hmcl 35.7 industry motogaze february 2018 bal sector view...

ICICI Securities Ltd. | Retail Equity Research

February 28, 2018

MotoGaze February 2018

s

Strong growth momentum continues!

The strong growth momentum witnessed in auto volumes last year,

continued in the new calendar year with solid growth of 31.1% YoY.

Growth was primarily seen across segments and partly driven by the low

base of demonetisation last year. The 2-W volumes reported robust

growth at 33.6% YoY, driven by both scooter & motorcycle segment,

which grew 46.8%, 30% YoY, respectively. The revival in rural sentiment

in key under penetrated states buoyed growth. The top two players HMCL

& HMSI posted volume growth of 31.7% YoY & 33% YoY, respectively.

The CV segment reported strong growth of 36.6% YoY, driven by LCV

space (volumes up 54.6% YoY), which saw increase in demand from e-

commerce & container and refrigerator vehicles. M&HCV volumes grew

16.9% YoY mainly after stricter implementation of overloading in some

states and revival in infrastructure development. The 3-W volumes were

up 87.7% YoY, as domestic & export volume grew 99.5% & 69.3% YoY,

respectively. The discontinuance of permits in Maharashtra, new permits

released in Delhi & replacement of two-stroke to four-stroke engine in

Bangalore lifted domestic volumes while strong demand revival and low

base supported export growth. The PV segment grew 8.9% YoY, driven

by strong growth of 41.7% YoY in the UV segment. The domestic tractor

volumes grew 38.1% YoY to 49,753 units.

Auto Expo 2018 – Flavour of EVs

Given the government’s aggressive plan of electrifying all new vehicles by

2030, most of the participant OEMs in the recently concluded Auto Expo

2018, emphasised on hybrid & electric vehicles. The new technology

solutions were offered by start-ups and new entrants, which grabbed a

good response. Within the PV space, new launches were made by MSIL –

Swift & Toyota’s -Yaris while the EV concept models were displayed by

most OEMs. Hyundai’s Ioniq is the first car to be offered in three electric

versions – hybrid, plug-in-hybrid & all-electric. Kia Motors made its India

entry and will start sales in FY20E. The Nissan Leaf’s all electric Joe, one

of the four most popular cars sold in Europe, was also showcased in the

Expo. Within 2-W space, HMCL marked its foray into 125 cc scooter

segment with the launch of Duet & Maestro Edge. HMSI unveiled all-new

160cc motorcycle X-Blade (will be launched next month) & fifth generation

Activa 5G. TVS Motors introduced ethanol based - Apache RTR 200 Fi. It

also unveiled – Zeppelin motorcycle & Creon – a concept electric scooter.

Long term story intact

The higher focus on rural & infrastructure development in Budget 2018 will

favour the auto space. The auto industry weathered key structural events

like implementation of BS IV norms and GST, with its volumes recovering,

up 13.3% in YTDFY18. The overall 2-W, PV, CV volume growth was at

14.3%, 6.1% YoY, 13.2% YoY, respectively, in YTDFY18. We expect the

strong growth momentum to continue in FY19E, (expect ~10% growth).

The government’s focus on the rural economy will aid the demand for 2-W

players in key under penetrated agrarian states. A buoyant outlook on

infrastructure spending will catalyse M&HCV growth.

For January 2018, the BSE Auto Index was down 3% underperforming the

benchmark index, which was up 5.6%. The pace of electric vehicle (EV)

adoption & BS VI implementation by 2020 is expected to lead to huge

investments & partnership in R&D. We believe the major OEMs business

will adopt new technology smoothly. However, ancillary companies

producing internal combustion engine related parts will face challenges.

The new technology can prove to be a threat to the incumbent in the

battery space, with new players & OEMs entering the space. In our I-direct

auto coverage, we remain bullish on frontline OEM stocks like Maruti

Suzuki and Eicher Motors.

Sector View

Overweight

Volume performance for January 2018

Company Gr. YoY(%)

Hero Motocorp 31.7

Bajaj Auto 46.0

TVS Motors 31.3

Maruti Suzuki 4.8

Tata Motors 39.4

Ashok Leyland 21.7

Mahindra and Mahindra 32.4

Key players & industry volume growth –January’18 (%)

21.0

35.7

20.7

5.8

32.6

16.4

6.1

32.8

-10.6

-6.0

31.1

31.7

46.0

31.3

33.0

4.8

39.4

32.4

8.5

21.7

Industry

HMCL

BAL

TVS

HMSI

Maruti

TML

M&M

Hyundai

ALL

MoM

YoY

Source: Siam

Key players & industry volume growth YTDFY18 (%)

13.3

12.6

6.3

15.8

21.5

13.1

14.1

6.5

1.0

19.5

Industry

HMCL

BAL

TVS

HMSI

Maruti

TML

M&M

Hyundai

ALL

YTDFY18

Source: Siam

Research Analyst

Nishit Zota

[email protected]

Vidrum Mehta

[email protected]


Motorcycle, scooters both drive two wheeler volumes!

For January 2018, overall 2-W volumes grew 33.6% YoY, supported by

both motorcycle & scooter segments, which grew 30% & 46.8% YoY,

respectively. Overall 2-W domestic volumes grew 33.4% YoY while

exports volumes grew 34.8% YoY. In terms of players, the top two - HMCL

& HMSI reported strong volume growth of 31.7% YoY & 33% YoY,

respectively. The other 2-W players viz. TVS & BAL (third & fourth largest

player) reported volume growth of 30.1% YoY & 36.4% YoY, respectively.

