%)
Buy
644.3 683.8 729.5 792.7
We expect revenue to increase 4% YoY (1% QoQ) to INR17.7b in
1QFY20.
RM cost is expected to increase by 60bp QoQ (+60bp YoY) to
60.3% in 1QFY20 due to inflation in natural rubber prices.
We estimate 180bp YoY contraction (-70bp QoQ) in EBITDA
margin to 8.5%. We expect margins to remain subdued due to RM
cost inflation (natural rubber up by 17% YoY, 13% QoQ) and
higher costs attributable to commissioning of TBR plant.
EBITDA is likely to decline 14% YoY (-7% QoQ) to INR1.5b.
We expect adjusted PAT to decline 30% YoY to INR510m.
We lower our EPS estimates for FY20/21 by 17%/13.5%
respectively, to factor in weak demand and RM cost inflation.
The stock trades at 15.3x/12x FY20/21E EPS. Maintain
Buy.
Key things to watch for
Demand environment in replacement market.
Guidance on RM costs and pricing actions.
Update on ramp-up of newly commissioned TBR capacity.
Whether capacity expansion is on track.
Consolidated - Quarterly Earning Model
Y/E March
Net Sales
YoY Change (%)
RM cost (%)
Employee cost (%)
Other expenses (%)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax Rate (%)
Minority Interest & Profit/Loss of Asso. Cos.
Reported PAT
Adj PAT
YoY Change (%)
1Q
17,063
16.9
60.7
7.0
22.1
1,758
10.3
460
204
37
1,108
39.9
-54
720
734
5,570
FY19
2Q
3Q
4Q
17,546 17,299 17,605
15.2
9.9
4.4
60.7
58.5
60.7
8.1
8.2
7.3
22.2
25.0
22.8
1,592 1,426 1,623
9.1
8.2
9.2
477
482
508
186
222
269
33
40
306
943
762
597
39.3
39.7
48.1
-59
-68
-32
632
528
341
643
528
669
-17
-37
-28
1QE
17,746
4.0
61.3
7.3
23.0
1,508
8.5
525
280
35
738
37.0
-45
510
510
-30
FY20E
FY19
FY20
2QE
3QE
4QE
19,301 20,067 20,327 69,845 77,441
10.0
16.0
15.5
11.9
10.9
61.3
61.0
60.5
59.9
61.0
7.0
7.5
8.2
7.6
7.5
22.0
22.5
22.3
23.3
22.5
1,882 1,806 1,812 6,425 7,008
9.8
9.0
8.9
9.2
9.1
550
650
709 1,927 2,434
300
325
328
880 1,233
38
41
44
390
158
1,070
872
819 3,409 3,499
37.0
37.0
37.0
41.1
37.0
-62
-55
-88
-213
-250
736
604
604 2,221 2,455
736
604
604 2,573 2,455
14
15
-10
-1
-5
July 2019
10
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Eicher Motors
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E March
Net Income
EBITDA
Net Profit
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
24.6
7.6
14.5
0.6
24.1 24.8
6.0
0.6
5.1
0.6
13.6 13.6
20.8
4.4
11.3
0.6
FY18
89.6
28.1
21.8
800
27.0
35.2
33.9
FY19 FY20E FY21E
98.0 104.1 121.5
29.0 28.6
22.2 21.6
814
1.8
793
-2.5
33.8
25.7
942
18.8
22.7
22.8
EIM IN
27.3
536 / 8
29800 / 18222
-1 / -15 / -43
CMP: INR19,647
TP: INR22,724 (+16%)
Buy
2,579 3,269 3,825 4,470
27.8 22.4
26.6 21.8
Royal Enfield’s volumes declined 18.5% YoY (-6.4% QoQ) to 184k
units. Net realization is expected to improve by 12.6% YoY (-0.2%
QoQ). S/A EBITDA margin is expected to contract by 500bp YoY to
27.3%.
VECV’s volume declined 18.3% YoY (-36.5% QoQ) to 13.3k units;
net realization is expected to decline 1.6% YoY (+3% QoQ). VECV
EBITDA margin is expected to contract by 300bp YoY to 6.2%.
Consolidated revenue would decline 8% YoY (-5.1% QoQ) to
INR23.3b. Adj. PAT is estimated to decline 29% YoY (-25% QoQ) to
INR4.1b.
We are lowering our volume estimates for RE for FY20/21 by
5%/5% to 806.1k/891.7k. We have also cut VECV volumes by
14.9%/9% for FY20/21, translating in consol. EPS cut of
9.6%/6.4%.
The stock trades at 24.8/20.8x FY20/21 consol. EPS. Maintain
Buy.
Key issues to watch
Outlook on RE demand from metros, tier 1 and tier 2 cities, and
order book trend.
Inventory levels for RE.
