MotoGaze June 2016

June 24, 2016

Sector View

Growth sustains in May!!!

Equal weight

Volume performance
Company
Hero Motocorp
Bajaj Auto
TVS Motors
Maruti Suzuki
Tata Motors
Mahindra and Mahindra
Ashok Leyland

Gr.

YoY(%)
2.3
0.5
13.0
7.1
1.5
10.8
6.3

Key players & industry volume growth May16 (%)

Industry
-4.8
HMCL

0.2

BAL

0.5

7.8

YoY gr

2.3
5.2
7.2

TVS
HMSI

18.8
7.1

1.5
1.7

M&M
-2.9
-2.3
Hyundai

13.0

1.2

-2.8
Maruti
TML

MoM gr

Activa in 2-W space & Vitara Brezza in PV space outshines!

10.8
1.2

ALL
-3.0

6.3

Source: Siam

Key players & industry volume growth YTDFY17 (%)

11.1

Industry
HMCL

YTD gr

8.4

BAL -0.7
TVS

16.1

HMSI

22.5

Maruti
TML

10.2
5.0
12.4

M&M
Hyundai

3.4

ALL

Overall volume growth in May 2016 came in at 7.8% YoY though it was
moderate sequentially. Major companies across categories posted
positive volume growth during the month. Overall growth was largely
driven by the 2-W space, which registered volume growth of 8.7% YoY.
Motorcycle growth continued to remain muted, up 2.3% YoY but scooter
volumes registered robust volume growth of 26.8% YoY. In the 2-W
space, HMSI posted robust growth of 18.8% YoY. PV growth took a
breather, up 5.2% YoY, after de-growth of 3.1% YoY in the car segment
was offset by strong growth of 41.9% YoY in the UV segment. MSIL, the
market leader, volumes (up 7.1% YoY) continued to outpace PV industry
growth. Volume of overall CV segment was up 15.1% YoY, driven by both
M&HCV and LCV sales, up 22.3% YoY, 10.3% YoY, respectively. A gradual
demand recovery on a low base & expectation of better monsoons lifted
domestic tractor volumes, which were up ~15% YoY. However, 3-W was
the only segment that posted de-growth of 9.9% YoY, mainly on the back
of weak exports. Growth in domestic 3-W (up 27.3% YoY) was largely
offset by a steep decline in volumes (down 44.9% YoY) in the export
market. Estimates by various departments/agencies suggest that
monsoons are likely to be above normal in 2016, which is positive for rural
areas. Thus, we believe the ongoing urban driven demand would be
additionally lifted by higher rural sales, going forward, helping the overall
auto consumption, benefiting the sector.

13.2

Source: Siam

For May 2016, Hondas Activa became the highest selling 2-W, registering
volumes of 237,317 units overtaking HMCLs Splendor substantially
(volumes at 207,010 units). MSIL continue to dominate in the PV space,
with its seven models in the list of top 10 selling models. Good consumer
response has led MSILs Vitara Brezza to clock robust volume of 7,193
units and is the second best selling UV (after Toyotas Innova). It is in the
tenth position in terms of highest selling PV models in India.

Industry growth = Launches + improved sentiment + Pay Commission

With expectations of an improvement in demand sentiments, we expect
the overall industry to grow 6-8% YoY in FY17E. We believe the PV space
will grow 8-10% YoY. Strong growth momentum in M&HCV volumes is
likely to continue (expect 16-17% YoY growth) while the LCV segment is
expected to recover in FY17E. The 2-W segment is likely to grow 5-7%
YoY, mainly led by growth in the scooter segment. Tractor industry
volumes are expected to grow 14-16% in FY17E, assuming above normal
monsoons and a gradual recovery due to a low base. On a longer term
basis, we remain positive on the growth prospects of the industry with a
rise in incomes augmenting auto penetration levels in the country in
addition to other favourable factors like lower interest rate & good
monsoons. We believe the auto industry will witness a demand recovery
mainly on the back of new launches & refreshes across segments. The
sector is expected to see the positive impact of the Pay Commission that
will incrementally boost PV volumes by ~16% in the next two years.

Research Analyst
Nishit Zota
nishit.zota@icicisecurities.com
Vidrum Mehta
vidrum.mehta@icicisecurities.com

ICICI Securities Ltd. | Retail Equity Research

For May 2016, the BSE Auto Index performance was largely in line with
the benchmark index as both were up ~4.2%. Among our I-direct auto
coverage, we remain bullish on frontline OEM stocks like Eicher Motors,
Tata Motors and M&M. However, with the favourable impact of operating
leverage due to increased demand as well as lower raw material prices,
the earnings growth trajectory for ancillary stocks is likely to remain on the
uptrend.

Two & three wheeler industry

May 2016 witnessed decent volume growth for the 2W space, supported
by the marriage season and primary signs of a rural demand recovery (on
expectations of better monsoons). Overall 2-W volumes were up 8.7%
YoY. Volume growth of scooters continued to outpace the motorcycle
segment, up 26.8% YoY to 479,044 units. All major players in the scooter
space (HMCL, HMSI, TVS & India Yamaha) posted robust growth during
the month. The motorcycle volume grew 2.2% YoY. The market leader
HMCL motorcycle volume declined marginally 0.8% YoY while HMSI &
BAL volumes grew 6.5% YoY & 1.8% YoY, respectively. The moped
segment (driven by TVS Motors) reported strong growth of 17.4% YoY to
76,401 units.
The 3-W volumes declined 9.9% YoY to 67,805 units, as domestic growth
of 27.3% YoY was offset by 44.9%YoY de-growth in the export market.
The 3-W export market continues to remain challenging, for players.

