Institutional Equities

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1 Monthly Sales Update Institutional Equities Automobile Sales-May June 2018 Growth Momentum Continues Automobile sales in May 2018 were strong across segments, except in case of a few companies. Most companies reported strong double-digit volume growth led by good demand. Commercial vehicle (CV) sales momentum continued as a low base and improved demand helped companies to post strong double-digit volume growth. In the passenger vehicle segment also, car sales were robust with market leader Maruti Suzuki India (MSIL) and other players like Tata Motors reporting strong double-digit volume growth. In the two-wheeler space, Hero MotoCorp reported double digit growth while Honda Motorcycles and Scooters India (HMSI)/TVS Motor Company reported single digit YoY growth. Most other players posted strong double-digit sales volume growth. May is usually a strong month for automobile retail sales in the two-wheeler segment because of the marriage season-led demand and hence most players had posted strong numbers in April 2018 to build inventory ahead of the marriage season. Going forward, with the onset of monsoon in southern and western regions of India and an extreme heat wave in the northern region, we are entering a seasonally lean season for automobile sales with manufacturers also adjusting their inventory level. In the two-wheeler space, market leader Hero MotoCorp reported 11% YoY growth while HMSI recorded 3% YoY growth in sales. Other players like Suzuki, Bajaj Auto and Eicher Motors posted strong 37%/30%/23% YoY growth, respectively while TVS Motor Company reported 9.9% YoY growth in sales. Overall sales of TVS Motor Company and Bajaj Auto were also helped by higher three-wheeler sales and export sales. Exports of Bajaj Auto and TVS Motor Company grew 31%/53% YoY, respectively. In the passenger vehicle segment, market leader MSIL surprised with stronger-than-expected numbers, posting a 26% YoY growth in volume. Tata Motors also reported strong volume growth of 61% in the domestic passenger vehicle space as its recently launched models witnessed robust demand. Mahindra & Mahindra (M&M) reported a muted 2% YoY growth in its passenger vehicle segment sales with the passenger car segment growing 34% YoY, while its commercial vehicles and pick-up van sales grew in double digits. Other car manufacturers like Hyundai India reported 11% YoY growth while Toyota Kirloskar/Ford India/Honda India recorded 13%/11%41% YoY growth, respectively. In the commercial vehicle segment, favourable low base and improved demand led to strong double-digit YoY growth for CV players. Market leader Tata Motors reported a strong 56% YoY growth in CV sales, while Ashok Leyland posted a robust 51% YoY growth in CV sales with medium and heavy commercial vehicle (MHCV) sales growing 70% Other CV players like VE Commercial Vehicles and SML Isuzu also reported strong sales growth of 29%/37%, respectively. Strong demand momentum continued in the tractor segment for most players with M&M and Escorts posting 14%/21% YoY growth, whereas VST recorded a 12% YoY drop in volumes. Going forward, as we enter a seasonally lean season for two-wheeler and car sales, we expect the absolute volume to be lower than the volume registered in May However, following Goods and Services Tax or GST-related inventory management last year and a favourable low base, there may be strong double-digit volume growth for a few manufacturers. Exhibit 1: Automobile sales snapshot Please refer to the disclaimer towards the end of the document. Gaurant Dadwal Research Analyst gaurant.dadwal@nirmalbang.com Vivek Sarin Research Associate vivek.sarin@nirmalbang.com Company (units) May-2018 May-2017 YoY (%) Bajaj Auto 4,07,044 3,13, TVS Motor Company 3,09,865 2,82, Royal Enfield 74,697 60, HMSI 5,51,601 5,37, Suzuki Motorcycles India* 53,167 38, Maruti Suzuki India 1,72,512 1,36, Hyundai Motors 56,016 50, Ford India 26,188 23, Honda Cars India* 15,864 11, Toyota Kirloskar India 13,940 12, M&M - Automobiles 46,849 42, M&M - Tractors 29,330 25, Tata Motors 57,994 38, Ashok Leyland 13,659 9, VE Commercial Vehicles 5,874 4, SML Isuzu 1,442 1, Atul Auto 3,983 3, Escorts 8,325 6, VST-Power Tillers 1,751 1,857 (5.7) VST-Tractors (11.8) *Domestic volume; Source: Respective companies