Quarterly performance (Consolidated)
Y/E March
Net Operating income
Growth (%)
EBITDA
EBITDA Margins (%)
Recurring PAT
Growth (%)
Standalone (Royal Enfield)
Royal Enfield ('000 units)
Growth (%)
Net Realn (INR '000/unit)
Change - YoY (%)
EBITDA Margins (%)
Recurring PAT
Growth (%)
VECV
Total CV Volumes
Growth (%)
Net Realn (INR '000/unit)
Change - YoY (%)
EBITDA Margins (%)
Recurring PAT
Growth (%)
E: MOFSL Estimates
1Q
25,478
27.3
8,095
31.8
5,761
22.4
225
22.5
113
3.9
32.3
5,912
19.6
FY19
2Q
3Q
4Q
24,082 23,411 25,001
11.1
3.2
-1.1
7,293 6,795 6,847
30.3
29.0
27.4
5,663 5,330 5,448
7.0
0.4
-16.0
210
3.6
114
7.3
30.6
4,927
1.3
194
-5.9
121
10.1
29.5
5,014
6.2
196
-13.6
127
14.4
27.8
4,804
15.9
1QE
23,339
-8.4
6,245
26.8
4,096
-28.9
184
-18.5
127
12.6
27.3
4,609
-22.0
FY20E
FY19
FY20E
2QE
3QE
4QE
26,426 27,707 26,627 97,971 1,04,098
9.7
18.4
6.5
9.3
6.3
7,350 7,782 7,180 29,031
28,558
27.8
28.1
27.0
29.6
27.4
5,734 6,160 5,650 22,203
21,640
1.3
15.6
3.7
1.9
-2.5
207
-1.3
127
11.4
28.2
5,260
6.7
217
11.3
128
6.1
28.5
5,502
9.7
199
826
1.3
0.7
134
119
5.2
8.6
27.4
30.1
5,014 20,659
4.4
10.6
806
-2.4
129
8.9
27.9
20,385
-1.3
71,531
-2.0
1,605
0.9
7.5
4,071
-14.3
16,327 18,696 16,936 21,010
40.9
24.5
4.3
-9.0
1,598 1,586 1,664 1,527
2.7
1.9
4.3
6.4
9.2
9.0
6.6
8.5
1,180 1,421
760 1,394
76.1
49.6
-42.7
-21.8
13,331 18,683 20,350 19,167 72,969
-18.3
-0.1
20.2
-8.8
10.7
1,573 1,605 1,613 1,618 1,590
-1.6
1.1
-3.1
5.9
4.3
6.2
7.5
8.4
7.3
8.4
462 1,084 1,421 1,103 4,751
-60.8
-23.7
86.9
-20.9
0.4
July 2019
11
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Endurance Technologies
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR Billion)
Y/E March
Sales
EBITDA
NP
Adj EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
37.8
7.1
16.7
30.4
6.0
13.7
27.3
5.2
11.7
23.7
4.5
10.1
2018
63.5
9.3
4.1
29.1
23.8
21.0
16.5
2019 2020E 2021E
75.1
11.3
5.1
36.2
24.5
21.5
18.0
83.3
12.9
5.7
40.2
11.2
20.5
17.8
92.5
14.4
6.5
46.3
15.2
20.4
18.5
ENDU IN
140.7
155 / 2
1579 / 1065
-8 / -24 / -24
CMP: INR1,099
TP: INR1,296 (+18%)
Buy
154.5 182.3 210.5 242.9
We expect 6.3% YoY growth (+4.1% QoQ) in consolidated revenue
to INR19.7b, led by strong performance in standalone operations.
While S/A operations revenue is expected to grow ~6% YoY, we
expect European operations to deliver 7% revenue growth led by
consolidation of recent acquisition Fonpresmetal.
Consolidated EBITDA is expected to grow 5.5% YoY (-11.8% QoQ).
EBITDA margin is likely to remain flat YoY (-260 bp QoQ) at 14.5%,
as 4QFY19 had incentives from the state government which are
lumpy in nature.
We expect PAT to decline by ~4% YoY (-19.3% QoQ) to INR1.2b.
We have lowered our EPS estimates for FY20/21 by 6% each,
mainly to factor in the weaker demand environment.
The stock trades at 27.3x/23.7x FY20/21E EPS. Maintain
Buy.
Key issues to watch for
Update on new order wins in India and Europe during the
quarter.
Extent of impact of slowdown in domestic 2W industry.
Update on outlook for European market.
Consolidated - Quarterly
Y/E March
INR m
Net Sales
YoY Change (%)
RM Cost (% of sales)
Staff Cost (% of sales)
Other Exp. (% of sales)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT after EO
Eff. Tax Rate (%)
Adj. PAT
YoY Change (%)
E: MOFSL Estimates
1Q
18,604
23.6
58.6
8.9
17.9
2,714
14.6
820
59
41
1,876
33.6
1,246
29.1
FY19
2Q
3Q
19,367 18,130
23.2
17.8
59.7
58.4
8.0
9.2
17.8
18.4
2,798
2,530
14.4
14.0
921
936
55
75
80
93
1,902
1,404
34.2
31.2
1,252
1,109
25.6
15.8
4Q
19,004
9.5
54.9
8.6
19.4
3,246
17.1
1,085
68
56
2,149
30.8
1,486
27.7
1QE
19,775
6.3
58.3
8.7
19.0
2,864
14.5
1,100
57
70
1,777
32.5
1,199
-3.7
FY20E
2QE
3QE
21,204 21,367
9.5
17.9
58.7
58.6
8.1
8.3
18.7
18.4
3,188
3,328
15.0
15.6
1,135
1,160
60
66
85
95
2,078
2,197
32.6
32.6
1,400
1,481
11.8
33.6
4QE
20,948
10.2
57.0
8.3
18.1
3,490
16.7
1,193
52
95
2,339
32.5
1,580
6.3
(INR Million)
FY19
FY20
75,105
18.2
57.9
8.7
18.4
11,288
15.0
3,762
257
270
7,331
32.5
5,091
24.5
83,294
10.9
58.1
8.3
18.1
12,870
15.5
4,588
235
345
8,391
32.6
5,659
11.2
July 2019
12
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Escorts
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR Billion)
Y/E March
Sales
EBITDA
NP
EPS (INR)
EPS Growth (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales(x)
19.5
3.1
11.8
1.3
14.2
2.6
8.4
1.0
12.8
2.2
7.3
0.9
12.2
1.9
9.6
1.2
2018
50.6
5.5
3.5
39.5
88.0
18.3
18.3
2019 2020E 2021E
62.4
7.4
4.8
54.5
37.8
20.0
20.3
66.4
8.1
5.4
60.3
10.7
18.7
28.2
70.3
8.5
5.6
63.3
5.1
16.9
25.3
ESC IN
122.6
70 / 1
944 / 519
-5 / -33 / -47
CMP: INR572
TP: INR625 (+9%)
Neutral
Tractor volumes declined ~16% YoY (-18% QoQ) to 20,591 units.
