initiating coverage report- auto

1

August 2, 2012

AUTOMOBILE SECTOR

Sector Overview

Slowdown in demand is visible across segments excluding UV’s & LCV: - Slowdown is seen in the passenger car segment and 2W Volumes. But UV’s & LCV’s maintain strong volume growth. But bullish on high volume growth due to strong economic growth, new product launches & export potential. Margins to improvement from 1QFY13 onwards: Operating margins are estimated to improve in FY13, benefitting from price increases and stable commodity cost. However, volatile Forex in some segments would restrict pricing power.

Receding Macro indicators augur well for FY13: Reversal of interest rate cycle & anticipated cut in rates augurs well for PV and CV demand. We expect majority of growth to come in 2HFY13. Easing of rates would be a key trigger for re-rating of auto stocks. However, increase in fuel price (on top of 2% increase in excise duty) is a potential negatives in the short term.

Projections

The government and industry has projected that the industry’s turnover would increase from US$ 34 billion to US$ 145 billion, an investment of US$ 35-40 billion (Rs.160,000 -180,000 crores) and 25 million additional job would be created over a period of 10 years. The auto industry’s contribution to GDP would rise from nearly 5% to 10%, thus making it a greater driving force.

Forecast

The sales in the automobile sector is expected to grow by 9-11 per cent in 2012-13, supported by the monetary and fiscal easing on account of lower inflation, borrowing rates and high subsidies on diesel. New entrants that are set to make a mark in the industry are enthusiastic and we can thus expect innovation and technology to drive growth in the segment.

India is also set to become the third largest auto industry by volumes by 2015, owing to the increase in investments by auto makers, thus expanding the capacity from 4.8 million units in 2010 to 12 million in 2018.

% of Automobiles as Per Fuel Type

Automobile Domestic Sales Trends(no. of vehicles)

Category 2008-09 2009-10 2010-11

Passenger 1552703 1951333 2520421

Commercial 384194 532721 676408

Three Wheeler

349727 440392 526022

Two Wheeler

7437619 9370951 11790305

Grand Total 9724243 12295397 15513156

20.90%

13.40%

24.60% 28.60%

23.70% P

assenger V

ehicles

Co

mm

ercial V

ehicles

Two

Wh

eelers

Three

Wh

eelers

Gran

d To

tal

5-year CAGR in Automobile Exports

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August 2, 2012

ERC-IIFT | Equity | Automobile Sector

Industry

Due to its deep forward & backward linkages with several key segments

of economy, automobile industry has a strong multiplier effect and acts as

one of the key drivers of economic growth. The sector also has a lot of

potential for providing employment, which presently is quite low in

comparison to some other Asian countries like Malaysia, China, Korea.

Installed Capacities (in millions)

4 Wheelers 3.88

Two & three wheelers 14.31

Engines 0.49

The production of all categories of vehicles, have grown at a rate of 16%

per annum over the last five years.

Also Indian auto component industry is quite robust with around 500

companies in the organized sector producing almost all parts and more

than 10,000 firms in the unorganized sector.

The Sector has been identified as the ‘Sunrise Sector’ of the economy. The

Automotive Mission Plan 2006-16, a joint document of the government

and industry has projected that the industry’s turnover would increase

from US$ 34 billion to US$ 145 billion, an investment of US$ 35-40 billion

(Rs.160,000 -180,000 crores) and 25 million additional job would be

created over a period of 10 years. The auto industry’s contribution to

GDP would rise from nearly 5% to 10%, thus making it a greater driving

force.