The 3-W volumes grew 87.7%, supported by a revival in export volume

(up 69.3% YoY) and higher demand in domestic market (up 99.5% YoY),

mainly due to discontinuance of permits in Maharashtra, new permits

released in Delhi & replacement of two-stroke to four-stroke engine in

Bangalore. Domestic tractor industry volumes grew 38.1% YoY to 49,753

units & 18% YoY to 590,384 units for January 2018 & YTDFY18,

respectively.

Market share movement

According to data released by the Society of Indian Automobile

Manufacturers (Siam), the domestic market share of two and three-

wheeler players as of January 2018 is mentioned below.

Exhibit 1: Domestic market share movement in two-wheelers

11.6

36.5

14.2

27.2

10.59.8

36.2

14.3

29.0

10.7

9.8

36.2

14.2

29.0

10.8

0

5

10

15

20

25

30

35

40

Bajaj Auto Hero MotoCorp TVS Motors HMSI Others

(%

)

Jan-17 Dec-17 Jan-18

Source: Siam, Data used is YTD

Exhibit 2: Domestic market share movement in three-wheelers

50.0

29.2

10.0

10.8

56.5

25.5

8.7

9.3

57.2

24.8

8.6

9.4

0 10 20 30 40 50 60 70

Bajaj Auto

Piaggio

M&M

Others

(%)



Overall 2-W segment volumes grew 33.6% YoY in January 2018.

Over last year, HMSI has outperformed the 2-W industry growth,

thereby expanding its market share by 180 bps YoY to 29%. On

the other hand, HMCL continues to enjoy a dominant position

with share of 36.2%. With the underperformance on a YTDFY18

basis, BAL has lost market share of ~180bps YoY to 9.8%

In January 2018, domestic 3W volumes grew 87.7% YoY,

mainly supported by market leader Bajaj Auto, which

reported strong volume growth of 113.6% YoY, thereby

gaining market share by 720bps YoY to 57.2%


Exhibit 3: Domestic market share movement in motorcycles

18.3

50.6

7.3

14.215.8

51.2

7.4

15.715.7

51.3

7.3

15.7

0

10

20

30

40

50

60

70

Bajaj Auto Hero Motocorp TVS motor Honda

(%

)


Source: Company, ICICIdirect.com Research

Exhibit 4: Domestic market share movement in scooters/scooters

14.1 14.5

57.5

13.812.9

16.2

57.2

13.613.0

16.1

57.3

13.6

0

10

20

30

40

50

60

70

Hero Motocorp TVS Motors Honda Others

(%

)



Overall motorcycle volumes increased 30% YoY in January

2018. HMCL continues to be the market leader in the space

with a share of ~51%

Overall scooter volumes grew 46.8% YoY in January 2018.

HMSI maintained its leadership position in scooters with

market share of ~57% YoY


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

19.4

59.6

6.0

15.0

0

4

8

12

16

20

0

10

20

30

40

50

60

70

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

(%

)

(%

)

Bajaj Auto (RHS) Hero Motocorp (LHS) TVS (RHS) HMSI (RHS)

Source: Siam * only top four two-wheeler OEMs

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

53.9

3.4

21.3

21.4

0

4

8

12

16

20

24

28

0

10

20

30

40

50

60

70

80

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

(%

)

(%

)

Bajaj Auto (LHS) Hero Motocorp (RHS) TVS (RHS) HMSI (RHS)

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

HMCL continues to dominate the executive motorcycle

segment (<=125 cc) in India with a market share of

~59.6%. HMSI’s volumes have been more volatile thereby

resulting in wide fluctuation in its market share in the last 12

months

BAL continues to dominate the executive motorcycle

segment (<=125 cc) in India with market share at ~54%.

HMSI’s volumes have been more volatile thereby resulting in

wide fluctuation in its market share in the last 12 months


Hero MotoCorp (HERHON)

The market leader in the 2-W space, Hero MotoCorp’s (HMCL),

volume grew 31.7% YoY to 641,501 units. Its motorcycle & scooter

volume grew 25.5% YoY & 103.1% YoY, respectively

Its top selling model Splendor volume grew 12.4% YoY. HF

Deluxe & Glamour reported strong volume growth of 41.1% YoY &

106.8% YoY, respectively. All its three scooter models (supported

by positive sentiments & refreshes) reported strong volumes,

Maestro (up 93.5% YoY), Duet (107.8% YoY) & Pleasure (119.8%

YoY)

HMCL, to revive its focus on the growing premium motorcycle

segment, unveiled all new ‘Xtreme 200R’ and will be across

dealership from April 2018. The management expects HMCL to

maintain its strong growth trajectory going forward.