Realizations are estimated to grow 1.4% YoY (-0.5% QoQ) to
INR487.2k/unit due to price increase taken during the year.
Revenues should decline 8.2% YoY (-15% QoQ) to INR13.9b.
We expect EBITDA margins to contract 170bp YoY (-100bp QoQ)
to 10.6%. EBITDA is expected to decrease by 21.1% YoY (-23%
QoQ) to ~INR1.5b.
We expect PAT to be at INR0.9b (-22.1% YoY, -22.3% QoQ).
We lower our EPS estimates for FY20/21 by 9.5%/11% to factor in
weak demand and its impact on operating leverage.
The stock trades at 12.8x/12.2x FY20/21E EPS. Maintain
Neutral.
249.2 296.1 348.0 402.9
Key things to watch for
Outlook for tractor demand in FY20.
Market share movement and new launches in tractor segment.
Demand momentum in construction equipment segment.
Visibility of order book execution in railways division.
Standalone Quarterly Performance
Y/E March
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO expense
Extra-Ord expense
PBT
Tax
Rate (%)
Adj PAT
YoY Change (%)
Margins (%)
E: MOFSL Estimates
1Q
15,113
29.9
13,257
1,855
12.3
206
29
170
1,791
0
1,791
595
33.2
1,196
90.9
7.9
FY19
2Q
13,984
15.4
12,409
1,575
11.3
215
39
221
1,543
0
1,543
516
33.5
1,026
24.9
7.3
3Q
16,551
37.3
14,546
2,005
12.1
215
43
244
1,991
-109
2,100
699
33.3
1,328
44.6
8.0
4Q
16,317
13.6
14,419
1,898
11.6
218
75
173
1,778
0
1,778
565
31.8
1,214
7.8
7.4
1QE
13,875
-8.2
12,411
1,464
10.6
225
60
210
1,389
0
1,389
458
33.0
931
-22.1
6.7
FY20E
2QE
3QE
15,470 16,864
10.6
1.9
13,706 14,891
1,764
1,973
11.4
11.7
235
240
60
60
235
255
1,704
1,928
0
0
1,704
1,928
561
635
33.0
33.0
1,142
1,293
11.3
-2.7
7.4
7.7
4QE
17,800
9.1
15,799
2,001
11.2
252
70
279
1,958
0
1,958
645
33.0
1,293
6.5
7.3
(INR Million)
FY19
FY20E
62,620
23.8
55,375
7,245
11.6
872
195
924
7,102
-56
7,157
2,371
33.1
4,730
34.7
7.6
64,008
2.2
56,807
7,201
11.3
952
250
979
6,978
0
6,978
2,300
33.0
4,659
-1.5
7.3
July 2019
13
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Exide Industries
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E MARCH
Net Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
25.4
3.3
12.6
1.2
22.9
3.0
10.9
1.2
20.1
2.7
9.4
1.5
18.0
2.5
8.3
1.5
2018
91.9
12.4
7.0
8.2
0.4
63.4
12.9
13.3
2019 2020E 2021E
105.9
14.1
7.7
9.1
10.6
70.4
12.9
13.6
113.6
16.0
8.8
10.3
13.9
77.0
13.4
14.1
125.8
17.9
9.8
11.5
11.9
84.7
13.6
14.3
EXID IN
850.0
177 / 3
305 / 195
-2 / -32 / -33
CMP: INR208
TP: INR267 (+29%)
Buy
We expect revenues to grow 1.8% YoY to INR28.2b, led by healthy
auto replacement demand, as well as ramp-up in new segments
such as E-rickshaw and Solar.
Spot LME lead prices decreased by 8.6% QoQ (-18% YoY) in
1QFY20 to average INR131/kg.
EBITDA margin is likely to grow by 40bp YoY (+10bp QoQ) to
14.5%.
PAT is estimated to grow by 8.4% YoY (+8% QoQ) to INR2.3b.
We lower our EPS estimates for FY20/21 by 5%/6% to factor in
weak demand.
The stock trades at 20.1x/18.0x FY20/21E EPS. Maintain
Buy.
Key issues to watch
Update on demand environment for OEMs, auto replacement
and industrial battery segments.
Market share in autos and non-autos.
Outlook for RM cost trend and recent pricing actions, if any.
