a rising tide lifts all boats; auto sales jump ahead of festive season

September 16, 2016 1

September 16, 2016

Raghunandhan N L [email protected]

+91 22 4088 0375

Mumuksh Mandlesha [email protected]

+91 22 4088 0282

A rising tide lifts all boats; Auto sales jump ahead of festive season


PV model-wise trends New products contribute 10-40% of sales for larger OEMs

New products: Launches have been driving sales for OEMs, with contribution of 10-40% of sales for Maruti Suzuki (MSIL IN), Hyundai, Tata Motors (TTMT IN) and M&M (MM IN).

New products viz., Renault Kwid (10,719), Maruti Vitara Brezza (9,554), Maruti Baleno (8,671), Hyundai Creta (8,450), Toyota Innova Crysta (8,229), Tata Tiago (4,527), Nissan Datsun Redigo (3,205), Mahindra KUV1OO (2,601), Volkswagen Ameo(2,427), Mahindra TUV3OO(2,279), Honda BR-V (2,229) and Maruti Scross (2,023), have made their mark in Aug16.

Top 10: MSIL’s Alto retains the Numero Uno position. MSIL dominates the top selling models, with 6 models in Top10. Among UV’s, Maruti’s Vitara Brezza takes the pole position and is expected to sustain on the back of healthy order book (over 100,000 bookings).

Segmental performance: Share of Compact UVs continued to rise (13% of PV sales; 106% y-y growth) due to new products and shift in preference of hatchback/ sedan buyers. Other segments such as Mini/Micro and Compact also logged strong growth of 22% and 14%, respectively. Entry level sedan and Mid-size sedan segment reported decline of 9% and 3%, respectively reflecting the lost of share to Compact UVs/ Premium hatchbacks.

Micro/Mini: Though Maruti Alto/Wagon R continue to dominate the segment with 65% share, they have been losing share to Renault Kwid. Competition intensity further increased with launch of Kwid 1.0.

Compact: MSIL share down 250bps m-m to 44% due to gain of share by Hyundai’s Grand i10 and i20 Elite on account of inventory buildup with dealers before festive season. MSIL’s Swift sales has been reducing over past few months due to rising competition and cannibalization by Baleno.

Super compact: Maruti Dzire continues to dominate the segment but the share has dropped below 50%. Dzire has lost volumes on account of cannibalization by Baleno. Meanwhile, Hyundai Xcent and Toyota Etios have gained share. With recent launch of Volkswagen Ameo, competitive intensity is set to increase.

Compact UV: MSIL’s Vitara Brezza retain the No.1 seller with share of 28%, while Hyundai’s Creta and Ford’s Ecosport take the 2nd and 3rd spot with share of 24.4% and 15.1%, respectively.

Companies: We expect MSIL and TTMT to sustain momentum on the back of product launches. MSIL has a healthy order book for new products such as Baleno/Vitara Brezza. Meanwhile, TTMT has witnessed a positive response for recent launch - Tiago.

Outlook: FY17 outlook remains positive on improving macros, 7PC/OROP implementation, scrappage policy, product launches and rural demand recovery.

Our top picks are Mahindra & Mahindra, Hero MotoCorp, Escorts and NRB Bearings.

Domestic PV sales

Category wise market share

Source: SIAM

Source: SIAM

Micro/ Mini (%) Aug-16 y-y (bp) m-m (bp)

Alto 38.1 (1,293) 154

Wagon R 26.5 (594) (148)

Kwid 19.5 1,951 129

Compact (%) Aug-16 y-y (bp) m-m (bp)

Swift 17.4 (809) (145)

Grand i10 17.3 175 112

i20 El i te 14.7 (146) 130

Super compact (%) Aug-16 y-y (bp) m-m (bp)

Dzire 47.5 (393) (682)

Xcent 13.0 421 5

Etios 7.5 25 89

Mid size (%) Aug-16 y-y (bp) m-m (bp)

Ciaz 47.0 1,639 713

City 32.2 (764) (117)

Verna 7.2 (493) (530)

Compact UV (%) Aug-16 y-y (bp) m-m (bp)

Vitara Brezza 27.6 2,758 (242)

Creta 24.4 (1,699) 100

Ecosport 15.1 (231) 83

Total UV (%) Aug-16 y-y (bp) m-m (bp)