2 Domestic sales grew up 29% YoY, driven by by strong strong two-wheeler and three-wheeler sales. demand. Domestic motorcycle sales continue growth to rebounds grow in double to 24% digits at 24% Commercial vehicles sales continued to to do do well, well, up 76% up 83% Exports of of three-wheelers were were up up 69% sharply by 85% Sales rose 11% YoY, driven by healthy Overall volume two-wheeler numbers of its sales Splendor were higher and HF than Deluxe estimate, models. up 24% YoY, with motorcycle/scooter sales posting 32%/10% YoY growth, respectively. Three-wheeler sales were up by 115% Exports Overall two-wheeler post double-digit sales growth were up -YoY 10% growth YoY, with of 54% motorcycle/scooter backed by a 46% sales rise posting two-wheeler 7%/12% YoY exports. growth, respectively. Three-wheeler sales were up 78% Exports post double-digit YoY growth of 53% backed by a 49% rise in two-wheeler exports. Overall sales grew 14% YoY, driven by double-digit demand for compact vehicles. Ciaz car sales witness a decline of 27% Utility Overall vehicle sales sales up 26% post YoY, flat 1% driven YoY by growth. double-digit demand for compact vehicles. Export Ciaz car sales sales growth witness rebounds a decline to of 19% 15% Utility vehicle sales continue with doubledigit growth of 13% Export sales grow sharply by 48% Exhibit 2: Bajaj Auto s sales Motorcycles 3,42,595 2,77, ,92,212 5,71, Commercial vehicles 64,449 36, ,30,000 72, Total 4,07,044 3,13, ,22,212 6,43, Domestic 2,24,625 1,74, ,54,089 3,51, Exports 1,82,419 1,39, ,68,123 2,91, Exhibit 3: Hero MotoCorp s sales Motorcycles/scooters 7,06,635 6,33, ,00,657 12,29, Exhibit 4: TVS Motor Company s sales Motorcycles 1,26,711 1,18, ,58,415 2,17, Mopeds 75,545 71, ,48,014 1,31, Scooters 95,879 85, ,85,124 1,67, Two-wheelers 2,98,135 2,75, ,91,553 5,16, Three-wheelers 11,730 6, ,107 11, Total 3,09,865 2,82, ,14,660 5,28, Exhibit 5: Maruti Suzuki India s sales Mini- Alto, Wagon R 37,864 39,089 (3.1) 75,658 77,986 (3.0) Compact-Swift, Ignis, Baleno, Celerio, Dzire 77,263 51, ,61,097 1,14, Mid-size - Ciaz 4,024 4,724 (14.8) 9,140 11,748 (22.2) Passenger cars 1,19,151 95, ,45,895 2,04, UV- S-Cross, Ertiga, Brezza 25,629 22, ,433 43, Vans - Omni, Eeco 16,717 12, ,603 26, Total domestic sales 1,61,497 1,30, ,24,931 2,74, LCV-Carry 1, , Total exports 9,312 6, ,320 13, Total sales 1,72,512 1,36, ,45,498 2,88, Automobile Sales May 2018

3 Exhibit 6: M&M Automobile division s sales Utility vehicle volume remains flat Overall passenger vehicle volume registers 2% growth. Car and van sales register healthy doubledigit growth of 34% Three-wheeler sales volume growth moderates to 7% YoY, while MHCV sales post 163% YoY jump on a low base. Overall CV sales post 15% YoY growth, while exports rise 134% Passenger vehicles 20,715 20, ,642 39, Utility vehicles 19,295 19,331 (0.2) 39,666 37, Cars + vans 1,420 1, ,976 2, Commercial vehicles 18,748 16, ,711 31, LCV < 3.5T 16,763 15, ,258 29, LCV >3.5T ,397 1, MHCVs 1, , Three-wheelers 4,355 4, ,682 7, Domestic sales 43,818 40, ,035 78, Total exports 3,031 1, ,911 2, Total sales 46,849 42, ,946 81, Tractor sales post double-digit YoY growth. The announcement of record production estimates for food grains and horticulture crops will drive the positive sentiment and boost tractor demand. Exhibit 7: M&M Tractor division s sales Domestic 28,199 24, ,083 49, Exports 1,131 1, ,172 1, Total tractor sales 29,330 25, ,255 51, Domestic CV volume up 56% YoY on the back of various macro-economic factors like investment in improved industrial activity, infrastructure development and demand from consumption-led sectors. Domestic passenger vehicle sales up 61% YoYon the back of continued strong demand for Tiago, Tigor, Nexon and Hexa models. Exhibit 8: Tata Motors sales PV-Domestic 17,489 10, ,724 23, CV-Domestic 36,806 23, ,082 39, Exports 3,699 3,900 (5.2) 6,709 6, Total 57,994 38, ,14,515 69, MHCV sales post double-digit growth of 70% LCV sales volume continues to grow, registering 10% YoY growth. Exhibit 9: Ashok Leyland s sales MHCVs 10,421 6, ,389 10, LCVs 3,238 2, ,947 5, Total 13,659 9, ,336 16, Power tiller sales and tiller sales post YoY contraction in sales volume. Exhibit 10: VST Tillers sales Power tillers 1,751 1,857 (5.7) 2,419 3,020 (19.9) Tractors (11.8) 1,056 1,601 (34.0) Total 2,457 2,657 (7.5) 3,475 4,621 (24.8) 3 Automobile Sales May 2018