S/A Quarterly Performance
Y/E March
Net Sales
Growth YoY (%)
RM(%)
Employee cost (%)
Other Exp(%)
EBITDA
EBITDA Margin (%)
Change (%)
Non-Operating Income
Interest
Depreciation
PBT after EO Exp
Tax
Effective Tax Rate (%)
Adj. PAT
Change (%)
E: MOFSL Estimates
1Q
27,725
31.8
66.4
5.8
13.6
3,909
14.1
20.6
42
11
719
3,221
1,122
34.8
2,099
11.1
FY19
2Q
3Q
27,204 24,968
15.3
9.6
66.9
64.9
6.1
6.5
14.8
16.1
3,327
3,125
12.2
12.5
12.4
10.6
116
80
14
23
768
813
3,745
2,369
1,060
818
28.3
34.5
1,908
1,550
17.0
0.5
4Q
25,987
5.7
64.9
5.7
15.0
3,733
14.4
10.4
166
12
835
3,051
945
31.0
2,107
11.1
FY20E
FY19
1QE
2QE
3QE
4QE
28,234 28,816 28,684 27,835 1,05,883
1.8
5.9
14.9
7.1
15.3
65.0
65.3
65.5
65.0
65.8
6.1
6.1
6.1
6.4
6.0
14.4
14.3
14.5
15.0
14.8
4,109
4,149
3,980
3,738
14,113
14.5
14.4
13.9
13.5
13.3
5.1
24.7
27.4
0.1
13.7
100
140
150
130
385
12
14
17
17
61
850
870
895
924
3,135
3,347
3,405
3,218
2,926
12,386
1,071
1,090
1,030
936
3,945
32.0
32.0
32.0
32.0
31.9
2,276
2,316
2,189
1,990
7,703
8.4
21.4
41.2
-5.5
10.6
FY20E
1,13,568
7.3
65.2
6.2
14.6
15,976
14.1
13.2
520
60
3,539
12,897
4,127
32.0
8,770
13.9
July 2019
14
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Hero MotoCorp
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E March
Sales
EBITDA
NP
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
14.0
4.4
8.3
3.7
15.3
4.0
9.2
3.4
16.4
3.7
9.4
3.5
14.5
3.4
8.1
3.7
2018
52.8
37.0
9.5
33.8
32.5
2019 2020E 2021E
49.3
33.8
-8.5
27.5
26.4
47.3
31.7
-6.7
23.7
22.8
54.0
35.8
13.0
24.7
23.8
322.3 336.5 343.1 386.1
HMCL IN
199.7
517 / 8
3695 / 2476
-8 / -26 / -38
CMP: INR2,587
TP: INR2,908 (+12%)
Neutral
185.1 169.5 158.1 178.6
589.3 643.7 691.9 756.0
Volumes declined by 12.4% YoY (+3.5% QoQ) to 1.8m units.
Realization is expected to grow by 5 % YoY (-0.8 % QoQ) to
INR43,923/unit, largely led by price hikes and higher share of
spares.
Net revenue is expected to decline by 8% YoY (2.7% QoQ) to
~INR81b.
EBITDA margin is expected to shrink by 230bp YoY (-30bp QoQ) to
13.3%.
EBITDA is likely to decline by 21.6% YoY (+1% QoQ) to INR10.8b.
We expect PAT to decline 19.6% YoY (0.1% QoQ) to INR7.3b.
We cut FY20/21 EPS by 10.6%/3.3% as we cut volumes by
5.5%/3.9% and margins by 70bp to factor in operating deleverage.
The stock trades at 16.4x/14.5x FY20/21E EPS; maintain
Neutral.
Key issues to watch
Update on demand trend in rural and urban markets.
Level of inventory in the system.
New product launches and the timelines.
Outlook on exports.
Quarterly Performance
Y/E March
Total Volumes ('000 nos)
Growth YoY (%)
Net Realization
Growth YoY (%)
Net Op Revenues
Growth YoY (%)
RM Cost (% sales)
Staff Cost (% sales)
Other Exp (% sales)
EBITDA
EBITDA Margins (%)
Other Income
Interest
Depreciation
PBT
Effective Tax Rate (%)
Adj. PAT
Growth (%)
E: MOFSL Estimates
1Q
2,105
13.3
41,853
-2.6
88,098
10.4
70.0
4.7
9.7
13,773
15.6
1,157
21
1,482
13,427
32.3
9,092
-0.5
FY19
2Q
2,134
5.5
42,600
2.9
90,909
8.6
69.3
4.8
10.8
13,787
15.2
2,237
21
1,518
14,485
32.6
9,763
-3.4
3Q
1,800
5.3
43,682
2.1
78,648
7.5
68.8
5.5
11.6
11,048
14.0
1,876
22
1,518
11,384
32.4
7,691
-4.5
4Q
1,781
-10.8
44,264
3.2
78,850
-7.9
69.0
5.7
11.8
10,693
13.6
1,642
22
1,502
10,811
32.4
7,303
-24.5
1QE
1,843
-12.4
43,932
5.0
80,962
-8.1
69.0
5.9
11.8
10,804
13.3
1,550
6
1,520
10,828
32.5
7,309
-19.6
FY20E
2QE
2,140
0.3
43,936
3.1
94,023
3.4
69.5
5.1
11.0
13,498
14.4
1,450
7
1,550
13,391
32.5
9,039
-7.4
3QE
2,085
15.8
43,980
0.7
91,698
16.6
69.5
5.4
11.2
12,789
13.9
1,460
6
1,570
12,673
32.5
8,554
11.2
4QE
1,730
-2.9
44,154
-0.2
76,367
-3.1
68.9
6.0
11.8
10,200
13.4
1,478
61
1,614
10,003
32.5
6,752
-7.5
(INR Million)
FY19
7,821
3.1
43,027
1.3
3,36,506
4.4
69.3
5.1
10.9
49,301
14.7
6,913
86
6,020
50,108
32.4
33,849
-8.5
FY20
7,797
-0.3
43,995
2.3
3,43,050
1.9
69.3
5.5
11.4
47,291
13.8
5,938
80
6,254
46,895
32.5
31,654
-6.5
July 2019
15
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Mahindra & Mahindra
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E March
Sales
EBITDA
NP (incl. MVML)
Adj. EPS (INR) *
EPS Gr. (%)
BV/Share (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
* incl. MVML
18.5
2.6
12.2
1.1
14.7
2.3
11.4
1.3
17.2
2.1
11.5
1.5
16.9
2.0
11.0
1.5
2018
62.2
43.2
36.3
22.7
254.6
14.2
13.0
2019 2020E 2021E
66.4
54.2
45.5
287
14.9
13.9
66.3
46.3
38.9
313
12.0
11.3
68.3
47.3
39.7
2.1
340
11.3
10.6
486.9 536.1 543.8 579.7
MM IN
1209.0
810 / 12
992 / 598
4 / -19 / -37
CMP: INR670
TP: INR778 (+16%)
Buy
25.3 -14.5
Overall volumes declined 9% YoY (-7% QoQ) to 218k units, as UV
volumes declined 5.9% YoY and 3W volumes increased 1% YoY,
while tractor volume declined 14.3% YoY.