Vitara Brezza 14.6 1,463 (133)

Creta 12.9 (373) 49

Innova Crysta 12.6 100 49

Market

share (%) y-y (bp) m-m (bp)

MSIL 119,906 106,781 125,764 46.3 (181) (208)

Hyundai 43,201 40,505 41,201 16.7 (157) 83

MM 18,246 14,198 17,356 7.1 65 37

TTMT 14,580 12,856 15,756 5.6 (16) (43)

Honda 13,941 15,655 14,033 5.4 (167) (1)

Tota l PV 258,722 221,743 259,720

Market share chgAug-16PVs (units) Aug-15 Jul-16


2W model-wise trends New products contribute 5-25% of sales for larger OEMs

New products: Launches have been driving sales for OEMs, with contribution of 5-25% of sales for Hero Motocorp

(HMCL IN), Honda, Bajaj Auto (BJAUT IN) and TVS Motors (TVSL IN).

New products viz., Hero Maestro (37,397), Hero Duet (28,364 units), Bajaj Avenger (23,519), Honda Livo (21,484), TVS

Victor (19,323), Yamaha Fascino (18,876), Bajaj V15 (17,427), Honda Navi (9,078), Honda CB Hornet (2,738), and RE

Himalayan (1,468) have made their mark in Aug16.

Top10: HMCL dominates the top selling models, with 5 models in Top10. However it has lost the Numero Uno position

to Honda Activa scooter. Consumer preference is shifting towards scooters and 3 of them feature in the Top10 list.

Meanwhile, 6 motorcycles (4 economy and 2 executive) feature in the Top10 list. Going ahead, we expect rural demand

recovery to drive sales for motorcycles .

Segmental performance: Scooters grew by 33% y-y, outpacing 22% growth in motorcycles. We expect scooters to gain

share in overall 2Ws. Within motorcycles, Premium segment has grown at 34% y-y led by new launches and robust sales

for Royal Enfield, while economy segment has grown 31%, outpacing executive segment which grew 14%.

Economy bikes: HF Deluxe share up 360bp m-m to 55%, however BJAUT’s CT100 and Platina lost 160bp and 420bp

share m-m to 19% and 12%, respectively . Inventory buildup with dealers has supported dispatches for HMCL.

Executive bikes: HMCL (Splendor/Passion/Glamour) share flat m-m at 72%. TVSL gained 110bp share m-m to 4% led by

new Victor. Meanwhile, Honda lost 90bp share m-m to 21%.

Premium bikes: BJAUT’s share stands at 40% from 36% in FY16, led by positive response for new launch - V15. The

segment generally outperforms other segments during an economic uptrend. To capitalize on this trend, several

launches have been scheduled ahead (Bajaj V variants, Bajaj Pulsar 400, TVS Apache RTR 300).

Scooters: Honda Activa remains the undisputed leader with market share of 50%. TVSL have gained share by 30bp m-m

to 11.9%. Meanwhile HMCL’s Maesto/Duet/Pleasure lost 10bp share to 14.3%.

Companies: HMCL, TVSL and BJAUT has outpaced industry (26% growth) with 31%, 30% and 27% jump in Aug16,

respectively on account of pre-festive inventory buildup and new products such as Splendor iSmart

110/Duet/Maestro Edge/Victor motorcycle/ 100cc moped/ Avenger variants/ Platina Comfortec/V15.

Outlook: FY17 outlook remains positive on improving macros, 7PC/OROP, product launches and rural demand

recovery.

Domestic 2W sales

Category wise market share

Source: SIAM

Source: SIAM

Source: SIAM

Segment mix

Market

share (%) y-y (bp) m-m (bp)

Hero Motocorp 601,241 460,557 520,559 35.3 118 120

Honda 466,289 373,169 429,551 28.6 (31) (82)

TVS 238,984 183,653 206,605 14.1 42 50

Baja j 174,719 137,948 174,324 10.6 3 (121)

Royal Enfield 54,735 41,600 52,128 3.2 13 (21)

Total 2W 1,648,883 1,305,348 1,476,340

2Ws (units) Aug-16 Aug-15 Jul-16Market share chg

Economy Aug-16 y-y (bp) m-m (bp)

HF Deluxe/Dawn 54.6 848 360

CT 100 18.9 (239) (160)

Platina 12.3 8 (421)