Exhibit 7: Volume performance (in units)

Segment Jan-18 Jan-17 %chg Dec-17 %chg YTDFY'18 YTDFY17 %chg

Motorcycles 562,931 448,394 25.5 413,946 36.0 5,473,286 4,838,371 13.1

Scooters 78,570 38,694 103.1 58,785 33.7 753,813 691,152 9.1

Total Sales 641,501 487,088 31.7 472,731 35.7 6,227,099 5,529,523 12.6

Export(inc. above) 22,114 15,368 43.9 16,861 31.2 154,609 141,554 9.2

Exports (% of sales) 3.4 3.2 29 bps 3.6 -12 bps 2.5 2.6 -8 bps

Source: Company, Siam

Bajaj Auto (BAAUTO)

Bajaj Auto’s (BAL) 2-W volumes grew 36.4% YoY, driven by both

exports & domestic volumes, which were up 36.7% YoY & 36.1%

YoY, respectively. On a YTDFY18 basis, its domestic volumes

declined 4% YoY resulting in a significant loss of market share

(down 180 bps YoY) in the 2-W space to 9.8%

Pulsar volumes grew 45.8% YoY to 77,550 units (driven by 150-

200 cc category). Volumes of its entry level segment (75-110 cc),

which includes brands like CT, Platina, Boxer & Discover, grew

71.6% YoY to 158,122 units. This was mainly due to strong

exports growth in Boxer & domestic growth in Discover. Volumes

of CT declined 4.1% YoY while Platina volumes grew 48.4% YoY.

Volumes of ‘V15’ & ‘V12’ declined 49.3% YoY to 5,001 units &

80.4% YoY to 2,013 units. Overall volumes of Dominar were at

3,322 units

Its overall 3-W volumes grew 113.6% YoY after domestic volumes

grew 154% YoY driven by discontinuance of permits in

Maharashtra, new permits released in Delhi & replacement of two-

stroke to four-stroke engine in Bangalore. The revival in export

market lifted its volumes up 71.2% YoY



Total 2-wheeler sales 288,936 211,824 36.4 228,762 26.3 2,801,881 2,730,739 2.6

2W exports 125,825 92,021 36.7 115,832 8.6 1,161,780 1,023,084 13.6

2W domestic sales 163,111 119,803 36.1 112,930 44.4 1,640,101 1,707,655 -4.0

Total 3-wheeler sales 64,211 30,065 113.6 63,785 0.7 512,679 388,741 31.9

3W exports 25,129 14,680 71.2 27,206 -7.6 226,189 170,167 32.9

3w domestic sales 39,082 15,385 154.0 36,579 6.8 286,490 218,574 31.1

Total Sales 353,147 241,889 46.0 292,547 20.7 3,314,560 3,119,480 6.3

Total Domestic Sales 202,193 135,188 49.6 149,509 35.2 1,926,591 1,926,229 0.0

Total Exports 150,954 106,701 41.5 143,038 5.5 1,387,969 1,193,251 16.3

Exports as % of sales 42.7 44.1 -137 bps 48.9 -615 bps 41.9 38.3 362 bps


Hero MotoCorp: Sales volumes

448

459 537

530

561

547

554

599

630

550

525

414

563

39

65

73

65

73

77

69

80

91

81 80

59

79

0

10

20

30

40

50

60

70

80

90

100

0

150

300

450

600

750

Ja

n-17

Ma

r-17

Ma

y-1

7

Ju

l-1

7

Sep

-17

Nov-17

Ja

n-18

('0

00s)

('0

00s)

Motorcycles Scooters

Source: Siam, ICICIdirect.com Research

Bajaj Auto: Sales volumes

212

245

244 294

277

205 2

65

284

370

326

264

229 2

89

30

29

28

36

37

40

43

51

59

57

62

64

64

44

42

38

46

45

48

3940

34 35

45

49

43

30

32

34

36

38

40

42

44

46

48

50

0

50

100

150

200

250

300

350

400

450

500

Jan-17

Mar-17

May-17

Jul-17

Sep-1

7

Nov-17

Jan-18

(%

)

('0

00s)

Two-Wheelers Three-Wheelers % exports



TVS Motors (TVSMOT)

TVS’ volumes (2-W+3-W) for January 2018 came in at ~2.7 lakh

units, up 31.3% YoY. The 2-W volumes grew 30.1% YoY while 3-

W volumes grew 81.6% YoY

Motorcycle segment volumes grew 65.8% YoY to 98,649 units.

Volumes of Apache & Star City (family) grew 58.7% YoY to 40,531

units & 64.9% YoY to 31,380 units. Volumes of Sport grew 52%

YoY to 13,360 units. Its scooter volumes grew 20.8% YoY to

85,521 units. This was after overall volume of Jupiter grew 25.3%

YoY to 65,243 units. Volumes of Pep+ grew 39.7% YoY to 10,684

units. However, Wego volumes declined 40.5% YoY to 3,462

units. Its moped volumes grew 9.7% YoY at 78,825 units

Export volumes grew 25.5% YoY to 42,802 units as 2-W & 3-W

volumes grew 19.6% YoY to 36,003 units & 69.9% YoY to 6,799

units, respectively



Motorcycles 98,649 59,511 65.8 95,281 3.5 1,107,868 921,631 20.2

Scooters 85,521 70,813 20.8 83,640 2.2 940,373 717,670 31.0

Mopeds 78,825 71,885 9.7 68,709 14.7 722,478 761,151 -5.1

Total 2-W Sales 262,995 202,209 30.1 247,630 6.2 2,770,719 2,400,452 15.4

3-Wheelers 8,806 4,850 81.6 9,279 -5.1 78,059 58,669 33.0

Total Sales 271,801 207,059 31.3 256,909 5.8 2,848,778 2,459,121 15.8

Exports(incl. in above) 42,802 34,110 25.5 47,818 -10.5 451,854 348,205 29.8

Exports as % of sales 16.3 16.9 19.3 16.3 14.5

Domestice sales 228,999 172,949 32.4 209,091 9.5 2,396,924 2,110,916 13.5


Honda Motorcycles & Scooters India (HMSI)

For January 2018, HMSI’s overall volumes grew 33% YoY to

517,778 units. This was after domestic motorcycle & scooter

volume grew 21.8% YoY & 39.6% YoY, respectively

Domestic motorcycles volumes grew 21.8% YoY as volumes of

CB Shine grew 17.2% YoY to 82,390 units. Domestic volumes of

Dream & LIVO grew 64.8% YoY to 30,969 units & 11% YoY to

18,627 units, respectively. Domestic scooter volumes grew 39.6%

YoY, after Activa volumes grew 23.8% YoY to 243,826 units.