MM’s (including MVML) realization is expected to improve 3%
YoY (-3% QoQ), as impact of price increase is partly offset by
product mix.
Net revenue is likely to decline 7% YoY (-10% QoQ) to INR124.5b.
EBITDA margin is expected to shrink 150bp YoY (+80bp QoQ) to
14.3%.
Adj. PAT is expected to decline 20% YoY (-6% QoQ) to INR9.9b.
We have cut consol. EPS for FY20/21 by 12%/7% as we cut
volumes by 9%/8% to factor in uncertainties in tractor volumes.
We cut margins by 40bp each to 13.9%/13.5% due to change in
mix (from tractor to UVs) and BS6 challenge.
The stock trades at 17.2x/16.9x FY20/21E EPS. Maintain
Buy.
Key issues to watch
Outlook for UV and tractor businesses for FY20 and FY21.
Update on response to the newly launched products.
Update on average discounts per unit during festivals.
Update on new launches and timelines.
Quarterly Performance (incl MVML)
Y/E March
Total Volumes (nos)
Growth YoY (%)
Net Realization
Growth YoY (%)
Net Op. Income
Growth YoY (%)
RM Cost (% of sales)
Staff (% of sales)
Oth. Exp. (% of Sales)
Total Cost
EBITDA
EBITDA Margins (%)
Other income
Interest
Depreciation
PBT
Effective Tax Rate (%)
Adj PAT
Change (%)
E: MOFSL Estimates
1Q
2,40,884
19.1
5,54,527
3.1
1,33,577
22.8
67.4
6.3
10.4
1,12,476
21,101
15.8
1,930
431
4,295
18,550
32.2
12,383
64.7
(INR Million)
FY19
2Q
3Q
2,28,590 2,34,001
3.7
10.9
5,59,524 5,50,959
2.6
1.2
1,27,902 1,28,925
6.4
12.2
67.6
69.2
6.5
6.6
11.2
11.0
1,09,408 1,11,897
18,493
17,029
14.5
13.2
8,478
3,423
379
353
4,986
5,054
22,981
14,245
22.6
2.0
16,725
14,578
18.7
40.7
4Q
2,35,557
-0.4
5,86,180
5.1
1,38,079
4.7
68.3
5.5
12.5
1,19,401
18,678
13.5
2,473
304
5,696
14,103
31.3
10,502
-6.4
1QE
2,18,039
-9.5
5,71,074
3.0
1,24,516
-6.8
67.5
6.6
11.3
1,06,669
17,848
14.3
2,000
360
5,450
14,038
29.5
9,902
-20.0
FY20E
FY19
FY20E
2QE
3QE
4QE
2,49,150 2,47,150 3,09,597 9,39,032 9,29,240
9.0
5.6
31.4
8.1
-1.0
5,75,305 5,76,248 4,05,361 5,62,795 5,76,570
2.8
4.6
-30.8
2.8
2.4
1,43,337 1,42,420 1,25,499 5,28,482 5,35,772
12.1
10.5
-9.1
11.1
1.4
68.8
68.6
68.5
68.1
68.4
5.8
6.0
6.8
6.2
6.5
10.9
10.9
11.9
11.4
11.3
1,22,871 1,22,280 1,09,627 4,53,182 4,61,447
20,466
20,139
15,871
75,301
74,325
14.3
14.1
12.6
14.2
13.9
8,515
3,520
2,517
16,303
16,552
375
394
400
1,467
1,529
5,800
6,150
6,295
20,030
23,695
22,806
17,115
11,693
69,879
65,652
29.5
29.5
29.5
22.7
29.5
16,088
12,073
8,248
54,187
46,311
-3.8
-17.2
-21.5
25.4
-14.5
July 2019
16
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Maruti Suzuki
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E MARCH
Sales
EBITDA
Adj. PAT
Con.adj.EPS
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
24.5
4.7
13.2
1.2
26.4
4.3
14.9
1.2
27.2
4.1
15.4
1.9
21.5
3.8
11.9
2.1
2018
2019 2020E
2021E
945.6
129.6
89.6
304
26.5
1,739
17.1
23.5
797.6 860.2 843.8
123.1 108.0 102.7
79.0
267
7.3
18.5
27.3
73.6
248
(7.1)
16.3
22.1
70.5
240
(3.1)
14.5
20.0
MSIL IN
302.1
1973 / 29
9923 / 6324
-6 / -22 / -40
CMP: INR6,530
TP: INR7,425 (+14%)
Buy
1,382 1,527 1,611
Volume declined by 18% YoY (-12% QoQ) to 401.9 units.
Net realization is expected to increase 4% YoY (+1% QoQ) to
INR475,078 per unit, resulting in net revenue decline of 15% YoY
(-11% QoQ) to INR190.9b.