Executive Aug-16 y-y (bp) m-m (bp)

Splendor 43.4 404 84

Pass ion 14.7 (293) 109

Glamour 14.1 205 (201)

Shine 12.0 (170) (19)

Premium Aug-16 y-y (bp) m-m (bp)

Pulsar 20.3 (878) 118

RE Class ic 350 14.8 67 4

V15 7.2 723 (258)

Scooters Aug-16 y-y (bp) m-m (bp)

Activa 49.5 (154) (135)

Jupiter 9.1 (180) (12)

Maestro 6.6 (80) 18

2Ws Mix (%) Motorcycle Mix (%)

Motorcycle 61 Economy 24

Scooters 34 Executive 53

Mopeds 5 Premium 24


Table of content

PVs: Model-wise trends 2

2Ws: Model-wise trends 3

Passenger Vehicles 5

Top sellers (in volumes): Maruti Suzuki continues to dominate the Top10 list 6

Top sellers (in values): Pocket share 7

Category wise market trends 8

New products driving sales success 11

Upcoming launches 12

Discounts 13

Two Wheelers 14

Top sellers: Hero Motocorp dominates the Top10 list 15

Category wise market trends 16

New products driving growth 18

Upcoming launches 19

Valuation Summary 20

September 16, 2016 5 Friday, September 16, 2016

PVs: Model-wise trends

September 16, 2016


Model Units Model Units Model Units y-y chg m-m chg

1 Alto 20,919 Al to 23,017 Al to 19,844 - -

2 Dzire 15,766 Dzire 18,718 Dzire 19,229 - -

3 Wagon R 14,571 Swift 16,811 Wagon R 15,207 +1 -

4 Swift 13,027 Wagon R 14,648 Swift 13,934 -1 -

5 Grand i10 12,957 El i te i20 10,662 Grand i10 11,961 +1 -

6 El i te i20 11,011 Grand i10 10,255 Vi tara Brezza 10,232 -1 +1

7 Kwid 10,719 Celerio 7,927 El i te i20 9,910 NM +1

8 Vitara Brezza 9,554 Creta 7,437 Kwid 9,897 NM -2

9 Baleno 8,671 Omni 6,956 Ba leno 9,120 NM -

10 Creta 8,450 Eeco 5,535 Omni 8,564 -2 +1

Aug 2016 Aug 2015 Jul 2016 Change in rankingsRank

Aug-16 PC Units UV Units

1 Alto 20,919 Vi tara Brezza 9,554

2 Dzire 15,766 Creta 8,450

3 Wagon R 14,571 Innova Crysta 8,229

4 Swift 13,027 Ecosport 5,248

5 Grand i10 12,957 Ertiga 5,024

6 El i te i20 11,011 Bolero 4,841

7 Kwid 10,719 Scorpio 3,918

8 Baleno 8,671 KUV1OO 2,601

9 Celerio 8,063 TUV 3OO 2,279

10 Ciaz 6,214 BR-V 2,229

Source: SIAM

Passenger vehicles top 10 selling models

Maruti Suzuki continues to dominate the Top10 list

MSIL’s Alto retains the Numero Uno position. MSIL dominates the top selling models, with 6 models in Top10.

MM’s Bolero sales were lower at 4,841 units in comparison to average of ~7,000 units in FY16. Sales has been trending lower due to cannibalization by TUV300 and increased competition in UVs. To arrest the fall, MM recently launched Bolero new variants Bolero Power+ (sub-4m) with the lower selling price.

Among UV’s, Maruti’s Vitara Brezza retains the pole position and expected to sustain on the back of healthy order book (over 100,000 bookings).

MSIL’s Swift/Dzire are facing sales decline due to cannibalization from Baleno. MSIL has stopped the production of not so successful product Ritz (~1,500 average sales in FY16). Going ahead it may launch the new Ritz tour to target the commercial segment.

Tata Tiago received positive response with over 40,000 bookings and the company plans to increase the production.

