Presentation on Auto Sector. 24 th Jul 18

Transcription

1 Presentation on Auto Sector 24 th Jul 18

2 Auto Sector Importance to the Economy Automobile Industry contributes around 7.1% to India s GDP by volume Automotive sector provided direct and indirect employment to ~32 mn in 16 India key auto manufacturing hubs: DelhiGurgaonFaridabad in the North MumbaiPuneNashikAurangabad in the West Chennai BengaluruHosur in the South JamshedpurKolkata in the East FDI received by the sector between April 00 and December 17 USD bn Source

3 Auto Sector Two wheeler Segment Two wheeler Domestic Sales Volume year domestic Two wheeler volume CAGR is 11% FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source SIAM Million units (LHS) % growth (RHS) Two wheeler Domestic Segment Mix (%) FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Scooter segment share is gradually inching up Source SIAM Scooters Motorcycle Moped

4 Auto Sector Two wheeler Segment Domestic Two wheeler Segmentwise growth (%) () () FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source SIAM Scooters Motorcycle Moped Scooter segment has consistently outperformed motorcycle segment growth rate 60 Domestic Market Share Change (%) 40 Market Share gap between Hero MotoCorp and HMSI has narrowed FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Bajaj Auto Hero MotoCorp * Honda Motorcycle and Scooters India TVS Motors Others Source SIAM *Hero and Honda separated in Dec

5 Auto Sector Two wheeler Segment Volume growth outlook positive Pickup in rural demand Motorcycle demand is picking up Over the longer term, scooter segment share to witness further rise for the industry Price war in the entry level motorcycle segment Commodity cost pressure in the near term Electric Vehicle

6 Auto Sector Passenger Vehicle Segment Passenger Vehicle Domestic Sales Volume FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY (5) () year domestic Passenger Vehicle volume CAGR is 8% Source SIAM Million units (LHS) % growth (RHS) Passenger Vehicle Segment Mix (%) FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Share of Utility Vehicle segment is increasing over the past few years Source SIAM Passenger Car Utility Vehcile Vans

7 Auto Sector Passenger Vehicle Segment Passenger Vehicle Segment growth (%) () () () FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 UV segment has grown significantly in the past two years Source SIAM Passenger Car Utility Vehcile Vans Passenger Vehicle Domestic Market Share (%) Maruti Suzuki s market share continues to move north FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source SIAM Hyundai Motor India Mahindra & Mahindra Maruti Suzuki India Tata Motors Others

8 Auto Sector Passenger Vehicle Segment New products continue to drive volume growth for the industry Past few years has seen demand shifting towards petrol run vehicles Top 5 players accounts for ~85% of the domestic volumes Rising commodity prices BSVI implementation, Challenges from Electric Vehicle disruptions Long term growth outlook remains strong on rising income levels and increasing car penetration

9 Auto Sector Commercial Vehicle Segment Domestic Commercial Vehicle Sales Volume 9,00,000 8,00,000 7,00,000 6,00,000 5,00,000 4,00,000 3,00,000 2,00,000 1,00,000 FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 40 () () () year domestic Commercial Vehicle volume CAGR is 5% Source SIAM Units (LHS) % growth (RHS) 6,00,000 5,00,000 4,00,000 3,00,000 2,00,000 1,00,000 Domestic LCV Sales Volume FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY () () () LCV sales is witnessing gradual improvement Units (LHS) % growth (RHS) Source SIAM

10 Auto Sector Commercial Vehicle Segment Domestic MHCV Sales Volume 4,00,000 3,50,000 3,00,000 2,50,000 2,00,000 1,50,000 1,00,000 50,000 FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 40 () () () (40) MHCV segment has completed 4 years of upcycle Source SIAM Units (LHS) % growth (RHS) MHCV Domestic Market Share (%) Ashok Leyland gained market share at the expense of Tata Motors FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Ashok Leyland Ltd Tata Motors Ltd VE CVs Eicher Others Source SIAM

11 Auto Sector Medium & Heavy Commercial Vehicle Segment Highly cyclical segment; performance linked to the economy MHCV segment dominated by two players Shift towards higher tonnage vehicle Recent new norms on increased load carrying capacity has led to uncertainity Prebuying ahead of BSVI implementation Scrappage policy

12 Auto Sector Tractor Segment Tractor volume growth has been robust for the past two years Domestic Tractor Sales Volume 8,00,000 7,00,000 6,00,000 5,00,000 4,00,000 3,00,000 2,00,000 1,00,000 FY09 FY FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 40 () () Units (LHS) % growth (RHS) Source M&M

13 Auto Sector Tractor Segment Strong rural economy channelizing into robust tractor demand FY19 is the third year of tractor industry upcycle IMD forecast of normal monsoon Industry players have guided for 911% volume growth in FY19 Rise in MSP, shortage of labor are positive for the industry

14 Auto Sector Commodity Prices Apr08 Apr08 Oct08 Oct08 Apr09 Apr09 Oct09 Oct09 Apr Apr Oct Oct Apr11 Apr11 Oct11 Oct11 Apr12 Apr12 Oct12 Oct12 Apr13 Apr13 Oct13 Oct13 Apr14 Apr14 Oct14 Oct14 Apr15 Apr15 Oct15 Oct15 Apr16 Apr16 Oct16 Oct16 Apr17 Apr17 Oct17 Oct17 Apr18 Apr18 Apr08 Apr08 Oct08 Oct08 Apr09 Apr09 Oct09 Oct09 Apr Apr Oct Oct Apr11 Apr11 Oct11 Oct11 Apr12 Apr12 Oct12 Oct12 Apr13 Apr13 Oct13 Oct13 Apr14 Apr14 Oct14 Oct14 Apr15 Apr15 Oct15 Oct15 Apr16 Apr16 Oct16 Oct16 Apr17 Apr17 Oct17 Oct17 Apr18 Apr China Hot Rolled Steel Export Price Shanghai (USD/MT) LME Primary Aluminum 3 Month Rolling Forward (USD/MT) Source Bloomberg LME Copper 3 Month Rolling Forward (USD/MT) Source Bloomberg LME Lead 3 Month Rolling Forward (USD/MT) Source Bloomberg Source Bloomberg

15 Auto Sector Valuations Revenue growth (%) Net Profit growth EPS (Rs) PE (x) RoE (%) FY19 FY FY19 FY FY19 FY FY19 FY FY19 FY Ashok Leyland Bajaj Auto Eicher Motors * ,011 1, Escorts Hero MotoCorp Mahindra and Mahindra Maruti Suzuki Tata Motors (1) TVS Motors * Top Picks Maruti Suzuki, Mahindra and Mahindra Source Kotak Securities PCG; * Bloomberg estimates Kotak Securities Private Client Group Path: Login to > Research > Equity Reports > Stock Recommendation Snapshot Kotak Securities Institutional Equities Path: Login to > Research > Equity Reports > India Daily Institutional Equities Research Report

16 Rating Scale

17 Research Team

18 Disclaimer

19 Disclaimer

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