We expect margins to decline 470bp YoY (-30bp QoQ) to 10.2%,
mainly due to higher discounts and operating deleverage.
EBITDA is estimated to decline by 42% YoY (-14% QoQ) to
INR19.4b.
We expect adj. PAT to decline by 31% YoY (-24% QoQ) to
INR13.7b.
We cut our FY20/21 EPS estimates by 13.5%/9.2% as we cut
volumes by 10.9%/9.4%.
The stock trades at 27.2x FY20E and 21.5x FY21E EPS. Maintain
Buy.
Key issues to watch
Update on demand scenario, channel inventory, discounting
trends and new launches.
Demand trend in urban and rural areas.
Quarterly Perf. (INR m)
Y/E March
Total Volumes (nos)
Change (%)
Realizations (INR/car)
Change (%)
Net operating revenues
Change (%)
RM Cost (% of sales)
Staff Cost (% of sales)
Other Cost (% of sales)
EBITDA
EBITDA Margins (%)
Depreciation
EBIT
EBIT Margins (%)
Interest
Non-Operating Income
PBT
Effective Tax Rate (%)
Adjusted PAT
Change (%)
E:MOFSL Estimates
1Q
4,90,479
24.3
4,57,907
3.0
2,24,594
28.0
69.0
3.4
12.6
33,511
14.9
7,198
26,313
11.7
207
2,718
28,824
31.5
19,753
26.9
FY19
2Q
3Q
4Q
4,84,848 4,28,643 4,58,478
-1.5
-0.6
-0.7
4,58,560 4,58,850 4,68,057
3.7
2.6
2.1
2,22,332 1,96,683 2,14,594
2.1
2.0
1.4
68.7
71.4
71.9
3.6
4.5
3.8
13.2
14.3
13.8
32,313
19,311
22,634
14.5
9.8
10.5
7,212
7,677
8,102
25,101
11,634
14,532
11.3
5.9
6.8
257
206
88
5,266
9,173
8,677
32,110
20,601
23,121
30.2
27.7
22.3
21,009
14,893
17,956
-15.4
-17.2
-12.9
1QE
4,01,994
-18.0
4,75,078
3.7
1,90,978
-15.0
70.5
4.3
15.0
19,428
10.2
8,160
11,268
5.9
210
8,000
19,058
28.0
13,722
-30.5
(INR Million)
FY20
FY19
FY20E
2QE
3QE
4QE
4,46,750 4,69,650 4,43,557 18,62,448 17,61,951
-7.9
9.6
-3.3
4.7
-5.4
4,79,829 4,75,031 4,85,517 4,61,867 4,78,898
4.6
3.5
3.7
3.0
3.7
2,14,364 2,23,098 2,15,354 8,60,203 8,43,795
-3.6
13.4
0.4
7.8
-1.9
70.0
69.7
70.0
70.0
70.0
4.0
4.3
4.0
3.8
4.2
13.5
12.8
13.5
13.6
13.6
26,820
29,462
26,954 1,07,993 1,02,663
12.5
13.2
12.5
12.6
12.2
8,300
8,500
8,725
30,189
33,685
18,520
20,962
18,229
77,804
68,978
8.6
9.4
8.5
9.0
8.2
210
210
170
758
800
7,250
7,250
7,307
25,610
29,807
25,560
28,002
25,366 1,04,656
97,985
28.0
28.0
28.0
28.3
28.0
18,403
20,161
18,263
73,573
70,549
-12.4
35.4
1.7
-6.8
-4.1
July 2019
17
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Motherson Sumi
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E Mar
Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
EV/Sales (x)
23.5
4.3
6.5
0.6
24.8
3.5
8.9
0.7
23.0
3.5
7.9
0.7
17.3
3.0
5.6
0.6
2018
51.2
17.0
5.4
6.0
29.5
19.4
12.2
2019 2020E 2021E
53.5
16.1
5.1
-5.2
35.7
15.7
9.8
60.2
17.4
5.5
7.6
36.6
15.2
10.0
78.3
23.1
7.3
32.8
41.6
18.7
13.5
562.9 635.2 708.9 789.4
MSS IN
3157.9
400 / 6
218 / 112
12 / -34 / -47
CMP: INR127
TP: INR150 (+18%)
Buy
We estimate consolidated revenues to grow 14% YoY (-2% QoQ),
driven by SMP (+28%), PKC (+18%) and SMR (+3%). India business
revenues are estimated to decline ~15% YoY.
Consol. PAT is expected to decline 24% YoY to INR4.2b, impacted
by weak margins and higher depreciation.
Standalone EBITDA margin is expected to contract 210bp YoY (-
310bp QoQ) to 15%.
For SMR, we estimate EBITDA margin at 11.1% (-10bp YoY/ -50bp
QoQ).
For SMP, we estimate EBITDA margins to contract 370bp YoY
(+60bp QoQ) to 2.5% due to ramp-up costs of new plants.
For PKC, we estimate EBITDA margins to expand 30bp YoY (+120
QoQ) to 9.8% led by expectation of healthy operating
performance.
We lower our EPS estimates for FY20 by ~7%, to factor in weak PV
demand in India.
The stock trades at 23x FY20E and 17.3x FY21E EPS. Maintain
Buy.
Key issues to watch
Update on ramp-up of new plants at SMRPBV.
Update on trends in key businesses.
Outlook for SMRPBV, PKC and India business.
Quarterly performance (Cons.)