Source: SIAM

Passenger cars and UV top 10 selling models


Aug-16 Manufacturer Models Value (Rs mn)

1 Toyota Innova 14,261

2 Maruti Suzuki Dzire 10,894

3 Hyundai Creta 10,051

4 Hyundai i20+el i te 8,352

5 Maruti Suzuki Vitara Brezza 8,049

6 Maruti Suzuki Swift 7,920

7 Hyundai i10 Grand 7,709

8 Maruti Suzuki Alto 6,903

9 Maruti Suzuki Wagon R + Stingray 6,746

10 Maruti Suzuki Baleno 5,892

Aug-16 Manufacturer Gross sales (Rs mn) Value Market share (%) Volumes Volume Market share (%) Diff. in share (%) Average realization (Rs)

1 Maruti Suzuki 67,567 37.2 119,906 46.3 (911) 563,496

2 Hyundai 32,661 18.0 43,201 16.7 130 756,031

3 Toyota 19,386 10.7 12,801 4.9 574 1,514,400

4 Mahindra 17,254 9.5 18,246 7.1 246 945,639

5 Honda 12,193 6.7 13,941 5.4 133 874,604

6 Ford 8,108 4.5 8,548 3.3 116 948,530

7 Tata Motors 8,043 4.4 14,580 5.6 (120) 551,614

8 Renault 5,905 3.3 12,972 5.0 (176) 455,194

9 Volkswagen 3,391 1.9 4,447 1.7 15 762,556

10 Nissan 2,485 1.4 5,918 2.3 (92) 419,961

11 Skoda 1,980 1.1 1,211 0.5 62 1,634,808

12 General Motors 1,428 0.8 1,801 0.7 9 792,985

13 Fiat 435 0.2 651 0.3 (1) 668,699

14 Isuzu 256 0.1 208 0.1 6 1,231,000

15 Hindustan Motors 193 0.1 70 0.0 8 2,756,500

16 Force Motors 157 0.1 221 0.1 0 711,672

Total 181,442 258,722 701,301

Note: Gross sales calculated by multiplying volumes with average prices (ex-delhi) of base and top variant. Source: SIAM, carwale

Passenger vehicle OEMs in terms of value

OEM rankings in terms of pocket share

Note: Gross sales calculated by multiplying volumes with average prices (ex-delhi) of base and top variant. Source: SIAM, carwale

Top 10 models in terms of value


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(%) Kwid Alto Wagon R Redigo Others

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(%) i20 Elite Grand i10 Swift Baleno Others

(1,274) (649) (337)

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(963) (246)(238)

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Source: SIAM

Micro/Mini: MSIL dominates with 65% share; Competition intensity further increased with launch of Kwid 1.0

Passenger cars: Category-wise market share trends

Source: SIAM

Source: SIAM

FY17 market share change (bps) in Micro/Mini segment

Compact: MSIL share down 250bps m-m to 44% as Hyundai models gained share on account of inventory buildup with dealers before festive season

Source: SIAM

FY17 market share change (bps) in Compact segment


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(%) Dzire Amaze Xcent Etios Others

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(%) City Ciaz Verna Vento Others

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Source: SIAM

Super compact: Dzire share below 50%; YTD fall due to cannibalization by Baleno

Passenger cars: Category-wise market share trends

Source: SIAM

Source: SIAM

FY17 market share change (bps) in Super compact segment

Mid-size: Maruti Ciaz retains No1 spot and further increased share by 710bp m-m to 47% led by gain of diesel share from Honda City.

Source: SIAM

FY17 market share change (bps) in Mid-size segment


(2,090) (1,492) (537)404

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(%) Creta Vitara Brezza TUV3OO Ecosport KUV1OO Others

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6(%) Creta Innova Crysta Vitara Brezza Ecosport Others

Source: SIAM

Compact UV: MSIL Vitara Brezza retain the pole position with share at 28%

Utility vehicles: Category-wise market share trends

Source: SIAM

Source: SIAM

FY17 market share change (bps) in Compact UV segment

Total UV: MM regain market leadership in UVs, but lack presence among the top models

Source: SIAM

FY17 market share change (bps) in total UVs


*Note: New models launched since Apr2015 have been taken; Variants have not been considered under new products Source: SIAM

OEMs with new products have witnessed positive growth

New products driving sales success

New products have been driving sales for OEMs, with contribution of 10-40% of sales for MSIL, Hyundai, Tata and MM, while the existing

models have reported decline for all OEMs reflecting prefence towards new products.

