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LKP reports: Automobile sales for the month December – Back on track

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From the desk of Ashwin Patil.

Mahindra and Mahindra – (TP- Rs 878, Outperformer)
M&M reported a healthy 42% yoy growth in its auto segment, with UV sales growing 24%yoy and the 4W pick-up segment which includes Gio and Maxximo posting a stellar growth of 47% yoy. Logan reported 896units of sales, a growth of 191% marking a revival of the sedan. LCV sales grew by 22% yoy. On a qoq basis, auto sales have grown by 28%. FES segment posted a very robust growth of 31% yoy to 16,334 units on good monsoon and rabi season picking up in the Northern parts of the country. On a cumulative basis, the company has grown by 29% and 21% in the auto and FES segments respectively.

Tata Motors – (TP – Rs 1580, Outperformer)
December sales for the company were very strong with a 23% mom growth and a 31% yoy growth to 67,441 units thus marking the company’s comeback after a lackluster November. CV growth pace was robust in the month, as M&HCV grew by 14% yoy, while LCV grew by 35% yoy with the highest ever monthly sales of the ACE family. Overall CV sales grew by 25% yoy. PV segment grew by 28% yoy to 19,977 units while utility segment sales grew by 62% yoy on the launch of Tata Aria. Indica and Indigo sales saw a sales growth of 40% and 3% respectively, marking a renewed demand for them. Nano sales were back on track at 5,784 units a 60% yoy growth after a dismal November sales which were at just 500 units. We believe this is due to the company’s rejuvenated marketing efforts and pushing volumes to the dealer end.

TVS Motor – (TP – Rs80, Neutral)
TVS reported 171,190 units of sales in December, a growth of 42% yoy and a 9% mom. This signifies a significant spurt in demand for its existing and new bikes post a slump in November. Three wheeler sales came at 3,431 units. Going forward, we expect the company to report numbers of close to 1.8 lakh per month, which will be growth over December numbers due to wholesale demand for its new models Jive and Wego picking up and three wheeler sales picking up in the traditionally strong quarter.

Hero Honda – (Under Review)
Hero Honda reported a 16% yoy strong growth to 5.01 lakh units in December, but it was a ~19% spurt mom. Though the company has cleared clouds over the royalty issue post its split with Honda and has posted stellar monthly sales numbers, we remain cautious on the stock as it will continue to face added pressures from strengthening presence of Honda and aggressive strategies by its other competitors as well. Hence, we will take a closer look at the stock post Q3 results and revise our rating and target price accordingly.

Bajaj Auto – (TP – Rs 1630, Outperformer)
Though Bajaj Auto has posted its best ever December sales, they have fallen well short of their monthly guidance of 3 lakh units as they posted 2.76 lakh sales this month. It was a growth of just 10% yoy and a dip of 18% mom. The company attributes this to capacity constraints and logistic issues. Henceforth they have guided us of getting back to the 3 lakh mark in each of the remaining 3 months.

Maruti Suzuki – (TP – Rs 1788, Outperformer)
Maruti’s December sales were 17% up yoy while 12% down on mom basis at ~99,000 units in line with our expectations as the company had its bi-annual maintenance shutdown at its various plants for 7 days in December. Due to this the production was low and thus sales. Domestically, the company reported sales close to 89,000 units while exports were close to the 10,000 mark as expected. Going forward, we believe Maruti will once again punch volumes anywhere in between 1,10,000 and 1,15,000 for the rest of the year as demand remains intact. For the full year, we expect volumes to be close to 1.2mn.

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Written by Fundamental Side

January 6, 2011 at 7:20 am