Market share movement

According to data released by the Society of Indian Automobile
Manufacturers (Siam), the domestic market share of two and threewheeler players as of May 2016 is mentioned below.
The 2-W segment reported decent growth in May 2016;

Exhibit 1: Domestic market share movement in two-wheelers

45

mainly on some signs of a demand revival in rural areas

40.7

May-15

38.5 38.0

40

Apr-16

May-16

35
30
25.6

26.5 27.0

(%)

25
20
15

12.7 12.7 13.2

12.4 12.8 12.4

8.7

10

9.5

9.5

5
0
Bajaj Auto

Hero MotoCorp

TVS Motors

HMSI

Others

Source: Siam, Data used is YTD

Exhibit 2: Domestic market share movement in three-wheelers

In May 2016, domestic 3W volumes grew 27.3% YoY.
Market leader BAL reported domestic volume growth of

May-15

8.2
6.1

Others

Apr-16

May-16

11.5

53% YoY, thereby gaining substantial market share

8.4
8.4

M&M

10.8
28.4
28.0

Piaggio

34.2
55.0
57.6

Bajaj Auto
43.5
0

10

20

30

40

50

60

70

(%)

Source: Siam, Data used is YTD

ICICI Securities Ltd. | Retail Equity Research

Page 2

The domestic motorcycle segment witnessed some signs

Exhibit 3: Domestic market share movement in motorcycles

of a demand recovery, with volumes up 2.2% YoY in May

60

53.3

2016. Hero MotoCorp maintained its leadership position

though it faced stiff competition from its peers resulting in

May-15

Apr-16

May-16

50.4 50.6

50

a decline in market share of 270 bps to 50.6%

(%)

40
30
20

18.0 19.6 18.9

14.7 14.7 14.8

6.3 6.8 7.1

10
0
Bajaj Auto

Hero Motocorp

TVS motor

Honda

Source: Company, ICICIdirect.com Research

The domestic scooter segment continued to outperform the

Exhibit 4: Domestic market share movement in scooters/scooterettes

motorcycle segment witnessing growth of 26.8% YoY for

May-15

70

May 2016. Market leader HMSI largely maintained its

leadership position with share of 57.6%. New launches by

Apr-16

58.3

60

HMCL lifted its market share on a YoY basis, up ~120 bps

MoM to 16.3%

May-16

56.2 57.6

50

(%)

40
30
20

15.1

17.8 16.3

14.0 12.9 12.9

12.6 13.0 13.2

10
0
Hero Motocorp

TVS Motors

Honda

Others

Source: Siam, Data used is YTD

ICICI Securities Ltd. | Retail Equity Research

Page 3

Exhibit 5: Market share movement in executive motorcycle (<125 cc) segment*

70

segment (<=125 cc) in India with a market share of ~59%.

20
58.8

60

The launch of Victor GLX helped TVS gain some market

share, which is at 7.7%

16

14.7

50

12

(%)

40
7.7

30

(%)

HMCL continues to dominate the executive motorcycle

20
4

18.9

10

0
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16

Bajaj Auto (RHS)

Hero Motocorp (LHS)

TVS (RHS)

HMSI (RHS)

Source: Siam * only top 4 two-wheeler OEMs

Exhibit 6: Market share movement in motorcycle greater than 125 cc segment

90

79.1

80

25

70
60
(%)

30

16.5

50
15.5

40

20
15
10

30
20

10

4.4

Bajaj Auto (LHS)

Hero Motocorp (RHS)

TVS (RHS)

Apr-16

May-16

Feb-16

Mar-16

Jan-16

Dec-15

Oct-15

Nov-15

Sep-15

Jul-15

Aug-15

Jun-15

Apr-15

May-15

Feb-15

Mar-15

Jan-15

Dec-14

Oct-14

Nov-14

Sep-14

Jul-14

Aug-14

Jun-14

May-14

HMSI (RHS)

Source: Siam *only top three vehicle two-wheeler OEMs

ICICI Securities Ltd. | Retail Equity Research

Page 4

(%)

BAL continues to dominate the executive motorcycle

segment (<=125 cc) in India with market share at 79%

Hero MotoCorp (HERHON)

Hero MotoCorp: Sales volumes

108
93 94 93 93

500

200

53

59

Hero MotoCorps volumes were up 2.3% YoY at 583,117 units,

partly driven by marriage season and pre-signs of a rural demand
recovery (rural accounts for ~50% of its total volumes). We
believe new product launches/refreshes remain key for HMCL to
improve its volumes, thereby gaining market share, going ahead

The motorcycle segment at ~5.1 lakh units declined 0.7% YoY.

New product launches in the past helped scooter volumes to
increase 32% YoY to 69,512 units. The newly launched Duet
clocked strong volumes of 33,637 units. However, some of this
was offset after volumes of Pleasure & Maestro declined 42.3%
YoY & 27.5% YoY to 8,864 units & 27,011 units, respectively

Export volumes grew 53% YoY to 15,262 units, largely on the back
of exports of HF Deluxe & Splendor. The management continues
to focus on exports market. It is likely to expand its global footprint
by entering ~50 markets with the target of sales of 12 million units
(~10% of total volume) by FY20E

100

86

72

70

53

517
484
433
427
542
531
478
406
470
458
513
527
514

('000s)

400
300

65

54

120

80
60

('000s)