New products viz., Renault Kwid (10,719), Maruti Vitara Brezza (9,554), Maruti Baleno (8,671), Hyundai Creta (8,450), Toyota Innova Crysta

(8,229), Tata Tiago (4,527), Nissan Datsun Redigo (3,205), Mahindra KUV1OO (2,601), Volkswagen Ameo (2,427), Mahindra TUV3OO

(2,279), Honda BR-V (2,229) and Maruti Scross (2,023), have made their mark in Aug16.

We expect MSIL and TTMT to sustain momentum on the back of product launches. MSIL has a healthy order book for new products such

as Baleno/Vitara Brezza. Meanwhile, TTMT has witnessed a positive response for recent launch - Tiago.

YTDFY16 YTDFY17 y-y (%) YTDFY16 YTDFY17 y-y (%)

Maruti Suzuki 516,768 475,092 (8) 92,918 16 522,880 568,010 9 Baleno, Scross, Vitara Brezza

Hyundai 173,498 168,822 (3) 39,088 19 189,359 207,910 10 Creta

Mahindra & Mahindra 82,133 64,687 (21) 30,273 32 82,133 94,960 16 TUV3OO, KUV1OO, Nuvosport

Tata Motors 62,613 46,840 (25) 20,155 30 62,614 66,995 7 Tiago

Honda 64,292 35,014 (46) 24,807 41 78,708 59,821 (24) Jazz, BR-V

New productsCompanyExisting models Total unitsFY17 new

product sales*

Contribution

to sales (%)


Renault Kwid AMT Tata Hexa

Toyota Fortuner

Upcoming launches

Maruti Ignis Tata Kite 5

Hyundai Tucson


Cash or other

incentivesExchange Total

Cash or other


Cash or other


Maruti Al to 800 30,000 20,000 50,000 15,000 20,000 35,000 20,000 20,000 40,000

Maruti Al to K10 15,000 15,000 30,000 22,000 20,000 42,000 20,000 20,000 40,000

Maruti WagonR 30,000 25,000 55,000 25,000 20,000 45,000 25,000 20,000 45,000

Maruti WagonR CNG 20,000 20,000 40,000 10,000 10,000 10,000 10,000

Maruti Celerio Petrol 5,000 10,000 15,000 20,000 15,000 35,000 20,000 15,000 35,000

Maruti Celerio AMT 25,000 15,000 40,000 25,000 15,000 40,000

Maruti Swift Petrol 10,000 10,000 20,000 10,000 15,000 25,000 10,000 15,000 25,000

Maruti Swift Diesel 10,000 10,000 20,000 20,000 15,000 35,000 15,000 15,000 30,000

Maruti Dzire Petrol 10,000 15,000 25,000 10,000 10,000 10,000 10,000

Maruti Dzire Diesel 15,000 15,000 20,000 20,000 40,000 20,000 20,000 40,000

Maruti Ertiga Petrol 25,000 20,000 45,000 10,000 15,000 25,000 10,000 15,000 25,000

Maruti Ertiga Diesel 25,000 30,000 55,000 15,000 15,000 15,000 15,000

Maruti Ciaz Petrol 10,000 10,000 20,000 40,000 60,000 15,000 40,000 55,000

Maruti Ciaz Diesel 25,000 25,000 25,000 25,000

Maruti Ri tz Petrol 10,000 15,000 25,000 20,000 20,000 40,000 15,000 20,000 35,000

Mahindra TUV3OO 25,000 15,000 40,000 30,000 25,000 55,000

Mahindra KUV1OO 10,000 25,000 35,000 10,000 25,000 35,000

Mahindra Scorpio 21,000 10,000 31,000 24,000 15,000 39,000 40,000 15,000 55,000

Mahindra XUV500 50,000 15,000 65,000 37,000 15,000 52,000

Tata Bolt 30,000 50,000 80,000 20,000 35,000 55,000 20,000 30,000 50,000

Tata Zest 20,000 20,000 40,000 15,000 25,000 40,000 20,000 25,000 45,000

Aug-16 Sep-16

Company Models

Sep-15

Source: Industry, Dealer interactions

PV discounts

PV discounts remain flat m-m

September 16, 2016 14 Friday, September 16, 2016

2Ws: Model-wise trends

September 16, 2016


Aug-16 Motorcycles Units Scooters Units

1 Splendor 229,061 Activa 280,790

2 HF Deluxe 127,752 Jupiter 51,728

3 Pass ion 77,581 Maestro 37,397

4 Glamour 74,693 Dio 35,479

5 CB Shine 63,606 Duet 28,364

6 CT 100 44,599 Access 24,904

7 Apache 35,832 Ray 20,782

8 Pulsar 150 33,815 Fascino 18,876

9 Class ic 350 32,971 Pleasure 15,254

10 Platina 29,163 Aviator 11,016

Source: SIAM

Two wheelers top 10 selling models

Hero MotoCorp dominates the Top10 list

HMCL dominates the top selling models, with 5 models in Top10. However it lost the