Volumes of Dio grew 81% YoY to 39,397 units. Volumes of Aviator

grew 39.2% YoY to 11,132 units. The newly launched CLIQ &

Grazia volumes were at 1,304 units & 22,656 units, respectively, in

January 2018

Export volumes grew 35.5% YoY to 28,923 units, mainly after

scooter volumes, grew 55.7% YoY to 16,052 units. Its export share

was at 5.6% of sales



Motorcycles 169,537 139,161 21.8 124,425 36.3 1,637,142 1,339,540 22.2

Scooters 319,318 228,811 39.6 238,820 33.7 3,231,353 2,693,631 20.0

Total Sales 517,778 389,313 33.0 390,439 32.6 5,163,831 4,248,456 21.5

Exports(incl.above) 28,923 21,341 35.5 21,879 32.2 295,336 232,397 27.1

Exports as % of sales 5.6 5.5 10 bps 5.6 -2 bps 5.7 5.5 25 bps

Domestice sales 488,855 367,972 32.9 368,560 32.6 4,868,495 4,016,099 21.2


TVS Motors: Sales volumes

60

58 9

6

100

118

112

109

112

144

125

93

95

99

71

69

84

81 8

6

90

92

114 1

22

107

78

84

86

72

78

71

60

72

66

62

83

85

76

72

69 79

0

50

100

150

200

250

300

350

400

Jan-17

Mar-17

May-17

Jul-17

Sep-1

7

Nov-17

Jan-18

('0

00s)

Motorcycles Scooters Mopeds


HMSI: Motorcycles & scooter sales volumes

139

120

85

183

176

145

168

192

183

144

151

124

170

229

250

254

369

334

271

344 3

94

386

293

282

239

319

0

75

150

225

300

375

450

525

600

675

Jan-17

Mar-17

May-17

Jul-17

Sep-1

7

Nov-17

Jan-18

('0

00s)

Motorcyc les Scooters



PV segment witnesses some recovery

The overall passenger vehicles segment grew 8.9% YoY to 342,103 units

for January 2018. Domestic PV volumes grew 7.6% YoY to 285,477 units

while exports grew 16.4% YoY to 56,626 units. Within the sub-segment,

the utility vehicle (UVs) segment reported healthy growth of 41.7% YoY to

98,787 units, driving overall PV volumes. Volumes of car segment

reported marginal growth of 0.1% YoY to 227,663 units while that of vans

declined 6.8% YoY to 15,653 units. With MSIL having a strong presence in

the car space, which grew marginally, the company reported modest

volume (up 4.8% YoY to 151,351 units), underperforming the PV industry.

For January 2018, the UV1 sub-segment grew 49.5% YoY to 72,571 units,

driven by Ford India (Eco sport), which grew 154.8% YoY to 13,579 units,

Honda Car’s (WR-V) volumes were at 4,323 units while Tata Motor’s

(Nexon) volumes were at 5,018 units. MSIL’s Vitara Brezza‘s overall

volumes grew 29.6% YoY to 11,919 units. The facelift of S-Cross lifted its

volumes to 3,648 units vs. 2,600 units in January 2017. Volumes of Gypsy

were at 940 units vs. 79 units in January 2017. Hyundai’s Creta volumes

grew 10.4% YoY to 12,409 units. Volumes in the UV2 space grew 9.7%

YoY to 18,324 units. Volumes of Toyota’s Innova grew 40.3% YoY to 7,031

units while that of Honda Cars BR-V declined 27.2% YoY to 1,191 units.

Aggregate volumes of all M&M’s models in the UV2 category (viz. Scorpio,

Bolero Plus, Xylo, XUV5OO) grew 12.4% YoY to 9,656 units. The segment

was impacted after General Motors stopped selling vehicles in India (Enjoy

& Tavera aggregate volume was at 751 units in January 2017).

Commercial vehicle volumes grew 36.6% YoY to 94,902 units, as M&HCV

volumes grew 16.9% YoY to 38,676 units & LCV volume grew 54.6% YoY

to 56,226 units. M&HCV volumes were driven by increase in restrictions on

overloading & pick-up in infrastructure projects while LCV volumes were

aided by an increase in demand from e-commerce sector and also due to

higher demand from container & refrigerator vehicles. The MHCV/LCV

volume ratio was at 41:59 in January 2018 vs. 28:72 in April 2017 vs. the

average ratio 41:59 over the past 36 months.