4 DISCLOSURES This Report is published by Nirmal Bang Equities Private Limited (hereinafter referred to as NBEPL ) for private circulation. NBEPL is a registered Research Analyst under SEBI (Research Analyst) Regulations, 2014 having Registration no. INH NBEPL is also a registered Stock Broker with National Stock Exchange of India Limited and BSE Limited in cash and derivatives segments. NBEPL has other business divisions with independent research teams separated by Chinese walls, and therefore may, at times, have different or contrary views on stocks and markets. NBEPL or its associates have not been debarred / suspended by SEBI or any other regulatory authority for accessing / dealing in securities Market. NBEPL, its associates or analyst or his relatives do not hold any financial interest in the subject company. NBEPL or its associates or Analyst do not have any conflict or material conflict of interest at the time of publication of the research report with the subject company. NBEPL or its associates or Analyst or his relatives do not hold beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of this research report. NBEPL or its associates / analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. NBEPL or its associates have not received any compensation or other benefits from the company covered by Analyst or third party in connection with the research report. Analyst has not served as an officer, director or employee of Subject Company and NBEPL / analyst has not been engaged in market making activity of the subject company. Analyst Certification: I/We, Gaurant Dadwal, the research analysts and Vivek Sarin, the research associate are the author of this report, hereby certify that the views expressed in this research report accurately reflects my/our personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research report and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. 4 Automobile Sales May 2018

5 Disclaimer Stock Ratings Absolute Returns BUY > 15% ACCUMULATE -5% to15% SELL < -5% This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. NBEPL is not soliciting any action based upon it. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any such transaction. In preparing this research, we did not take into account the investment objectives, financial situation and particular needs of the reader. This research has been prepared for the general use of the clients of NBEPL and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. If you are not the intended recipient you must not use or disclose the information in this research in any way. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. NBEPL will not treat recipients as customers by virtue of their receiving this report. This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject NBEPL & its group companies to registration or licensing requirements within such jurisdictions. The report is based on the information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up-to-date and it should not be relied upon as such. We accept no obligation to correct or update the information or opinions in it. NBEPL or any of its affiliates or employees 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. NBEPL or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. This information is subject to change without any prior notice. NBEPL reserves its absolute discretion and right to make or refrain from making modifications and alterations to this statement from time to time. Nevertheless, NBEPL is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries. Before making an investment decision on the basis of this research, the reader needs to consider, with or without the assistance of an adviser, whether the advice is appropriate in light of their particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. Opinions expressed are subject to change without any notice. Neither the company nor the director or the employees of NBEPL accept any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Here it may be noted that neither NBEPL, nor its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profit that may arise from or in connection with the use of the information contained in this report. Copyright of this document vests exclusively with NBEPL. Our reports are also available on our website Access all our reports on Bloomberg, Thomson Reuters and Factset. Team Details: Name Id Direct Line Rahul Arora CEO rahul.arora@nirmalbang.com - Girish Pai Head of Research girish.pai@nirmalbang.com / 18 Dealing Ravi Jagtiani Dealing Desk ravi.jagtiani@nirmalbang.com , Pradeep Kasat Dealing Desk pradeep.kasat@nirmalbang.com /8101, Michael Pillai Dealing Desk michael.pillai@nirmalbang.com /8103, Nirmal Bang Equities Pvt. Ltd. Correspondence Address B-2, 301/302, Marathon Innova, Nr. Peninsula Corporate Park, Lower Parel (W), Mumbai Board No. : /1; Fax. : Automobile Sales May 2018

Institutional Equities

Monthly Sales Update Institutional Equities Automobile Sales-August 2018 4 September 2018 Mixed Performance; Commercial Vehicles Outperform Automobile sales in August 2018 showed a mixed performance with