Numero Uno position to Honda Activa scooter. Consumer preference has been shifting

towards scooters and 3 of them feature in the Top10 list.

HMCL is launching 3 updated motorcycles before festive season which includes new

Achiever 150, Super Splendor and Passion PRO with i3S technology.

BJAUT plans to launch 2 more new motorcycles on ‘V’ platform, one in 2HFY16 and the

other in FY18.

TVS Moped reported strong sales of 75,435 units on account of launch of 100cc version,

and rural demand recovery.

Six motorcycles (4 economy and 2 executive) feature in the Top10 list. Going ahead, we

expect rural demand recovery to drive sales for entry/ executive motorcycles . Source: SIAM

Motorcycles and Scooters top 10 selling models

Model Units Model Units Model Units y-y chg m-m chg

1 Activa 280,790 Activa 217,819 Activa 256,173 - -

2 Splendor 229,061 Splendor 181,993 Splendor 197,760 - -

3 HF Deluxe 127,752 Pass ion 81,529 HF Deluxe 101,708 +1 -

4 Pass ion 77,581 HF Deluxe 80,871 Glamour 75,088 -1 +2

5 TVS Moped 75,435 CB Shine 63,590 TVS Moped 74,990 +2 -

6 Glamour 74,693 Glamour 55,944 Pass ion 63,229 - -2

7 CB Shine 63,606 TVS Moped 55,132 CB Shine 56,892 -2 -

8 Jupiter 51,728 Jupiter 46,614 Jupiter 46,557 - -

9 CT 100 44,599 CT 100 38,412 CT 100 41,301 - -

10 Maestro 37,397 Dream 37,530 Platina 33,384 +2 +2

RankAug 2016 Aug 2015 Jul 2016 Change in rankings


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5

Oct

-15

De

c-1

5

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

HF Deluxe/Dawn CT 100 Star City/Sport Platina Others

0

5

10

15

20

25

30

35

40

45

50

Ap

r-1

4

Jun-

14

Aug

-14

Oct

-14

Dec

-14

Feb-

15

Apr

-15

Jun-

15

Au

g-1

5

Oct

-15

Dec

-15

Feb-

16

Apr

-16

Jun-

16

Aug

-16

Splendor Passion Shine Glamour Others

(574) (258) (125) 29

928

(800)

(400)

0

400

800

1,200

Oth

ers

CT

10

0

Star

Cit

y/Sp

ort

Pla

tin

a

HF

De

luxe

/Daw

n

(530) (117)63

273 311

(800)

(400)

0

400

Pas

sio

n

Shin

e

Sple

nd

or

Gla

mo

ur

Oth

ers

Source: SIAM

Economy bikes: Hero ‘HF’ continue to dominate the segment with the share over 50%

Two wheelers: Category-wise market share trends

Source: SIAM

Source: SIAM

FY17 market share change (bps) in Economy bikes

Executive bikes: HMCL share flat m-m at 72%

Source: SIAM

FY17 market share change (bps) in Executive bikes


0

10

20

30

40

50

60

Ap

r-1

4

Jun

-14

Au

g-1

4

Oct

-14

De

c-1

4

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

De

c-1

5

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Pulsar RE Classic 350 Apache V15 Others

0

10

20

30

40

50

60

Ap

r-1

4

Jun

-14

Au

g-1

4

Oct

-14

De

c-1

4

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

De

c-1

5

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Activa Jupiter Maestro Duet Others

(982) (530) (118)124

1,058

(1,200)

(800)

(400)

0

400

800

1,200

Pu

lsar

Ap

ach

e

Oth

ers

RE

Cla

ssic

Ave

nge

r

(249) (219)(112) (31)

611

(400)