600

40
20

100

0
May-16

Mar-16

Jan-16

Nov'15

Sep'15

May'15

Jul'15

Motorcycles

Scooters

Source: Siam, ICICIdirect.com Research

Exhibit 7: Volume performance (in units)

Segment
Motorcycles
Scooters
Total Sales
Export(inc. above)
Exports (% of sales)

May-16
513,605
69,512
583,117
15,262
2.6

May-15
517,228
52,648
569,876
9,978
1.8

%chg
-0.7
32.0
2.3
53.0
87 bps

Apr-16
526,735
86,004
612,739
12,214
2.0

%chg
-2.5
-19.2
-4.8
25.0
62 bps

YTD'17
1,040,340
155,516
1,195,856
27,476
2.3

YTD'16
992,924
110,257
1,103,181
18,218
1.7

%chg
4.8
41.0
8.4
50.8
65 bps

Source: Company, Siam

Bajaj Auto (BAAUTO)

Bajaj Auto: Sales volumes

53
50
45

50

The management has guided that June & July are likely to be soft
for both domestic & export market. However, on the back of new
products & focus on the economy and premium segments it
expects demand to recover in FY17E

30

307
May-16

Mar-16

Jan-16

Sep'15

Jul'15

May'15

Nov'15

Three-Wheelers

4140
35

33
31

Two-Wheelers

Overall 3-W volumes declined 8.7% YoY, mainly after strong

growth of 53.1% YoY on domestic volumes that was largely offset
by export volumes, which declined 44.3% YoY. Volumes in
Nigeria were at 21,000 units (vs. earlier run-rate of 40,000 units)

(%)
36

292

264

235

253

36

248

309

271

330

290

282

302

100

45

200
150

Bajaj Autos (BAL) total 2-W volumes were up 1.8% YoY; primarily
led by domestic volumes, which were up 9.4% YoY. BAL has seen
a good improvement gradually with market share up from 16.5%
in March 2015 to the current 18.9%. Volumes of Discover were at
15,411 units vs.13,344 YoY. The newly launched Avenger & V 15
boosted its volumes, which were at 18,732 units & 31,859 units in
May 2016

40

38
44

41

41

39

45

250

50

44

54
52

47

48

44

46

288

('000s)

300

44

350

50

37

400

55

41

450

% exports

Source: Siam, ICICIdirect.com Research

Exhibit 8: Volume performance (in units)

Segment
Total 2-wheeler sales
2W exports
2W domestic sales
Total 3-wheeler sales
3W exports
3w domestic sales
Total Sales
Total Domestic Sales
Total Exports
Exports as % of sales
Source: Company, Siam

ICICI Securities Ltd. | Retail Equity Research

May-16
307,344
127,522
179,822
39,791
15,379
24,412
347,135
204,234
142,901
41.2

May-15
%chg
301,862
1.8
131,194
-2.8
170,668
5.4
43,576
-8.7
27,630
-44.3
15,946
53.1
345,438
0.5
186,614
9.4
158,824
-10.0
46.0 -481 bps

Apr-16
291,898
91,465
200,433
37,999
12,299
25,700
329,897
226,133
103,764
31.5

%chg
5.3
39.4
-10.3
4.7
25.0
-5.0
5.2
-9.7
37.7
971 bps

YTD'17
599,242
218,987
380,255
77,790
27,678
50,112
677,032
430,367
246,665
36.4

YTD'16
%chg
587,653
2.0
256,431
-14.6
331,222
14.8
94,059
-17.3
63,991
-56.7
30,068
66.7
681,712
-0.7
361,290
19.1
320,422
-23.0
47.0 -1057 bps

Page 5

TVS Motors (TVSSUZ)

TVS Motors: Sales volumes

TVS volumes (2-W+3-W) for May 2016, at ~2.4 lakh units, were
up 10.8% YoY. The 2-W volumes grew 13% YoY while 3-W
volumes declined 40.9% YoY for May 2016

Motorcycle segment volumes grew 5.6% YoY to 91,344 units

mainly driven by Apache (volumes up 11% YoY). Its newly
launched Victor GLX came in at 19,216 units supplemented the
growth. However, the same was partially offset by volumes of Star
City & Phoenix, which declined 31.1% YoY & 78.1% YoY. Scooter
segment reported growth of 20.2% YoY, driven by Jupiter & Pep+
volumes up 37.5% YoY & 31.1% YoY, respectively. Moped
volumes were up 17.4% YoY to 76,401 units

Overall export (14.9% of sales) volumes declined 14.9% YoY to

35,545 units. This was particularly after volumes of 3-W exports
declined 50.4% YoY to 4,111 units

300

65
96

76

72
68
87

69

67
67
77

63

55
63

90

58
65

83

76

91
82

50

106

100

71

55
75
90

150

60

57
73
87

61

61
70

61

77

65
54
91

89

(%)

200

77

250

Motorcycles

Scooters

May-16

Mar-16

Jan-16

Nov '15

Sep'15

Jul'15

May'15

Mopeds

Source: Siam, ICICIdirect.com Research

Exhibit 9: Volume performance (in units)

Segment
Motorcycles
Scooters
Mopeds
Total 2-W Sales
3-Wheelers
Total Sales
Exports(incl. in above)
Exports as % of sales
Domestice sales