Market share movement

According to Siam, the domestic market share for passenger vehicles (PV)

and commercial vehicles (CV) in January 2018 was as follows:

Exhibit 11: Domestic market share movement in passenger vehicles

47.6

16.8

5.6

7.6

4.9

17.4

50.3

16.4

6.0

7.3

5.4

14.7

50.1

16.4

6.2

7.4

5.3

14.6

0 10 20 30 40 50 60

Maruti

Hyundai

Tata Motors

M&M

Honda Cars

Others

(%)


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

MSIL continues to dominate the PV segment with market

share of 50% in January 2018


Exhibit 12: Market share movement in A2 segment

25.922.8

67.3 68.8

0

10

20

30

40

50

60

70

80

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

(%

)

Hyundai Maruti

Source: Siam, Top two PV OEMs considered

Exhibit 13: Domestic market share movement in commercial vehicles

18.3

25.3

43.3

13.1

18.0

26.0

44.1

11.9

18.2

25.8

44.1

11.9

0

5

10

15

20

25

30

35

40

45

50

ALL M&M Tata Motors Others

(%

)


Source: Siam Data used is YTD

Exhibit 14: Segmental share in CVs

44.5

40.75

55.5

59.25

0

10

20

30

40

50

60

70

80

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

(%

)

M&HCV LCV

Source: Siam

The A2 (Mini & Compact) segment is the bread & butter

category of the passenger car segment. The segment

witnessed a demand revival, with volumes up 8.4% YoY on

a YTDFY18 basis, primarily supported by market leader

MSIL, which grew 16.5% YoY in the same segment

M&HCV & LCV volumes increased 16.9% YoY & 54.6% YoY,

respectively, in January 2018. Thus, overall CV volumes

grew 36.6% YoY

Tata Motors continues to be the market leader in the

overall CV space with market share of ~44% and is

followed by M&M with market share of ~26% in January

2018

The MHCV/LCV ratio was at 41:59 in January 2018 vs.

28:72 in April 2017, after M&HCV volumes sharply

recovered from July 2017 onwards. Average M&HCV

volumes (in the past 36 months) has been ~41% of total

CV sales


Tata Motors (TATMOT)

Tata Motors’ overall standalone volumes increased 39.4% YoY to

64,624 units, backed by its domestic CV & PV segment, which

grew 38.1% YoY & 55.4% YoY, respectively

Domestic M&HCV volumes increased 15.6% YoY to 16,012 units

while LCV volumes grew 59.3% YoY to 23,374 units driven by

increased in restrictions on overloading, pick-up in infrastructure

projects, increase in demand from e-commerce sector and also

higher demand from container & refrigerator vehicles. On the PV

side, volumes of Tiago & Tigor were at 8,297 units & 3,189 units,

respectively. Within its UV portfolio, volumes of Hexa (launched in

January 2017) & Nexon (launched in September 2017) were at 873

units & 5,018 units, respectively, in January 2018

JLR’s wholesale volumes grew 1.8% YoY at 49,631 units. Jaguar

volumes grew 4.4% YoY to 16,108 units. Land Rover volumes

grew 0.6% YoY to 33,523 units. We believe the Chinese market

would have largely supported the overall growth



Domestic MHCV 16,012 13,849 15.6 19,298 -17.0 127,813 116,222 10.0

Domestic LCV 23,374 14,672 59.3 21,149 10.5 181,126 142,362 27.2

Domestic Pass.Car Sales 13,415 10,600 26.6 8,138 64.8 111,264 111,500 -0.2

Domestic UV 6,640 2,307 187.8 6,042 9.9 38,020 14,052 170.6

Exports 5,183 4,921 5.3 6,293 -17.6 40,921 53,468 -23.5

Total Sales 64,624 46,349 39.4 60,920 6.1 499,144 437,604 14.1

Jaguar 16,108 15,427 4.4 16,826 -4.3 138,953 142,088 -2.2

Landrover 33,523 33,313 0.6 38,240 -12.3 361,431 332,337 8.8

Total JLR Sales 49,631 48,740 1.8 55,066 -9.9 500,384 474,425 5.5


Maruti Suzuki India (MARUTI)

Maruti Suzuki’s (MSIL) volumes grew 4.8% YoY to 151,351 units

Volumes of its domestic mini car segment de-grew 12.2% YoY, as

volumes of Alto & Wagon R declined 16.8% YoY & 5% YoY

respectively. Domestic volumes of Baleno & Vitara Brezza were at

17,770 & 11,785 units, respectively. DZire’s (domestic) volumes

normalised at 18,053 units, adjusting for production ramp up & the

waiting period. Export volumes grew 2.8% YoY to 10,751 units

MSIL has commissioned a study to gauge the requirement of

potential customers as it embarks on the journey to bring on road

affordable electric vehicle by 2020



Omni, Eeco,Versa 12,250 14,179 -13.6 11,420 7.3 129,023 126,186 2.2

Alto, Wagon-R, Zen, Swift,Ritz,

Celerio, Dzire,Baleno 101,184 93,745 7.9 85,482 18.4 970,260 827,078 17.3

SX4, Swift Dzire Tour, Ciaz 5,062 9,531 -46.9 2,382 112.5 49,695 82,516 -39.8

Total Passengers 118,496 117,455 0.9 99,284 19.4 1,148,978 1,035,780 10.9

Gypsy, Vitara,Ertiga,Brezza 20,693 16,313 26.8 19,276 7.4 210,671 159,567 32.0

Total Domestic 139,189 133,768 4.1 118,560 17.4 1,359,649 1,195,347 13.7

LCV (Super Carry) 1,411 166 NA 726 NA 7,369 460 NA

Exports 10,751 10,462 2.8 10,780 -0.3 102,134 102,753 -0.6

Total Sales 151,351 144,396 4.8 130,066 16.4 1,469,152 1,298,560 13.1


Source: Company, Siam.