30476 36612 33250

43296

58583

2006-07 2007-08 2008-09 2009-10 2010-11

Gross Turnover of the Automobile Industry in India 2006-07 to 2010-11

For Key Points……………………………

Automobile Production Trends(Number of vehicles)

Category 2009-10 2010-11

Passenger Vehicles

2,357,411 2,987,296

Commercial Vehicles

567,556 752,735

Three Wheelers

619,194 799,553

Two Wheelers

10,512,903 13,376,451

Grand Total

14,057,064 17,916,035

Source: SIAM

16% 4%

4%

76%

Domestic Market Share for 2010-11

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers

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August 2, 2012


The Indian automobile industry’s growth is driven by various factors which include:

Economic growth Rural economy Government duty Disposable income Infrastructure-Road Development

However, against this background of robust industry growth, the auto industry is deeply concerned about certain factors like:

High rate of excise duty on various kind of vehicles Rise in Interest rates Rise in commodity prices Low growth of Export markets High and varied rate of road taxes

Moreover, despite growth of the industry, India is still highly under

penetrated. In India, there are only 10 passenger vehicles per’000

population, 4 commercial vehicles per’000 population and 43 two

wheelers per’000 population. Globally, these figures are substantially

higher. For instance, Germany has 565 cars per’000 population, S Korea

has 238 cars per’000 population and Thailand 57 cars per’000 population.

In case of Commercial vehicles, the penetration in various countries is

much higher – 131 in Japan, 90 in Thailand, 88 in S Korea, etc. In two

wheelers also, countries like Thailand (286), Japan (100), Germany (69),

etc have much higher penetration.

The cumulative production data for April-September 2011 shows

production growth of 16.62 percent over same period last year.

Production in September 2011 grew at 19.96 percent as compared to

September 2010.

The cumulative growth rate of domestic sales recorded for April-

September 2011 was 14.36 percent. September 2011 registered a growth

rate of 19.39 percent as compared to September 2010.

Source: Siam

Production CAGR

17.90%

14.00% 11.90% 12.90% 12.90%

Passen

ger V

ehicles

Co

mm

ercial V

ehicles

Two

W

heelers

Three

Wh

eelers

Gran

d To

tal

5-Year CAGR

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August 2, 2012


# Passenger Vehicles segment grew marginally at 1.84 percent during

April-September 2011 over same period last year. # The overall Commercial Vehicles segment registered a growth of 17.85

percent during April-September 2011 as compared to the same period

last year. # Three Wheelers sales recorded de-growth at (-) 0.04 percent in April-

September 2011. # Two Wheelers registered a growth of 17.42 percent during April-

September 2011. # If we compare September 2011 to September 2010, the growth figures

for two wheelers was 24.27 percent. Three Wheelers registered

marginal growth at 0.90 percent in the month of September 2011.

During April-September 2011, overall automobile exports registered a

growth rate of 32.31 percent. Passenger Vehicles registered growth at

21.01 percent in this period. Two Wheelers, Commercial Vehicles and

Three Wheelers segments recorded growth of 32.34 percent, 35.91

percent and 49.55 percent respectively during April-September 2011. In

September 2011 compared to September 2010, overall automobile

exports registered a growth of 39.62 percent.

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers

Segment F12 Growth

Cars 0-2%

UVs 9-11%

Vans 8-10%

PV Total 2-4%

LCV Goods 28-30%

MHCV Goods 12-14%

Passenger Buses 0-2%

Total CV 18-20%

2W 13-15%

3W Goods 14-16%

3W Passenger 4-6%

3W Total 0-2%

Auto Total 11-13%

Source: Siam

20.90%

13.40%

24.60% 28.60%

23.70% P

assenger

Veh

icles

Co

mm

ercial V

ehicles

Two

Wh

eelers

Three

Wh

eelers

Gran

d To

tal

5-year CAGR

Export Trends

Export CAGR

5

August 2, 2012


Major Sector Constituents

COMPANY P/E EV/EBITDA ROE ROCE

Tata Motors 10.2 6.0 47.3 24.6

Maruti Suzuki 16.2 8.7 16.5 22.1

M&M 14.5 13.7 25 25.6

Hero

MotoCorp

20.5 15.2 62.5 59.2

Bajaj Auto 18.6 12.9 66.7 76.1

*As of 2011 Source:-Company Reports

Budget Impact

Auto industry has appreciated that there was a compulsion to increase base rates of service tax and excise duty, the industry had hoped that the excise duty on large cars would have come down from 22% to 16% rather than going up. The 27% excise duty will increase tax significantly for large premium cars.