May-16
96,485
65,434
76,401
238,320
5,463
243,783
35,545
14.9
208,238

May-15
91,344
54,426
65,073
210,843
9,236
220,079
43,595
20.7
176,484

%chg
5.6
20.2
17.4
13.0
-40.9
10.8
-18.5
18.0

Apr-16
90,491
63,341
68,518
222,350
4,746
227,096
28,354
12.8
198,742

%chg
6.6
3.3
11.5
7.2
15.1
7.3
25.4
4.8

YTD'17
186,976
128,775
144,919
460,670
10,209
470,879
63,899
13.9
406,980

YTD'16
166,297
103,801
126,786
396,884
19,132
416,016
76,021
19.2
339,995

%chg
12.4
24.1
14.3
16.1
-46.6
13.2
-15.9
19.7

Source: Company, Siam

Honda Motorcycles & Scooters India (HMSI)

HMSI: Motorcycles & scooter sales volumes

HMSIs May 2016 overall volumes were up 18.8% YoY to 436,358

units led by strong growth in scooter segment volume up 24.7%
YoY to 268,423 units respectively. This further helped HMSI to
expand its 2-W market share by 140bps YoY to 27%

Motorcycle volumes have seen an improvement after being

subdued in the past. This was primarily led by strong growth in
volumes of its newly launched LIVO, CB Shine SP, CB Hornet 160R
volumes were at 22,095 units, 14,040 units and 10,308 units,
respectively. However, volumes of CB Shine & Dream declined,
partially offsetting gains. The scooter segment grew 24.7% YoY,
led by 26.9% YoY & 13.1% YoY growth in Activa and Aviator. Its
newly launched NAVI clocked volumes of 4,422 units

Export volumes grew 48.4% YoY to 20,456 units, primarily led by

growth in the scooter segment. With HMSIs focus more on
domestic markets, the export segment remains a small part of the
companys volume pie contributing 4.7% of total volumes

450
400

268

272
241
129

245

236

208
99

126

208
104

264

270

257

147

200

268

215

227

138

250

121

('000s)

300

139

350

147

159

121

50

162

100

121

150

Motorcycles

May-16

Mar-16

Jan-16

Nov'15

Sep'15

Jul'15

May'15

Scooters

Source: Siam, ICICIdirect.com Research

Exhibit 10: Volume performance (in units)

Segment
Motorcycles
Scooters
Total Sales
Exports(incl.above)
Exports as % of sales
Domestice sales

May-16
147,479
268,423
436,358
20,456
4.7
415,902

May-15
138,140
215,300
367,226
13,786
3.8
353,440

%chg
6.8
24.7
18.8
48.4
93 bps
17.7

Apr-16
158,956
272,119
431,075
17,040
4.0
414,035

%chg
-7.2
-1.4
1.2
20.0
73 bps
0.5

YTD'17
306,435
540,542
867,433
37,496
4.3
829,937

YTD'16
269,431
413,101
708,017
25,485
3.6
682,532

Source: Company, Siam

ICICI Securities Ltd. | Retail Equity Research

Page 6

%chg
13.7
30.8
22.5
47.1
72 bps
21.6

Four-wheeler industry
The overall passenger vehicles segment for May 2016 took a breather as
volumes registered growth of 5.16% YoY to 283,162 units. The domestic
PV space was up 6.3% YoY while exports volumes reported marginal
growth of 0.5% YoY. Within the overall PV space, three sub-segments viz.
cars & vans reported volume de-growth of 3.1% YoY & 2.4% YoY,
respectively. However, on the other hand, utility vehicles (UVs) reported
strong volume growth of 41.9% YoY. Market leader, MSIL, outperformed
the PV space, with overall volumes up 7.1% YoY.
For May 2016, utility vehicle (UV) volumes were up 41.9% YoY to 70,126
units, outperforming the overall PV market. The UV1 sub-segment
registered growth of 67.7% YoY to 48,432 units, mainly driven by new
product launches (Hyundais Creta volumes at 8,414 units, Maruti Suzukis
S-Cross & Vitara Brezza volumes at 2,108 units & 7,193 units, respectively
and M&Ms TUV300 & KUV100 volumes at 1,927 units & 4,706 units,
respectively, for May 2016). Volumes in the UV2 segment grew 9.9% YoY
to 20,244 units, mainly due to Toyotas (Innova volume up 44.4% YoY to
7,259 units) & Honda Cars (new BR-V volumes stood at 2,344 units).
The commercial vehicles segment witnessed growth of 15.1% YoY to
66,239 units. The M&HCV segment grew 22.3% YoY to 28,433 units,
driven by growth in market leaders like Tata Motors and Ashok Leyland.
The LCV segment continued to witness some kind of strength over the
past couple of months, registering volume growth of 10.3% YoY to 37,806
units, supported by decent growth in M&M and Tata Motors LCV volumes.

Market share movement

According to Siam, the domestic market share for passenger vehicles (PV)
and commercial vehicles (CV) in May 2016 was as follows:
Exhibit 11: Domestic market share movement in passenger vehicles
New product launches helped the top two passenger

19.2
18.9
20.1

Others

vehicle players in India. MSIL (continues to dominate the

passenger vehicle segment) and Hyundais market share
respectively. A positive consumer response to M&Ms
TUV300 & KUV100 has helped the company to increase its

Apr-16

May-16

1.0
0.9
1.5

GM

improved by ~20 bps MoM to ~48.6% & 17.7%,

May-15

8.9
9.4
8.6

M&M

market share by ~30 bps YoY to 8.9%

4.6
5.1
5.7

Tata Motors

17.7
17.5
17.4

Hyundai

48.6
48.4
46.6

Maruti
0

10

20

(%)

30

40

50

60

Source: Siam, Data used is YTD * passenger vehicles as per Siam include Vans like Gio, Maxximo, Eeco, Ace