Y/E March
Net Sales
YoY Change (%)
RM Cost (% of sales)
Staff Cost (% of sales)
Other Exp (% of sales)
EBITDA
Margins (%)
Depreciation
Interest
Other income
PBT before EO expense
Tax Rate (%)
Min. Int & Share of profit
Adj PAT
YoY Change (%)
E: MOFSL Estimates
FY19
1Q
2Q
3Q
4Q
1,47,755 1,51,050 1,64,730 1,71,695
13.0
12.6
14.5
11.4
57.6
21.9
11.0
14,121
9.6
4,471
1,005
447
9,093
36.0
1,389
4,431
21.8
57.9
21.7
11.8
13,001
8.6
4,879
1,315
463
7,269
35.4
982
3,711
-15.6
57.7
22.5
11.3
13,934
8.5
5,714
882
610
7,948
33.9
1,365
3,891
6.3
58.1
23.0
11.6
12,428
7.2
5,518
1,030
682
6,562
37.8
-17
4,100
-23.1
FY20E
FY18
1Q
2Q
3Q
4Q
1,68,596 1,63,197 1,87,521 1,89,573 5,62,933 6,35,229 7,08,886
14.1
8.0
13.8
10.4
32.8
12.8
11.6
57.0
25.0
10.7
12,241
7.3
5,750
1,070
400
5,821
34.0
-350
4,192
-5.4
56.7
24.0
11.1
13,406
8.2
5,850
1,150
425
6,831
34.0
-300
4,808
29.6
56.7
22.0
12.2
17,138
9.1
6,000
1,150
475
10,463
34.0
-350
7,256
86.5
56.9
21.3
12.6
17,454
9.2
6,100
1,170
500
10,684
34.0
-425
7,477
82.4
61.0
60.6
10.3
51,226
9.1
15,752
4,108
1,701
33,067
30.5
5,249
17,024
10.2
57.8
22.3
11.4
53,484
8.4
20,582
4,232
2,202
30,872
35.7
3,719
16,132
-5.2
56.8
23.0
11.7
60,239
8.5
23,700
4,540
1,800
33,799
34.0
4,944
17,363
7.6
(INR Million)
FY19 FY20E
July 2019
18
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
Tata Motors
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E March
Net Sales
EBITDA
NP
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
7.1
0.6
2.3
-37.3
0.9
3.3
12.2
0.9
3.3
10.5
0.8
3.1
2018
2,916
338.0
77.8
22.9
281.0
10.1
6.4
2019 2020E 2021E
3,019
297.9
-14.8
-4.4
177.2
-1.9
5.2
3,047
380.5
45.2
13.3
190.2
7.2
7.3
3,222
427.6
52.3
15.4
15.7
205.3
7.8
7.5
TTMT IN
3396.6
551 / 8
282 / 142
-6 / -14 / -52
CMP: INR162
TP: INR183 (+13%)
Neutral
15.7 -119.0 -405.7
Consolidated revenues are estimated to decline 15% YoY (-35%)
QoQ), resulting in net loss of ~INR11.8b (v/s ~INR19b loss in
1QFY19 v/s PAT of ~INR21.4b in 4QFY19).
We expect JLR’s (including JV) volume to decline by 15% YoY (-
31% QoQ). Net realization is expected to decline 1.6% YoY (+0.3%
QoQ). JLR’s EBITDA margin would expand 80bp YoY (-240bp QoQ)
to 7.4%.
S/A volume declined YoY by 22% (+29% QoQ) as CV volume
declined 19% YoY, while PV volume fell 30% YoY. EBITDA margin is
expected to decline to 3.2% (-540bp YoY and -410bp QoQ). We
expect net loss of ~INR5.1b (v/s ~INR11.9b PAT in 1QFY19).
We cut FY20 consolidated PAT by 3.7% and increase FY21 PAT by
2.3%.
The stock trades at 12.2x/10.5x FY20/21E EPS. Maintain
Neutral.
Key issues to watch
Current demand trends for JLR and outlook for key markets.
Update on cost-cutting initiatives at JLR.
Demand trend in domestic markets and new product launch.
Impact of forex hedge loss.
Quarterly Performance [Consol]
Y/E March
Net Op Income
Growth (%)
EBITDA
EBITDA Margins (%)
JLR EBITDA Margins (%)
S/A EBITDA (%)
Other Income
Interest Expenses
PBT before EO Exp
EO Exp/(Inc)
PBT after EO Exp
Tax rate (%)
PAT
Minority Interest
Share in profit of Associate
Reported PAT
Adj PAT
Growth (%)
E: MOFSL Estimates
1Q
667,011
14.0
50,504
7.6
6.2
8.6
6,050
13,753
-25,842
0
-25,842
16.1
-21,686
-398
3,060
-19,024
-19,024
(295.9)
FY19
2Q
3Q
4Q
721,121 769,159 864,220
2.5
4.8
-3.9
67,576 59,557
80,193
9.4
7.7
9.3
9.1
8.5
6,172
12,269
-2,932
5,303
-8,234
-33.0
-10,953
-393
859
-10,488
-5,597
(122.5)
7.3
8.8
6,668
15,685
-12,144
280,140
-292,284
8.2
-268,232
-317
-1,376
-269,925
-11,551
(196.1)
9.8
7.3
8,636
15,880
23,722
11,072
12,649
8.8
11,535
88
-448
11,175
21,387
(31.6)
1QE
564,859
-15.3
42,023
7.4
7.4
3.2
1,450
10,500
-15,027
0
-15,027
30.0
-10,519
-100
-1,213
-11,832
-11,832
(37.8)
(INR Million)
FY20E
FY19
FY20E
2QE
3QE
4QE
770,745 815,077 896,495 3,019,384 3,047,176
6.9
6.0
3.7
3.6
0.9
100,830 112,491
84,454 255,702 339,797
13.1
13.8
9.4
8.5
11.2
10.6
8.1
1,500
11,000
41,330
0
41,330
40.0
24,798
-250
175
24,723
24,723
(541.7)
12.4
9.9
1,800
10,750
49,041
0
49,041
40.0
29,424