Budget has been neutral for the sector as 2% increase in the excise duty would not impact demand considerably. But no tax on diesel is positive for Passenger Vehicles. Increase in excise on CV chassis is negative in the short term for the CV industry.

The industry is encouraged by 5 years extension of 200% weighted deduction of R&D expenditure under Income Tax Act and also welcomes the introduction of weighted deduction of 150% for expenditure on skills development. These measures will help the industry improve its products and performance.

The increase in Customs Duty on Cars and MUVs valued above USD 40,000/- from 60% to 75% seems to be a step to encourage local manufacturing, value addition and employment.

TRENDS IN DEPLOYMENT OF GROSS BANK

CREDIT TO AUTOMOTIVE SECTOR IN INDIA

Period Import Export

From China To China

2003-04 214 126

2004-05 371 128

2005-06 766 158

2006-07 1376 113

2007-08 2052 177

Source: Exim bank

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August 2, 2012


Challenges

Growth in input costs

Fuel price volatility

Slowdown in demand

Slowdown in USA

Production cuts

Growing Competition

Changing consumer preferences

Chinese competition

Environmental issue

Low R&D orientation

Infrastructure constraints

Incidence of Levies/Duties

Export competitiveness of Indian Automotive industry

In the last few years, Indian automotive market has emerged as one of the most vibrant markets in the world, with increasing number of technology transfers, foreign investments and R&D. Though there is slowdown in demand for automobiles due to recessionary conditions, in the long term there are opportunities for Indian automotive industry with an increasing trend in outsourcing of engineering design, assembly and manufacturing.

Industry Volatility

The level of volatility is medium. Over the past few years, the

motor vehicle manufacturing industry has become more volatile.

This has been the result of fluctuations in metal prices and fuel

prices, as well as the changes in legislation and assistance

packages. India’s increasing per capita disposable income and

growth in exports is playing a major role in the rise and

competitiveness of the industry. As per the BRIC report India’s

Source: Exim bank

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August 2, 2012


per capita disposable income from current year will rise by 106%

in 2015. This increase in the spending power has been a

forefront of the economic development. Also allowing

unrestricted foreign direct investment and removing foreign

currency neutralization and export obligations have been one of

the key factors to India’s automotive volatility.

Barriers to entry

Barriers to entry in this industry are also high.

The cost of developing high volume production facilities.

The ability to gain access to technology of major global operators

The relatively high competition between established domestic companies and foreign companies.

Future Outlook

The widening gap between petrol and diesel prices in India is

expected to create a humongous demand for the diesel cars.

Already, the demand for diesel cars is growing due to the

long term benefits provided by these vehicles.

The current market penetration of diesel cars is 36% which is

expected to cross the 45% mark by 2015-2016, according to

the current growth rate. The key driving force behind the

consumers preferring diesel cars over petrol cars is the

cheap fuel that they cash upon throughout the life of the

car. Moreover, the diesel is expected to provide a 25%

better mileage as compared to petrol, thus the initial

additional cost of Rs 80,000-100,000 is compensated in due

course of time. Another point noteworthy in the

corresponding graph is that of the rising share of the CNG

vehicles. CNG is also a cheap source of fuel for users that

offers the same benefits as the diesel. In fact, it is an even

cheaper fuel than diesel, and thus can be expected to make

a mark in the segment.

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August 2, 2012


Comparing the prices, petrol was deregulated by the

government in June 2010, which made its price market

determined and thus removed any higher cap on the prices.

The petrol prices have risen by almost 24% since then as

compared to only a 7% increase in the diesel prices. As can

be inferred, the diesel is a highly regulated fuel. Subsidies

on diesel form a major part of the entire subsidy budget,

thus making it a cheap source of fuel for the Indian

consumers.