ICICI Securities Ltd. | Retail Equity Research

Page 7

Exhibit 12: Market share movement in A2 segment

The A2 segment is the bread & butter category of the

80

passenger car segment. The segment growth has

70

moderated over the last couple of months owing to a lack

60

of options among diesel variants

63.8

61.2

50
33.3

(%)

40

31.2

30
20
10

Hyundai

Apr-16

May-16

Feb-16

Mar-16

Jan-16

Dec-15

Oct-15

Nov-15

Sep-15

Jul-15

Aug-15

Jun-15

Apr-15

May-15

Mar-15

Feb-15

Jan-15

Dec-14

Oct-14

Nov-14

Sep-14

Jul-14

Aug-14

Jun-14

May-14

Maruti

Source: Siam, Top two PV OEMs considered

The M&HCV segment continued to show growth traction,

Exhibit 13: Domestic market share movement in commercial vehicles

up 22.3% YoY in May 2016. On the other hand, LCV also

witnessed a demand recovery in the past couple of

May-15

50

months, with volumes up 10.3% YoY. Thus, overall growth

Apr-16

May-16

44.8

45

for the CV segment came in at 15.1% YoY

43.4 44.7

40
35

(%)

30

24.0 24.0 23.5

25
16.5 17.7 16.7

20

14.7 14.9 15.2

15
10
5
0
ALL

M&M

Tata Motors

Others

Source: Siam Data used is YTD

The M&HCV segment witnessed strong volume growth in

Exhibit 14: Segmental share in CVs

May 2016 leading the MHCV/LCV ratio to come in at 43:57

70 64.6

against 41:59 in May 2015. For September 2015, the ratio

60

was at 48:52, more tilted towards M&HCV, as the industry

57.1

50

witnessed some pre-buying due to implementation of ABS

from October 1, 2015

42.9

(%)

40 35.4
30
20
10

M&HCV

LCV

Source: Siam

ICICI Securities Ltd. | Retail Equity Research

Page 8

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Oct-15

Nov-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Oct-14

Sep-14

Aug-14

Jul-14

Jun-14

May-14

Tata Motors: Domestic sales volume

Tata Motors (TELCO)

60

Tata Motors standalone volumes grew 1.5% YoY to 40,071 units.

The growth was largely seen in the CV segment, which was offset
by de-growth in the PV and export for May 2016

Domestic M&HCV volumes grew 23.4% YoY while LCV volumes

witnessed demand recovery, up 6.4% YoY. The domestic car
segment declined 15.1% YoY, mainly due to a decline in volume
of its Indica and Indigo CS. However, partially the same was offset
by its newly launched Tiago registering volume of 3,287 units

JLRs wholesale volumes were up 18.8% YoY at 46,204 units.

Jaguar volumes were up 69.3% YoY to 12,442 units, driven by XE
volumes ~3,200 units & F-Pace volumes at ~3,100 units. Land
Rover volumes increased 7.1% YoY to 33,762 units, mainly driven
by Discovery Sport. In terms of region, the UK, Europe & Chinese
market registered strong growth of >20% YoY while volume
growth moderated in North America up ~8% YoY

31.2

8.8

8.9
28.6

10.8

11.4
44.1

35.3

8.3

11.1
36.0

31.7

10.6

13.2
30.3

28.3

11.9

10.7

10.7

12.3
33.0

28.8

10

29.5

20

29.5

(000's)

30

28.2

40

11.3

50

CV Sales

May-16

Mar-16

Jan-16

Nov'15

Sep'15

Jul'15

May'15

PV Sales

Source: Company, ICICIdirect.com Research

Jaguar Land Rover sales volume

20

Exhibit 15: Volume performance (in units)

Segment
Domestic MHCV
Domestic LCV
Domestic Pass.Car Sa
Domestic UV
Exports
Total Sales
Jaguar
Landrover
Total JLR Sales
Source: Company, Siam

Apr'15
May'15
Jun'15
Jul'15
Aug'15
Sept'15
Oct'15
Nov'15
Dec'15
Jan'16
Feb'16
Mar'16
Apr'16
May'16

55
50
45
40
35
30
25
20
15
10

(000's)

40

40.9
46.2

60

51.1
48.5
51.0
51.0
45.5
52.3

80
40.7
38.9
34.9
32.6
33.1

(% share of total volumes)

100

% Jaguar

% LR

JLR total volumes(RHS)

Source: Company, ICICIdirect.com Research

12

10.9

120

10

May-16

Mar-16

Jan-16

Nov'15

Sep'15

0
Jul'15

0
May'15

Source: Siam, ICICIdirect.com Research

%chg
14.3
1.9
-14.5
-40.2
17.0
1.7
35.4
6.4
12.9

YTD'17
24,954
27,174
16,893
2,219
8,213
79,453
21,630
65,507
87,137

YTD'16
20,967
24,905
18,101
3,204
8,464
75,641
14,115
65,429
79,544

%chg
19.0
9.1
-6.7
-30.7
-3.0
5.0
53.2
0.1
9.5

Domestic volumes grew 10.6% YoY to 113,162 units. Stiff

competition in the mini car segment (Alto and WagonR) impacted
its volumes, down 5.6% YoY. Its compact car segment (Ritz, Swift,
Baleno, Celerio, & DZire) grew 11% YoY. Surprisingly, volumes of
DZire Tour (used for cabs & fleet operators) were down 19.9% YoY
at 2,555 units. Total volumes of S-Cross & Baleno were at 2,108
units & 14,450 units, respectively. Newly launched Vitara Brezza
clocked strong volume of 7,193 units