Maruti Suzuki India: Sales volumes

144

130

140

151

137

106

165

164

163

146

155

130 151

7.2

7.1

0

2

4

6

8

10

12

14

0

20

40

60

80

100

120

140

160

180

Jan-17

Mar-17

May-17

Jul-17

Sep-1

7

Nov-17

Jan-18

(%

)

('0

00s)

Total Sa les Ex port %


Tata Motors: Domestic sales volume

33.2

33.4

41.4

18.0

27.4

29.1

31.1

34.6

40.6

36.6

40.0

46.5

44.3

13.2

14.1

15.7

12.9

10.9

11.3

15.1

14.4 1

7.6

16.6

17.4

14.4

20.3

0

10

20

30

40

50

60

70

Jan-17

Mar-17

May-17

Jul-17

Sep-1

7

Nov-17

Jan-18

(000's

)

CV Sa les PV Sales


Jaguar Land Rover sales volume

48.7 54.6

71.6

41.9

47.1

49.4

51.4

44.4

57.4

49.8

54.2

55.1

49.6

10

20

30

40

50

60

70

80

0

20

40

60

80

100

Jan'1

7

Feb'1

7

Mar'1

7

Apr'1

7

May'1

7

June'1

7

July

'17

Aug'1

7

Sept'1

7

Oct'1

7

Nov'1

7

Dec'1

7

Jan'1

8

(000's

)

(%

share o

f total volu

mes)

% Jaguar % LR JLR total volumes(RHS)



Ashok Leyland (ASHLEY)

Ashok Leyland’s (ALL) volumes grew 21.7% YoY to 18,100 units,

as M&HCV volumes grew 13.2% YoY to 13,642 units. Its LCV

segment grew 58.3% YoY to 4,458 units. On a YTDFY18 basis, its

M&HCV market share has improved 67 bps YoY to ~34% YoY

Volumes of M&HCV passenger increased 10% YoY to 1,871 units

while M&HCV goods volumes grew 13.7% YoY to 11,771 units.

Exports grew 39.7% YoY, with overall share at 8.9% of sales

ALL aims to diversify its business with focus on 1) LCV – aiming to

launch one product per quarter; 2) Exports – plans to increase

export revenue to >30% from the current <10%; 3) Aftermarket –

aims to increase higher margin aftermarket business; 4) Defence –

aims to increase its revenue by 10x (from the current revenue of

~| 500 crore to | 5,000 crore, going forward)

Mahindra and Mahindra (MAHMAH)

M&M’s overall automotive volumes grew 32.4% YoY to 52,048

units. Its core domestic UV volumes grew 15.7% YoY to 22,235

units. Volumes of Bolero grew 31% YoY to 7,251 units. Volumes

of TUV3OO & KUV1OO increased 9.2% YoY to 2,680 units & 2.4%

YoY to 2,806 units, respectively. Volumes of XUV5OO & Scorpio

increased 15.3% YoY to 2,584 units & 14% YoY to 5,340 units,

respectively

M&M’s tractor volumes grew 37.5% YoY to 21,875 units. Domestic

tractor industry volumes grew 38.1% YoY to 49,753 units & 18%

YoY to 590,384 units for January 2018 & YTDFY18, respectively



M&HCV Passenger 1,871 1,701 10.0 1,628 14.9 16,184 18,332 -11.7

M&HCV Goods 11,771

10,355 13.7 14,320 -17.8 84,465 68,363 23.6

LCV 4,458 2,816 58.3 3,303 35.0 33,568 25,612 31.1

Passenger Vehicles - 0 NA 0 NA - - NA

Total Sales 18,100 14,872 21.7 19,251 -6.0 134,217 112,307 19.5

Exports 1,616 1,157 39.7 1,367 18.2 14,351 9,787 46.6





UV’s 22,235 19,217 15.7 14,514 53.2 188,345 179,185 5.1

4-Wheeler pickups 19,309 12,737 51.6 15,749 22.6 157,296 136,322 15.4

M & HCV 1,693 1,153 46.8 1,793 -5.6 13,060 11,364 14.9

Total 4wheeler Sales 44,688 33,986 31.5 33,085 35.1 370,427 332,825 11.3

3-Wheeler 4,744 3,056 55.2 3,894 21.8 42,885 43,818 -2.1

Total Domestic Auto Sales 49,432 37,042 33.4 36,979 33.7 413,312 376,643 9.7

Exports 2,616 2,261 15.7 2,221 17.8 22,149 32,242 -31.3

Total Auto Sales 52,048 39,303 32.4 39,200 32.8 435,461 408,885 6.5


Tractors - Domestic 20,647 14,776 39.7 16,671 23.8 255,696 216,602 18.0

- Exports 1,228 1,133 8.4 1,617 -24.1 12,927 12,046 7.3

Total Tractors 21,875 15,909 37.5 18,288 19.6 268,623 228,648 17.5



Mahindra and Mahindra: Sales volume

39.3

42.7

56.0

39.4

41.9

35.7 41.7

42.1

53.7

51.1

38.6

39.2

52.0

0

10

20

30

40

50

60

70

Ja

n-17

Feb

-17

Mar-17

Apr-1

7

May-1

7

Ju

n-17

Ju

l-17

Aug-1

7

Sep-17

Oc

t-17

Nov-1

7

De

c-17

Ja

n-18

(000's

)

Source: SIAM, ICICIdirect.com Research

Mahindra and Mahindra: Tractor sales

15.9

15.0 19.3

26.0

25.6

32.9

18.8

16.5

45.6

40.3

22.8

18.3 21.9

0

5

10

15

20

25

30

35

40

45

50

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

(000's

)