As can be seen in the graph as well, the drift between the

prices of the two most consumed fuels has increased to 36%

from 29% in a span of 3 years.

As was being discussed before the budget announcement, the

government is under a great pressure to remove/reduce the

subsidies on diesel, kerosene and urea due to the rising fiscal

deficit which has been missing the budgeted target

remarkably. But despite the pressure, we may not witness a

drastic change in these subsidies, due to the elections that

would be approaching soon. The government would be

expected to spend more on the welfare of people to garner

goodwill, and this may prevent any hikes in the prices of

diesel.

The automobile companies are aware of these facts and hence

are capitalizing on the opportunity on offer, and hence more

and more carmakers are launching the diesel versions of their

cars.

A number of diesel models of the existing cars have been

launched in the last two months. Volkswagen, Nissan, General

Motors and Ford launched Polo, Micra, Beat and Figo in the

small-car segment with diesel variants as well. In 2010-11,

more than one-fifth of small cars sold were diesel cars. Of the

2.5 million cars and UVs sold in the year, 910,000 were diesel-

based.

PRICE COMPARISON: - PETROL & DIESEL

Source: www.ibef.org

9

August 2, 2012


This year more launches are expected in the segment, which

will increase the competition as well as choices for the diesel

car purchasers.

The already existing players are also not lagging behind in any

respect and capitalizing on the current demand-supply

mismatch, are eager to hike prices.

The country's largest car maker Maruti Suzuki India has raised the prices of the new diesel variants of its sedan DZire by up to Rs 12,000 from April’12. The reason being cited for the same is the rising input costs including diesel engine which costs more than the petrol engine.

Forecasts

The year 2011-2012 was a relatively good one for the automobile industry, where the commercial vehicles witnessed an exceptional growth of 18% on account of innovations and new entrants in the market. But to expect the same numbers in the current fiscal would not be a good assumption.

The world economic scenario is not at its best at present and thus we are witnessing a weakness in the economic growth, and the sluggish economy is set to affect all the major sectors adversely.

The growth was seen to slow down to 18% in 2011-12 from 28% in 2010-11, thus displaying a strong correlation between the economic scenario and automobile sector (especially commercial vehicles). Expecting a similar trend, the growth rate in the sector is again expected to decline sharply. To be on the optimistic side, we can expect the growth in the commercial sector vehicles to be around 10-13%, following the expected 7% growth in the GDP this fiscal.

Entry of the new players into the commercial vehicle industry is expected to change the dynamics of the sector. There are many International players set to make their debut in this segment in the Indian market. Some of the examples are that of companies like Daimler, Beiqi Foton, General Motors (GM), Shanghai Automotive Industry Corporation (SAIC), Nissan.

10

August 2, 2012


Where on one hand, these foreign players are set to make their mark on the industry; on the other hand, local veterans like Asia Motor Works, Ashok Leyland, Mahindra and Mahindra are expanding their product portfolio and adding more cars to their stock. These changing trends and increasing competition is certainly set to intensify the competition and is thus expected to benefit the consumers by reducing prices and increasing the choices for the customers, also accelerating product development in the industry. The approval for FDI in retail segments is also expected to

benefit the demand for advanced trucks. The demand can

also be driven by large fleet operators and large organized

retail players who are willing to pay upfront for more long

term profitability in terms of durability, higher comfort and

more productivity.