0

400

800

Mae

stro

Oth

ers

Act

iva

Jup

ite

r

Du

et

Source: SIAM

Premium bikes: BJAUT share stands at 40% from 36% in FY16, led by new launches

Two wheelers: Category-wise market share trends

Source: SIAM

Source: SIAM

FY17 market share change (bps) in Premium bikes

Scooters: Honda Activa share remains high at 50%

Source: SIAM

FY17 market share change (bps) in Scooters


YTDFY16 YTDFY17 y-y (%) YTDFY16 YTDFY17 y-y (%)

Hero Motocorp 2,355,021 2,523,874 7 304,370 11 2,526,210 2,828,244 12 Maestro, Edge

Honda 1,745,100 1,958,573 12 175,141 8 1,758,780 2,133,714 21 NAVI, Livo, CB Hornet

Bajaj 750,309 673,151 (10) 224,772 25 767,437 897,923 17 V15, Avenger

TVS 873,570 973,003 11 83,908 8 873,570 1,056,911 21 Victor

Royal Enfield 185,797 245,013 32 5,179 2 185,797 250,192 35 Himalayan

New productsCompanyExisting models FY17 new

product sales*

Contribution

to sales (%)

Total units

*Note: New models launched since Apr2015 have been taken; Variants have not been considered under new products Source: SIAM

OEMs with new products have witnessed positive growth

New products driving growth

New products are driving sales for OEMs, with contribution of 5-25% of sales for HMCL, Honda, BJAUT and TVSL. Sales growth is

improving led by new launches and recovery of rural demand.

New products viz., Hero Maestro (37,397), Hero Duet (28,364 units), Bajaj Avenger (23,519), Honda Livo (21,484), TVS Victor (19,323),

Yamaha Fascino (18,876), Bajaj V15 (17,427), Honda Navi (9,078), Honda CB Hornet (2,738), and RE Himalayan (1,468) have made their

mark in Aug16.

HMCL, TVSL and BJAUT has outpaced industry (26% growth) with 31%, 30% and 27% jump in Aug16, respectively on account of pre-festive

buildup and new products such as Splendor iSmart 110/Duet/Maestro Edge/Victor motorcycle/ 100cc moped/ Avenger variants/ Platina

Comfortec/V15.


Hero Achiever 150 Bajaj ‘V’ variants Hero Super Splendor iSmart

Bajaj Pulsar 400

Upcoming launches

TVS Apache RTR 300 Hero Passion PRO iSmart


Valuation summary

Valuation summary

Note: prices as of 16 September 2016; AL, BIL, BJAUT, ESC, HMCL, MSIL, NRB and TVSL estimates are Standalone, MM estimates are standalone and MVML; Eicher Motors/SKF numbers had YE December till CY14, which changed to YE March from FY16. Source: quant Global Research estimates

Market cap CMP* Px target

(Rsbn) (Rs) (Rs) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E

Baja j Auto ACCUMULATE 860 2,972 3,138 135.8 150.6 171.7 21.9 19.7 17.3 17.6 14.3 12.9 34.2 33.0 32.8 47.0 44.9 44.8

Hero MotoCorp BUY 717 3,590 3,781 158.3 175.0 199.0 22.7 20.5 18.0 15.3 13.9 12.2 43.6 40.4 39.1 60.7 55.6 54.3

TVS Motor ACCUMULATE 155 326 295 9.2 13.3 18.4 35.4 24.5 17.7 21.7 15.0 11.3 24.4 29.6 33.2 21.7 29.5 35.5

Eicher Motors REDUCE 612 22,540 21,615 469.2 625.4 767.4 48.0 36.0 29.4 24.7 20.0 15.9 34.2 41.4 37.5 37.7 48.5 46.7

Maruti Suzuki ACCUMULATE 1,620 5,364 4,670 151.3 212.9 233.5 35.4 25.2 23.0 18.0 15.9 14.5 18.0 21.9 20.7 25.4 29.8 28.2

Tata Motors BUY 1,800 561 583 38.7 45.7 52.3 14.5 12.3 10.7 5.4 4.5 4.0 19.2 17.5 17.0 14.8 16.2 16.7

Ashok Leyland ACCUMULATE 240 84 104 3.9 4.7 5.5 21.6 18.0 15.4 11.7 9.7 8.3 20.9 22.3 22.2 21.4 25.3 26.7