Source: SIAM, ICICIdirect.com Research

Ashok Leyland: Total sales

12.1

11.3 15.3

4.5

6.1 9

.2

9.0

10.6

11.8

9.1

10.6 1

5.9

13.6

2.8

2.7

3.4

2.6 2

.9

3.1

3.0 3

.0 3.6

3.8 3

.8

3.3

4.5

0

5

10

15

20

25

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

(000's

)

M&HCV LCV



Top domestic model wise volumes for January 2018

Exhibit 19: Top 10 passenger vehicle – Models sold in India (in units)

S.No. Models Jan-17 Models Jan-18

1 Alto 22,998 Alto 19,134

2 DZIRE TOUR 18,088 DZIRE 18,053

3 Wagon R 14,930 Baleno 17,770

4 Swift 14,545 Swift 14,445

5 Grand i10 13,010 Wagon R 14,182

6 Elite i20 11,460 Grand i10 12,109

7 Celerio 10,879 VITARA BREZZA 11,785

8 Baleno 10,476 Elite i20 9,650

9 VITARA BREZZA 8,932 Creta 9,284

10 Omni 8,723 Tiago 8,287

Source: Siam

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

S.No. Models Jan-17 Models Jan-18

1 Splendor 208,512 Activa 243,826

2 Activa 196,996 Splendor 231,356

3 HF Deluxe 122,202 HF Deluxe 171,167

4 CB Shine 70,294 CB Shine 82,390

5 TVS XL Super 69,373 TVS XL Super 76,309

6 Passion 56,335 Glamour 75,533

7 Jupiter 51,868 Jupiter 64,990

8 Classic 350 39,391 Passion 61,661

9 Glamour 38,204 Pulsar 56,919

10 Pulsar 36,456 Classic 350 53,221

Source: Siam


Upcoming 2-Ws & 4-Ws in India

Exhibit 21: Upcoming OEM wise 2-Ws and 4-Ws in India

S.No. OEM Bramd / Model Launch Date

1 Maruti Suzuki Vitara Apr-18

2 Maruti Suzuki New Ertiga Jun-18

3 Maruti Suzuki Jimmy Dec-19

4 Hyundai New Eon Apr-18

5 Hyundai i20 Sport Jun-18

6 Hyundai Kona Nov-18

7 Mahindra & Mahindra New XUV5OO Aug-18

8 Honda Cars Honda Civic Mar-18

9 Honda Cars Amaze Jun-18

10 Honda Cars Honda CR-V Mar-19

11 Hero Motocorp Dare 125 Mar-18

12 Hero Motocorp Hatsur Mar-18

13 Hero Motocorp Xtreme 200R Apr-18

14 Hero Motocorp Xpluse Jun-18

15 Hero Motocorp Duet-E Nov-18

16 Hero Motocorp Duet 125 Nov-18

17 Hero Motocorp Maestro Edge 125 Dec-18

18 TVS Motors Dazz Mar-18

19 Eicher Motors Continental GT 650 Jun-18

Source: Company, ICICIdirect.com Research, Autondtv


State wise sales mix for H1FY18 (April – September 2017)

Exhibit 22: Top 10 state wise PV volume for H1FY18 (in units)

189580

135496

144231

136077

115311

114967

103281

82438

78520

62191

192936

113998

124450

125437

123563

111999

99804

80175

67620

59271

-1.7

18.9

15.9

8.5

-6.7

2.73.5

2.8

16.1

4.9

-10

-5

0

5

10

15

20

25

0

50000

100000

150000

200000

250000

Maharashtra

U.P

.

Guja

rat

Kerala

Karnataka

Tam

il N

adu

Delh

i

Haryana

Raja

sthan

Tela

ngana

H1FY18 (units) H1FY17 (units) YoY growth %

Source: Siam

Exhibit 23: Top 10 state wise 2-W volume for H1FY18 (in units)

1426274

989123

857614

657583

717108

652141

486396

581348

618124

5388501103495

989149

869836

644140

656101

644168

408737

482579

548514

504253

29.3

0.0-1.4

2.1

9.3

1.2

19.020.5

12.7

6.9

-5

0

5

10

15

20

25

30

35

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

U.P

.

Maharashtra

Tam

il N

adu

Andhra P

radesh

Guja

rat

Karnataka

Bih

ar

Madh. P

rad.

Raja

sthan

West B

engal


Source: Siam

State wise market share of PV for H1FY18

Maharasht

ra

12%

U.P.

8%

Gujarat

9%

Kerala

8%

Karnataka

7%

Tamil Nadu

7%

Delhi

6%

Haryana

5%

Rajasthan

5%

Telangana

4%

Others

29%


State wise market share of 2-W for H1FY18

U.P., 14%

Maharashtra,

9%

Tamil Nadu, 8%

Andhra

Pradesh, 6%

Gujarat, 7%

Karnataka, 6%

Bihar, 5%

Madh. Prad.,

6%

Rajasthan, 6%

West Bengal,

5%

Others, 28%



State wise sales mix for H1FY18 (April–September 2017)

Exhibit 24: Top 10 state wise CV volume for H1FY18 (in units)

43870

32263

27449

24636

23032

21144

20712

20017

18912

12678

43535

26105

29322

23422

22301

23684

23249

17381

18649

10748

0.8

23.6

-6.4

5.23.3

-10.7 -10.9

15.2

1.4

18.0

-15

-10

-5

0

5

10

15

20

25

30

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Maharashtra

U.P

.