Budgetary and other Policy decisions would impact the sector positively as well as negatively The Union Budget this fiscal increased the basic excise duty on the commercial vehicles to 12 per cent from 10 per cent in the previous year. Owing to the rise in the excise duty in the budget, the prices of commercial vehicles are also expected to increase in line with the duty hike. Thus, a price rise is imminent in the near future, which may have a negative impact on the growth of the commercial vehicle segment. Talking about cars, the growth in the year 2011-12 was mere 2.2%. The major reason that was cited for the same was the numerous hikes in fuel prices that were made in the year 2011. Moreover, high inflation had caused the prices of automobiles to rise more than the rise in incomes. This was also a cause for the slow growth in the segment. As compared to the previous year, the current year is expected to be better in terms of easing inflation, owing to the cut in the interest rates. The lowering of borrowing rates, and a little less inflation are expected to benefit the sector by increasing the sales in the FY2012-13. Adding to the positive factors, the low base of the last year may help to put up good growth numbers. The utility vehicles also posted huge numbers in 2010 by growing by about 27 per cent in 2010-11. But the growth could not be extended to the tough year of 2011-12, and

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August 2, 2012


slowed down to around 14 per cent, backed by the variant launches in the segment. Carrying forward the trend of the previous year, even this year the sales are expected to go up by about 12-14%. This is not an easy target to achieve taking into account the already high numbers of the previous year, but it may be achievable, if backed by the new entrants in the market which are set to make their presence felt in the industry. Moreover, the demand for diesel vehicles is expected to rise on grounds of low prices, which would further help the sales in this segment. Serious investments and government support required for urban infrastructure and private transportation The need for the development of urban infrastructure is very high. The highway construction programme and public transportation is fast improving in select cities. Rising incomes are increasing the need of private transportation for individuals. Thus it is important that the government stands committed towards the development of urban infrastructure and private transportation and not just public transportation. Local auto component suppliers will also have to invest and strengthen their R&D culture even as global auto majors descend upon Indian shores Also local component suppliers will have to increase their businesses to keep pace with the rapid auto growth. Local automobile manufacturers cannot continue to source a majority of their supplies from abroad and will need the local component manufacturers to also catch on the wave of greater professionalism and technology that will be stimulated by the entry of global auto players. An opportunity of this kind calls for the Indian component manufacturers to raise their technological expertise by investing a greater proportion of their funds towards R&D and Engineering

12

August 2, 2012


Eicher Motors Q4 net profit surges 56 per cent

# Eicher Motors has reported a 55.74 increase in consolidated net

profit for the quarter ended December 31, 2011, to Rs 85.44 crore.

# Consolidated total income from operations also jumped by 26.79

per cent to Rs. 1,576.64 crore during the fourth quarter from Rs

1,243.51 crore in the year-ago period.

# EBITDA grew 27.7% Y-o-Y to Rs. 1.5 bn in Q4CY11 against

Rs. 1.2 bn in Q4CY10 due to price increase and better

product mix.

Eicher Motors hits 52-week high on better March

sales numbers

Eicher Motors march auto sales number were up at 6,051 units

versus 5,065, YoY and it touched a 52-week high of Rs 2,060.

Valuation & viewpoint

With new Royal Enfield plant which will begin production from FY13

and the new engine project starting from FY13, future prospects of

the company look very good and it should be on a path of robust

growth. As far as the pricing is concerned, with current market price

of Rs. 2156 it looks to be on higher side.

Dividend

For the year ending December 2010, Eicher Motors has declared an

equity dividend of 110.00% amounting to Rs 11 per share. At the

current share price of Rs 2158.00 this results in a dividend yield of

0.51% .The Company has a good dividend track report and has

consistently declared dividends for the last 5 years.

Announcement Date

Effective Date

Dividend Type

Dividend (%)

11/2/2012 13-03-12 Final 160

5/2/2011 8/3/2011 Final 110

15-02-10 5/3/2010 Final 70

30-03-09 20-05-09 Final 50

28-04-08 26-05-08 Final 50

6/3/2007 16-03-07 Interim 290

Listing Details - Eicher Motors

Key dates

AGM Date (Month) March

Book Closure Date (Month) March

Listing Information

Face value of equity shares 10

Market lot of equity shares 1

BSE Code 505200

NSE Code EICHERMOT

BSE Group A

BSE 1 Year Current

Open Price

1165 2140

High Price 1167.65 2212.95

Low Price 1119 2075.1

Last Price 1149.15 2180.05

Volume 1,463 10,756

0

200

400

600

800

Net Sales

Other Income

PBDIT Net Profit (Dec '11)