M&M BUY 877 1,412 1,570 53.0 65.5 77.7 26.6 21.5 18.2 16.7 13.8 11.8 15.6 17.0 17.7 18.7 20.7 21.8

Ba lkrishna Industries REDUCE 85 884 701 58.7 64.1 70.1 15.1 13.8 12.6 9.4 8.2 6.8 22.3 20.2 18.5 19.2 22.1 22.6

Bharat Forge ACCUMULATE 200 861 813 28.3 27.2 41.3 30.5 31.7 20.9 15.3 15.6 11.2 18.7 16.7 22.2 18.5 16.7 22.9

SKF India ACCUMULATE 75 1,428 1,434 48.8 48.9 57.3 29.3 29.2 24.9 18.8 18.3 15.1 13.8 15.5 16.3 21.3 23.7 24.7

Wabco India REDUCE 118 6,203 6,373 120.6 150.4 182.1 51.4 41.2 34.1 35.8 27.5 22.6 23.9 24.1 23.6 30.4 32.8 32.2

SML Isuzu REDUCE 19 1,304 1,263 35.3 58.6 78.9 36.9 22.2 16.5 21.5 14.2 10.9 15.9 22.9 25.7 20.2 27.2 30.3

Supraji t Engineering BUY 26 195 203 5.9 7.9 10.1 32.9 24.6 19.2 17.4 13.4 10.8 22.6 21.4 23.1 26.0 27.6 33.9

NRB Bearings BUY 13 131 138 5.0 6.6 8.6 26.3 19.8 15.1 14.7 11.5 9.3 16.8 19.9 22.6 13.4 17.3 21.1

Escorts BUY 43 353 376 12.7 22.0 32.8 27.8 16.0 10.8 27.8 15.7 10.2 5.7 9.3 12.7 6.9 11.6 16.3

ROCE (%)Rating

EPS (Rs) P/E (x) EV/EBITDA (x) ROE (%)


Disclaimer

DISCLOSURES AND DISCLAIMER

quant Broking Private Limited, Mumbai, India (Hereinafter referred to as “QBPL”) is Registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited (Formerly know as MCX Stock Exchange). QBPL is also registered as Depository Participant with NSDL. QBPL has applied for Registration to SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014. QBPL or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market.

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“We, Raghunandhan NL and Mumuksh Mandlesha, Research Analyst hereby certify that all of the views expressed in this Research Report accurately reflect their personal views about all of the issuers and their securities and no part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research report.”

As per the declarations given by the Research Analyst(s) and/or any of his family members do not serve as an officer, director or any way connected to the company/companies mentioned in this report. Further, as declared by him/them, he/they has/have not received any compensation from the above companies in the preceding twelve months. He/they do not hold any shares by him/them or through his or their relatives. Our entire research professionals are our employees and are paid a salary. They do not have any other material conflict of interest of the Research Analyst or member of which the Research Analyst knows of has reason to know at the time of publication of the research report or at the time of the public appearance.

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This Research Report (hereinafter called “Report”) is meant solely for use by the recipient and is not for circulation. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Similarly, this document does not have regard to the specific investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities discussed in this report may not be suitable for all investors. This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This document does not solicit any action based on the material contained herein.

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RATINGS AND OTHER DEFINITIONS

STOCK RATING SYSTEM SECTOR RATING SYSTEM

BUY. We expect the stock to del iver >15% absolute returns . Overweight. We expect the sector to relatively outperform the Sensex.

ACCUMULATE. We expect the stock to del iver 6-15% absolute returns . Underweight. We expect the sector to relatively underperform the Sensex.

REDUCE. We expect the stock to del iver +5% to -5% absolute returns . Neutral. We expect the sector to relatively perform in l ine with the Sensex.

SELL. We expect the stock to del iver negative absolute returns of >5%.

Not Rated (NR). We have no investment opinion on the stock.


Disclaimer

Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company. This information is subject to change without any prior notice. QBPL or any of its affiliates/group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. QBPL is committed to providing independent and transparent recommendation to its clients. Neither QBPL nor any of its affiliates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including loss of revenue or lost profits that may arise from or in connection with the use of the information. The information given in this report is as of the date of this report and there can be no assurance that future results or events will be consistent with this information.

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Title

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Thank you

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a rising tide lifts all boats; auto sales jump ahead of festive season

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