Export volumes declined 20.8% YoY to 9,872 units, with its share
declining to 8% of total sales vs. 10.9% in May 2015

20

Total Sales

Apr-16
11,642
13,460
9,106
1,389
3,785
39,382
9,188
31,745
40,933

Maruti Suzukis volumes for May 2016 grew 7.1% YoY to 123,034
units, outperforming the PV space (up 5.1% YoY)

Export %

(%)

80

40

%chg
23.4
6.4
-15.1
-57.7
-5.3
1.5
69.3
7.1
18.8

8.08
115
115
122
118
114
134
121
119
114
117
129
127
123

('000s)

100

60

May-15
10,788
12,892
9,176
1,962
4,678
39,496
7,347
31,532
38,879

Maruti Suzuki India (MARUTI)

Maruti Suzuki India: sales volumes

140

May-16
13,312
13,714
7,787
830
4,428
40,071
12,442
33,762
46,204

Exhibit 16: Volume performance (in units)

Segment
Omni, Eeco,Versa
Swift,Ritz, Celerio,
Dzire,Baleno
SX4, Swift Dzire Tour,
Ciaz
Total Passengers
Gypsy, Vitara,Ertiga,Brezza
Total Domestic
Exports
Total Sales
Exports as % of sales

May-16
12,164

May-15
11,602

%chg
4.8

Apr-16
14,520

%chg
-16.2

YTD'17
26,684

YTD'16
23,671

%chg
12.7

79,659

76,988

3.5

77,606

2.6

157,265

154,688

1.7

7,743
99,566
13,596
113,162
9,872
123,034
8.0

8,202
96,792
5,567
102,359
12,466
114,825
10.9

-5.6
2.9
144.2
10.6
-20.8
7.1

8,875
101,001
16,044
117,045
9,524
126,569
7.5

-12.8
-1.4
-15.3
-3.3
3.7
-2.8

16,618
200,567
29,640
230,207
19,396
249,603
7.8

14,690
193,049
10,019
203,068
23,505
226,573
10.4

13.1
3.9
195.8
13.4
-17.5
10.2

Source: Company, Siam.

ICICI Securities Ltd. | Retail Equity Research

Page 9

Ashok Leyland (ASHLEY)

Ashok Leyland (ALL) took a breather in May 2016 as volume

growth moderated to 6.3% YoY to 9,875 units vs. >15% growth in
the past. The M&HCV segment volumes moderated and were up
8.4% YoY to 7,469 units. The LCV segment of ALL remained
largely flat, up 0.2% YoY to 2,406 units

The M&HCV goods segments volumes registered growth of 16.2%

YoY to 5,706 units. However, growth was partially offset by degrowth in volumes of M&HCV passenger segments, which
declined 10.8% YoY to 1,763 units

Overall exports declined 16.5% YoY to 905 units, with overall

volume share at 9.2% vs. 11.7% in May 2015

2.3
2.4

2.6

May-16

Apr-16

7.9
7.5

13.2

10.8
Feb-16

11.2

M&HCV

Mar-16

9.7
Dec'15

Jan-16

2.6

2.7

7.2

6.3

Oct'15

Nov'15

12.1
Sep'15

8.9

2.7

2.5

2.6
2.6

2.2
8.8
Jul'15

Aug'15

Jun'15

2.4
8.0

2.4
6.9
May'15

(000's)

18
16
14
12
10
8
6
4
2
0

3.5

Ashok Leyland: Total sales

LCV

Exhibit 17: Volume performance (in units)

Source: Siam, ICICIdirect.com Research

Segment
M&HCV Passenger
M&HCV Goods
LCV
Passenger Vehicles
Total Sales
Exports
Exports as % of sales
Source: Company, Siam

May-16
1,763
5,706
2,406
9,875
905
9.2

May-15
1,976
4,912

%chg
-10.8
16.2
0.2
NA
6.3
-16.5

2,400
2
9,290
1,084
11.7

Apr-16
1,688
6,181

%chg
4.4
-7.7

2,313
0
10,182
668
6.6

4.0
NA
-3.0
35.5

YTD'17
3,451
11,887
4,719
20,057
1,573
7.8

YTD'16 %chg
3,159
9.2
10,278
15.7
4,260
10.8
28 -100.0
17,725
13.2
2,130
-26.2
12.0

Mahindra and Mahindra (MAHMAH)

Mahindra and Mahindra: Sales volume

41.9
40.7

44.0

37.9

35.6

35

34.7

36.7

40

36.1

(000's)

45

41.6

42.8

50

43.8

51.4

55

M&Ms overall automotive volumes were up 10.8% YoY to 40,656

units. Its core UV segment (including exports) grew 9.8% YoY
supported by its new launches (TUV300 & KUV100). However, the
same was below industry volumes growth at 41.9% YoY

The newly launched TUV300 & KUV100 clocked volumes of 1,927

units and 4,706 units, respectively. However, growth in new
launches was offset by the existing by Bolero, Thar and XUV5O0.
New launches and facelifts continue to hold the key for M&M in
the extremely competitive space

M&Ms tractor volumes grew 19.5% YoY to 23,018 units, mainly

on account of the low base and pent-up demand. Domestic tractor
volumes were up 21.4% YoY to 22,148 units while export volumes
remained challenging, down 14% YoY to 870 units. In FY16,
tractor industry volume de-grew by 10.5% YoY. However, above
normal monsoon forecast is likely to drive volumes in FY17E