Quarterly (Dec '11) Yearly

Price Comparison vs Nifty

13

August 2, 2012


Current Position

Adverse product mix, high RM costs, higher discounts on the

PVs & declining PV business led to fall in margins of the

domestic business. CV sales were good during the year. On

the LCV front, the demand for Tata Ace family was high and

is expected to remain robust. On the PV side, improvement

was seen from Nano and Indica Vista variant which was

launched in mid 2011. This segment posed a flattish growth.

Valuation & viewpoint

Positive on the long term outlook and expected to witness

upgrades both in terms of earnings and valuations for

domestic as well as JLR business. Bullish estimates for FY13E

due to the better-than-expected performance of JLR, which

may receive strong currency benefits in both

realizations/costs in case US$, EUR turning favorable. Since

the start of the first quarter FY’12, the stock has given ~38%

returns. It has outperformed the broader market by approx

6% on an annual basis. Similar growth can be expected in

whole FY’12. EPS for the core business expected to be about

30.5 & EBITDA margin of 15%.

Jaguar Land Rover

JLR has been the most promising acquisition for TML. The JLR

business has witnessed strong volume growth (up ~24% YTD

FY12 at 2,17,108 units) led by popular Land rover products

(Evoque, RR-Sport) at 1,77,364 units, up ~34% YTD.JLR

reported all-time high monthly volumes of 30,981 units for

December 2011, up ~45% with both Land Rover and Jaguar

rising ~54% and 9%, respectively. The geographical demand

has been fuelled by Emerging markets like China, Brazil along

with the Developed markets of the US

1 YEAR

1 YEARPRICE

MOVEMENT

1 Year price movement

Listing Information

Debt(FY11) Rs 32791.4 Cr

Cash(FY11) Rs 10947.9 Cr

NSE Code TATAMOTOR.NS

EV Rs 85588.4 Cr

1 YEAR

1 YEARPRICE

MOVEMENT

Shareholding Pattern (Sep’ 11)


14

August 2, 2012


Volumes back to normal level

Maruti’s Net Sales grew by approximately 50% qoq, when the results of the fourth quarter were declared. Its total sales increased by 16.5% yoy to Rs11, 486cr in FY12. The company took a sigh of relief when the production returned to normal levels after being hit in the 3rd quarter of FY12.

EBITDA margin increased from lows

Higher volumes and cost control led EBITDA margin to increase by around 210bp qoq to 7.5%. However, higher discounts on petrol models (5-6% higher than 3QFY2012) and adverse currency movements limited EBITDA margin expansion. On a yoy basis, EBITDA margin was low due to an increase in raw material costs and employee costs.

Volume Trend Analysis

Domestic as a well as Exports volume increased sharply in 4QFY2012. Exports sales reported higher growth in yoy terms, while, Domestic growth was moderate at 2.9% yoy.

Maruti Suzuki in News

Maruti Suzuki India has raised the prices of the new diesel variants of its sedan DZire by up to Rs 12,000 from this month, citing input costs pressure."The company is feeling the pressure of input costs. To mitigate the impact, we have hiked the prices of only diesel variants of the new DZire with effect from May 1," a senior Maruti Suzuki India (MSI) official said.

Maruti Suzuki plans to introduce a hot Swift Sport though rumors suggest it could be a more modest version with either a 1.4-litre petrol engine from the Ertiga or a 1.6-litre engine from the SX4

Challenges Faced

Increasing competition from new comers can pose a threat to the company.

High inflation can lead to higher raw material cost, reducing the profit margins.

Labour unrest has been a major concern for the company since long and needs a permanent solution.