Tam

il N

adu

Raja

sthan

Karnataka

Andhra P

radesh

Guja

rat

Haryana

West B

engal

Assam


Source: Siam

Exhibit 25: Top 10 state wise 3-W volume for H1FY18 (in units)

26793

40588

19721

21712

18379

17562

15265

17169

14271

10158

27456

41334

22169 33016

18975

20231

15592

19538

13938

8573

-2.4 -1.8

-11.0

-34.2

-3.1

-13.2

-2.1

-12.1

2.4

18.5

-40

-30

-20

-10

0

10

20

30

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Guja

rat

Maharashtra

Karnataka

Andhra P

radesh

Tela

ngana

U.P

.

Kerala

Bih

ar

Tam

il N

adu

Madh. P

rad.


Source: Siam

State wise market share of CV for H1FY18

Maharashtra

12%

U.P.

9%

Tamil Nadu

8%

Rajasthan

7%

Karnataka

7%

Andhra

Pradesh

6%

Gujarat

6%

Haryana

6%

West Bengal

5%

Assam

4%

Others

30%


State wise market share of 3-W for H1FY18

Gujarat, 10%

Maharashtra,

16%

Karnataka, 8%

Andhra

Pradesh, 8%

Telangana, 7%

U.P., 7%Kerala, 6%

Bihar, 7%

Tamil Nadu,

5%

Madh. Prad.,

4%

Others, 22%



Auto Expo 2018 - Flavour of EVs

We attended Auto Expo 2018 – the motor show (OEMs) and components

show. The motor show registered >600,000 footfalls and witnessed >500

products display from >100 exhibitors. Given the government’s

aggressive plan of electrifying all new vehicles by 2030, most of the

participant OEMs in the recently concluded Auto Expo 2018, emphasised

on hybrid & electric vehicles. The new technology solutions were offered

by start-ups and new entrants, which grabbed a good response. Some

prominent OEMs (viz. Bajaj Auto, Harley Davidson, Triumph, Volkswagen

group, Ford, Volvo, Jeep, Audi & others) opted to stay out of the show.

Within the PV space – new launches were made by MSIL – Swift and

Hyundai’s - Elite i20 while the concept vehicle on EV were displayed by

most of the OEMs. Within the 2-W space, the premiumisation trend

continued with a slew of 125 cc scooter launches & premium motorcycles.

Ashok Leyland unveiled its first electric bus that has swappable battery

option and is developed in partnership with the Sun Mobility.

New launches + EVs = make PV segment

MSIL’s new Swift with an attractive price point (| 4.99 lakh) was one of the

key highlights in terms of new launches. Further, MSIL is thinking ahead

on technology for the next generation and showcased two concepts -

FutureS (SUV) & e-Survivor (small electric off-roader). Hyundai’s Ioniq is

the first car to be offered in three electric versions – hybrid, plug-in-hybrid

and all-electric. It also launched Elite i20 at a price of | 5.34 lakh & | 6.73

lakh for the petrol and diesel variants, respectively. TML showcased two

concepts 1) H5X - new SUV that has a new impact design 2 and is built on

all new platform and is expected to be launched by Q4FY19E and 2) a

product on Alfa Arc platform – premium hatchback. The company also

unveiled the Nexon AMT variant, which will be up for sale in the next

couple of months. M&M showcased its Rexton G4, which is expected to

be launched in 2018 and the TUV Stinger concept. It also unveiled its

production ready eKUV100 apart from eVerito and e2o plus, which will

further strengthen its EV portfolio. Apart from that, Honda Cars launched

the new Amaze, CR-V, Civic while Toyota launched Yaris. The auto expo

2018 also saw the new brand entry in the country of Kia Motors, which will

start Indian sales after the commencement of its Andhra Pradesh plant in

mid-2019 that will have an initial capacity of 300,000 units per annum. The

company showcased the new Stinger Sport & all new SP SUV concept.

Nissan Leaf’s all electric – Joe received a good response and is one of the

four popular cars being sold in Europe.

Premiumisation trend seen in 2-W segment

The 2-W segment witnessed a premiumisation trend with new scooter

being launched in 125 cc segment and higher end motorcycle. HMCL

unveiled XPluse 200, which is the only adventure motorcycle in its class.

HMCL also marked its foray into the growing 125 cc scooter segment with

the launch of Duet and Maestro Edge. HMSI unveiled 11 new products,

including all-new 160cc motorcycle X-Blade that will be launched next

month & introduce the fifth generation Activa 5G. TVS Motors introduced

ethanol based - Apache RTR 200 Fi. It also unveiled – Zeppelin motorcycle

with 220 cc engine mated with patented Integrated Starter Generator (ISG

– claims to start motorcycle quicker) and Creon – a concept electric

scooter that offers 80 km range on a full charge & is powered by 3 Li-on

batteries than can produce 12 km of power. Apart from that 1) Suzuki

launched Burgman Street – 125 cc scooter, GSX S750 motorcycle, which

is its first sub 1000 cc big bike in India; 2) Piaggio Group launched Aprilia

SR 125 (scooter) at | 65,310 (ex-showroom, Pune) and Vespa Elettrica &

introduced mobile connectivity options for Vespa and Aprilia scooters.


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 [email protected]

ICICIdirect.com Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]


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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 associates 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

and their relatives 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 or their relatives 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.

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.

The company has been received a mandate from Mahindra and Mahindra. The report is prepared based on publicly available information.

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