52.7

60

30
25
20
May-16

Apr-16

Mar-16

Feb-16

Dec'15

Jan-16

Nov'15

Oct'15

Sep'15

Aug'15

Jul'15

Jun'15

May'15

15

Source: SIAM, ICICIdirect.com Research

Exhibit 18: Volume performance (in units)

Mahindra and Mahindra: Tractor sales

23.0

14.7

13.6

15.1

21.4

21.7

18.1

12.9

15

11.7

15.5

20

19.3

(000's)

25

25.1

30

28.1

35

Segment
UVs
4-Wheeler pickups
M & HCV
Total 4wheeler Sales
3-Wheeler

Source: SIAM, ICICIdirect.com Research

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec'15

Nov'15

Oct'15

Sep'15

Aug'15

Jul'15

Jun'15

May'15

%chg
14.3
2.3
25.4
13.3
1.6

39,357

-7.0

75,970

67,836

12.0

2,506

61.3

6,549

5,597

17.0

41,863

-2.9

82,519

73,433

12.4

7.9

7.6

7.0

42,852

35,251

21.6

27.6
7.6

1,552
44,404
3.5

2,017
37,268
5.4

-23.1
19.1

9.7

3,337

21.2

40,656

36,706

10.8

9.9

9.1

Tractors - Domestic

22,148

18,245

21.4

20,704

- Exports
Total Tractors
Exports as % of sales

870
23,018
3.8

1,012
19,257
5.3

-14.0
19.5

682
21,386
3.2

Exports as % of sales

4,043

YTD'16
35,110
23,151
1,890
60,335
7,501

33,369

Total Auto Sales

10

36,613

YTD'17
40,132
23,686
2,370
68,346
7,624

Apr-16
21,484
11,834
1,113
35,602
3,755

Exports

May-15
16,980
11,407
1,155
29,542
3,827

%chg
-13.2
0.2
12.9
-8.0
3.0

%chg
9.8
3.9
8.8
10.8
1.1

Total Domestic Auto Sales

May-16
18,648
11,852
1,257
32,744
3,869

6.0

Source: Company, Siam

ICICI Securities Ltd. | Retail Equity Research

Page 10

Top Model wise volumes for May 2016

Exhibit 19: Top 10 passenger vehicle Models sold in India (in units)
S.No.
1

Models
Alto

May-15
22,595

Models
Alto

May-16
19,874

Swift

17,195

DZIRE

14,413

DZIRE

16,473

Wagon R

13,231

Wagon R

12,467

Swift

12,355

Elite i20

10,334

Grand i10

12,055

Grand i10

10,112

Elite i20

10,472

Bolero

7,569

Baleno

10,004

City

7,562

Celerio

7,379

Celerio

6,653

Innova

7,259

10

Eon

6,449

VITARA BREZZA

7,193

Source: Siam

Exhibit 20: Top 10 two-wheelers Models sold in India (in units)

S.No.

Models
Splendor

May-15
241,249

Activa

May-16
237,317

Activa

Passion

187,827

Splendor

207,010

104,054

HF Deluxe

112,273

HF Deluxe

93,944

Passion

97,882

CB Shine

78,183

TVS XL Super

75,406

CT

66,263

Glamour

74,590

TVS XL Super

63,555

CB Shine

56,818

Glamour

58,434

CT

51,893

9
10
Source: Siam

ICICI Securities Ltd. | Retail Equity Research

Models

Pulsar

53,263

Pulsar

46,307

Dream

39,710

Jupiter

43,867

Page 11

News & views

Maruti Suzuki (MSIL) resumed its production at both its plants after a
maintenance closure from June 6-11 (six days). The company had to
advance its maintenance by three weeks, owing to a fire at Subros
Manesar plant on May 29, 2016 after which supply of car airconditioner units had stopped. The fire led to suspension of
operations at MSILs plants in Gurgaon & Manesar for a couple of
days, prompting the company to advance the regular maintenance

Mahindra & Mahindra (M&M) has expanded its zero emission electric
vehicle range with the launch of eVerito, its first electric sedan that is
priced at | 9.5 lakh (ex showroom, Delhi)

Tata Motors owned Jaguar Land Rover (JLR) India, has launched the 2
litre petrol variant of Land Rover Discovery Sport at a starting price of
| 56.50 lakh (ex-showroom, Delhi)

ICICI Securities Ltd. | Retail Equity Research

Page 12

ICICIdirect.com Research Universe (Auto & Auto ancillary)

CMP
Sector / Company
(|)
TP(|) Rating
Amara Raja (AMARAJ)
872
900 Hold
Apollo Tyre (APOTYR)
149
160 Hold
Ashok Leyland (ASHLEY)
99
110 Hold
Bajaj Auto (BAAUTO)
2652 2780
Buy
Balkrishna Ind. (BALIND)
685
675 Hold
Bharat Forge (BHAFOR)
752
790 Hold
Bosch (MICO)
21751 24000
Buy
Eicher Motors (EICMOT)
18623 22500
Buy
Exide Industries (EXIIND)
163
165
Buy
Hero Mototcorp (HERHON)
3063 2880 Hold
JK Tyre & Ind (JKIND)
86
90 Hold
M&M (MAHMAH)
1375 1500
Buy
Mahindra CIE (MAHAUT)
189
225
Buy
Maruti Suzuki (MARUTI)
4169 4285 Hold
Motherson (MOTSUM)
302
260 Hold
Tata Motors (TELCO)
455
540
Buy
Wabco India (WABTVS)
5584 5500 Hold
Source: ICICIdirect.com Research

M Cap
(| Cr)
14895
7493
28024
76741
6621
17523
68298
50301
13893
61176
1960
81154
6108
125975
39955
139932
10610