Listing Information



NSE Code MARUTI

EV Rs 29979 Cr

Q4'12 Q4'11 %YOY Q3'12 %QOQ

Domestic 321424 312389 2.9 211803 51.8

Exports 38910 30951 25.7 27725 40.3

54.21

12.67

20.29

6.21 2.46

Foreign Promoters Banks Fin. Inst. and Insurance

FII's Private Corporate Bodies

General public



http://economictimes.indiatimes.com/maruti-suzuki-india-ltd/stocks/companyid-11890.cms

http://www.zigwheels.com/newcars/Maruti-Suzuki/Swift-Dzire

http://www.zigwheels.com/newcars/Maruti-Suzuki

http://economictimes.indiatimes.com/topic/Swift-Sport

http://economictimes.indiatimes.com/topic/Ertiga

http://www.zigwheels.com/newcars/Maruti-Suzuki/SX4

15

August 2, 2012


Highlights of Q1 Results

The production volumes in terms of two-wheelers shrank by 1%, as compared to last year to 1.08 million units. Realizations per unit of vehicle grew up by 4.7% YoY to INR45,095, although it shrank 1.4% QoQ. Also, the net revenues grew by 3% YoY to INR48.6 billion. The current quarter may bring some good news for the company on account of the increased demand in Sri Lanka (due to price cuts) and the all‐India launch of new products such as Discover 125 ST and Pulsar 200 NS. The other financial ratios also failed to impress. Low profit margin was also a result of increased Tax rate at Pantnagar Plant. The tax rate increased to 29.5% (v/s 25.4% in FY12) on account of exhaustion of 100% tax exemption limit.

Bajaj Auto in News

Bajaj Auto has decided to go for an increase in price in the domestic market, from 14th July. The rise comes in to tackle the growing cost of raw materials. The company has raised the prices by INR500-1,000/unit in motorcycles and INR500-1,500/unit in 3Wheelers.

Future Expectations

The domestic volumes are not expected to soar rapidly owing to the delay in the festive season this year. Although the second half of the year may turn out to be bright beginning with the auspicious Diwali, which may boost sales of two-wheelers. The contentious issue in the case of both Sri Lanka and Egypt seems to be settling down, thus indicating a rise in the exports. But the rise in numbers in case of SL has to come at a cost of price cut to dilute impact of increase in custom duty, and is thus expected to have an adverse impact on EBITDA margins of the company. The Depreciating Rupee is also a big cause of concern due to the rising costs of raw materials. The rising raw materials cost is likely to result in another hike in domestic prices, which may again impact the growth of domestic sales.

Listing Information



NSE Code BAJAJ-AUTO

EV Rs 470.54 Bn

Q3FY11 Q4FY11 Q1FY12 Q2FY12

Sales 51854 49859 46514 48657

PAT 7910 8340 7590 7184

Promoters 50%

Domestic Investors

10%

Foreign Investors

15%

Others 25%



16

August 2, 2012


RESEARCH TEAM (AUTOMOBILE SECTOR)

Amit Gupta Senior Analyst [email protected]

Pushpjit Singh Malik Senior Analyst [email protected]

Vaibhav Gupta Senior Analyst [email protected]

ERC COORDINATORS

Amit Gupta +91 9718791688 [email protected]

Firasat Ali +91 8860837105 [email protected]

Vipul Agarwal +91 8860340536 [email protected]

Please send your feedback and queries to:

[email protected] or [email protected]

ALL RIGHTS RESERVED, EQUITY RESEARCH CELL

Indian Institute of Foreign Trade

New Delhi | Kolkata

Disclaimer: This document has been prepared by the Equity Research Cell at Indian Institute of Foreign Trade, New Delhi and is meant for

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are for academic purposes. This document is not to be reported or copied or made available to others without prior permission of ERC-IIFT.

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initiating coverage report- auto

Documents

automobile industry

sunrise sector

unorganized sector

largest auto industry

strong economic growth

strong volume growth

automobile exports

majority of growth