-175
1,576
30,826
30,826
(366.9)
15.3
8.3
21,821
23,957
-10,180
0
-10,180
103.0
304
-662
1,847
1,489
1,489
(93.0)
8.2
8.3
29,653
57,586
-17,196
296,516
-313,712
7.8
-289,337
-1,020
2,095
-288,262
-14,785
-119.0
11.9
7.8
26,571
56,207
65,163
0
65,163
32.5
44,007
-1,187
2,385
45,205
45,205
-405.7
July 2019
19
 Motilal Oswal Financial Services
June 2019 Results Preview | Sector: Automobiles
TVS Motor Company
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
Financial Snapshot (INR b)
Y/E March
Sales
EBITDA
Adj. PAT
EPS (INR)
EPS Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
31.2
7.2
18.7
0.8
30.8
6.2
15.6
0.8
27.0
5.3
13.8
0.9
21.1
4.4
11.1
0.9
2018
151.8
11.7
6.6
13.9
18.7
60.6
25.1
24.1
2019 2020E 2021E
182.1
14.3
6.7
14.1
1.1
70.5
21.5
22.4
199.5
16.0
7.7
16.1
14.3
82.1
21.1
22.3
226.7
19.5
9.8
20.6
27.8
97.9
22.9
26.1
TVSL IN
475.1
207 / 3
604 / 424
-12 / -31 / -35
CMP: INR435
TP: INR434 (0%)
Neutral
Overall volume decreased 0.5% YoY (+1.7% QoQ) to 923k units.
Motorcycle and scooters volume increased 7.7% and 2.3% YoY,
while Mopeds volume declined by 21% YoY. 3W volumes rose by
11.3% YoY.
Net realization is likely to increase 7.9% YoY (0.2% QoQ) to
INR48,439 per unit due to price hikes and better product mix.
We estimate net sales to grow by 7.3% YoY (2% QoQ) to INR44.7b.
EBITDA margin is expected to be 7.2% (-50bp YoY and +16bp
QoQ).
We expect PAT to decline 3.6% YoY (+5.6% QoQ) to INR1.4b.
We lower our EPS estimates for FY20/21 by 11%/10% to factor in
for weak volumes and operating deleverage.
The stock trades at 27x FY20E and 21.1x FY21E EPS; Maintain
Neutral.
Key issues to watch
Update on demand from rural and urban areas.
Exports outlook for 2W and 3W in key markets.
Update on new product launches including EV.
S/A Quarterly Performance
Y/E March (INR m)
Volumes (units)
Growth (%)
Realization (INR/unit)
Growth (%)
Net Sales
Growth (%)
RM (% of sales)
Emp cost ( % of sales)
Other exp (% of sales)
EBITDA
EBITDA Margin (%)
Interest
Depreciation
Other Income
PBT after EO Exp
Tax rate (%)
Adjusted PAT
Growth (%)
E: MOFSL Estimates
1Q
9,28,274
15.7
44,905
6.0
41,685
22.6
75.9
5.7
10.7
3,212
7.7
180
933
26
2,124
31.0
1,466
13.2
(INR Million)
FY19
FY20E
2Q
3Q
4Q
1QE
2QE
3QE
4QE
FY19
FY20
FY21
10,88,374 9,89,787 9,07,328 9,23,195 11,24,500 11,12,000 9,57,123 39,14,985 41,16,818 43,81,911
14.7
19.8
2.0
(0.5)
3.3
12.3
5.5
13.0
5.2
6.4
45,880 47,121 48,318
48,439
48,197
48,438 48,793
46,513
48,454
51,744
7.1
5.3
7.2
7.9
5.0
2.8
1.0
6.2
4.2
6.8
49,935 46,640 43,840
44,718
54,197
53,863 46,700 1,82,099 1,99,478 2,26,739
22.8
26.1
9.4
7.3
8.5
15.5
6.5
20.0
9.5
13.7
75.8
75.8
76.6
76.0
75.8
76.0
76.0
76.0
76.0
76.0
4.9
5.1
4.6
5.4
4.7
4.6
5.1
5.1
4.9
4.7
10.7
11.1
11.7
11.4
10.7
10.9
11.5
11.0
11.1
10.7
4,282
3,757
3,081
3,215
4,767
4,581
3,446
14,333
16,008
19,500
8.6
8.1
7.0
7.2
8.8
8.5
7.4
7.9
8.0
8.6
212
167
247
175
185
195
208
806
763
618
1,016
1,012
1,031
1,040
1,060
1,130
1,158
3,993
4,388
4,993
7
7
36
20
26
26
15
75
87
95
3,062
2,585
1,839
2,020
3,548
3,282
2,095
9,610
10,945
13,985
31.0
31.0
27.2
30.0
30.0
30.0
30.0
30.3
30.0
30.0
2,113
1,784
1,338
1,414
2,483
2,297
1,467
6,701
7,661
9,789
(0.9)
15.6
(19.2)
(3.6)
17.5
28.8
9.6
1.1
14.3
27.8
July 2019
20
 Motilal Oswal Financial Services
NOTES
July 2019
21
 Motilal Oswal Financial Services
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
> - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In
case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30 days take appropriate measures to make the recommendation
consistent with the investment rating legend.
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Analyst ownership of the stock
Companies where there is interest
No
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Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its
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* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.
July 2019
22