ICICI Securities Ltd. | Retail Equity Research

EPS (|)
FY15 FY16E FY17E
24.1
28.0
31.4
18.8
22.0
18.9
1.2
2.5
5.5
97.2 126.2 147.7
50.6
55.7
45.1
32.8
28.0
33.0
426.0 398.7 498.5
227.1 477.4 608.2
6.4
7.5
7.9
119.5 156.9 168.5
14.5
20.4
20.5
48.3
59.7
64.9
2.7
9.9
12.5
122.9 151.3 197.2
6.5
9.6
13.7
41.2
37.2
48.5
63.6 107.9 128.5

P/E (x)
FY15 FY16E FY17E
36.3 27.8 22.4
7.9
6.7
7.9
84.3 39.1 17.9
27.3 21.0 18.0
13.9 12.6 15.5
22.9 26.9 22.8
51.1 54.6 43.7
82.0 39.0 30.6
25.5 21.9 20.7
25.6 19.5 18.2
5.9
4.2
4.2
28.4 23.0 21.2
70.0 19.0 15.1
33.9 27.5 21.1
46.3 31.4 22.1
11.0 12.2
9.4
87.8 51.8 43.4

EV/EBITDA (x)
FY15 FY16E FY17E
20.5 17.6 16.1
4.2
4.4
5.7
31.6 14.0 10.7
16.1 14.8 12.2
8.3
7.2
8.1
12.8 12.9 11.9
33.4 35.6 29.7
48.6 22.1 18.4
13.8 11.5 10.6
12.1 11.5 10.0
4.8
3.9
3.6
16.6
9.6
8.5
19.9 12.6 10.5
17.4 13.0 11.5
12.5 11.0
9.2
4.1
3.8
3.1
53.3 36.4 30.4

RoCE (%)
FY15 FY16E FY17E
34.3 31.1 28.4
26.0 20.9 14.6
7.2 23.0 27.2
35.6 35.4 36.8
17.8 18.7 15.9
18.6 16.4 18.1
18.2 15.1 16.6
24.5 42.6 41.5
18.9 19.3 18.7
45.9 50.4 43.8
18.8 21.4 20.6
14.6 16.5 16.7
7.5 14.0 15.5
17.3 22.7 21.2
24.7 22.3 26.9
22.8 17.0 17.1
14.0 19.4 19.1

RoE (%)
FY15 FY16E FY17E
25.6 22.8 21.2
18.9 18.1 14.3
6.5 13.1 23.6
26.3 29.3 30.4
21.3 18.7 15.9
22.2 18.2 18.6
19.4 17.8 19.0
24.5 37.2 35.3
13.5 14.3 13.7
36.5 39.4 35.9
23.5 26.5 21.2
14.5 14.4 13.9
7.4 13.0 15.1
15.7 16.9 18.9
25.9 30.0 37.2
24.9 15.3 15.3
18.2 22.5 22.1

Page 13

Exhibit 21: Auto raw material index

The in-house raw material index reflects the combination of

RM Auto Index

various input materials (steel, rubber, aluminium, plastics)

240

for OEMs, which have February 2009 as base year at 100.

The chart shows a declining trend in the past; however

220

from January 2016 onwards the prices have started

200

moving northwards, giving primary signs that the benefit of

180

lower input cost has peaked out.

160
140

156

120
100
Apr-16

Nov-15

Jun-15

Jan-15

Aug-14

Mar-14

Oct-13

May-13

Dec-12

Jul-12

Feb-12

Sep-11

Apr-11

Nov-10

Jun-10

Jan-10

Aug-09

Mar-09

80

Source: Bloomberg, Reuters, Company, ICICIdirect.com Research

Exhibit 22: Currency movements

180
160
140
120
100
80

US$INR

US$JPY

Apr-16

Dec-15

Aug-15

Apr-15

Dec-14

Aug-14

Apr-14

Dec-13

Aug-13

Apr-13

Dec-12

Aug-12

Apr-12

Dec-11

60

US$EUR

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd. | Retail Equity Research

Page 14

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Sector view:
Over weight compared to index
Equal weight compared to index
Under weight compared to index
Index here refers to BSE 500

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd. | Retail Equity Research

Page 15

ANALYST CERTIFICATION
We /I, Nishit Zota, MBA (Finance) and Vidrum Mehta, MBA (Finance) research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or
view(s) in this report.

Terms & conditions and other disclosures:

ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia,
engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is Indias largest private sector bank and has its various
subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (associates), the details in respect of which are
available on www.icicibank.com.
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking
and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts
and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and
meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without
prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is is under no obligation to update or keep the information
current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended
temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this
company, or in certain other circumstances.
This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This
report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their
receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific
circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate
the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any
loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the
risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to
change without notice.
ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment
in the past twelve months.
ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in
respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.
ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned
in the report in the past twelve months.
ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation
or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any
material conflict of interest at the time of publication of this report.
It is confirmed that Nishit Zota, MBA(Finance) and Vidrum Mehta, MBA(Finance) research analysts of this report have not received any compensation from the companies mentioned in the report in the
preceding twelve months.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the
publication of the research report.
Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject
company/companies mentioned in this report.
It is confirmed that Nishit Zota, MBA(Finance) and Vidrum Mehta, MBA(Finance) research analysts do not serve as an officer, director or employee of the companies mentioned in the report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.
We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,
publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities
described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and
to observe such restriction.

ICICI Securities Ltd. | Retail Equity Research

Page 16