MotoGaze July 2016

July 22, 2016

Sector View

UVs & Scooters drive growth in June!!!

Overweight

Volume performance for June 2016

Company
Hero Motocorp
Bajaj Auto
TVS Motors
Maruti Suzuki
Tata Motors
Mahindra and Mahindra
Ashok Leyland

Gr.

YoY(%)
1.3
-4.3
13.7
-13.9
10.3
8.0
6.2

Key players & industry volume growth June16 (%)

-3.3
Industry
-5.8
HMCL

7.3

MoM gr
YoY gr

1.3

-8.7BAL
-4.3
TVS

0.7

13.7

HMSI-2.1

22.5

-19.7 -13.9 Maruti

TML

10.3
10.5

M&M
-4.0

8.0
4.87.0

Hyundai
ALL

6.2

Innova, Creta, & Viatra Brezza drives Utility Vehicle (UVs) segment!
12.5

Source: Siam

Key players & industry volume growth YTDFY17 (%)

9.8

Industry
HMCL

YTD gr

6.1

BAL-1.9
15.3

HMSI

TML

22.5
2.1
6.9
10.9

M&M
Hyundai

For June 2016, the overall Utility Vehicle segment registered growth of
51.3% YoY to 63,308 units (domestic volume up 35.2% YoY & exports
volumes up 223% YoY). The robust growth is supported by new launches
across players. In the domestic market Toyotas Innova leads the space
(domestic volumes of 8,171 units) followed by Hyundais Creta (domestic
volume of 7,700 units). Apart from that, Marutis Vitara Brezza & Fords
Ecosport also posted domestic volumes of 6,673 units and 4,612 units
respectively in June 2016.

Industry growth = Launches + improved sentiment + Pay Commission

TVS

Maruti

The Overall Automotive volume registered a growth of 7.3% YoY in June

2016 and was largely driven by Utility Vehicle (UVs) & Scooters segment.
Although the growth rate is decent, its pace on a sequential basis has
slowed down after the stronger volume growth of 14.5% YoY & 7.8% YoY
in the month of April & May 2016 respectively. For the month of June
2016, the overall Passenger Vehicle (PV) segment grew by 7.6% YoY
mainly due to strong volume growth of 51.3% YoY in UVs segment. The
volumes of Maruti Suzuki (MSIL), the market leader in the PV space
declined by 13.9% YoY post disruptions in its production activity. The
commercial vehicle (CV) volumes grew by 7.3% YoY, largely due to LCV
volumes which were up 11.4% YoY. The growth in the M&HCV
surprisingly moderated, registering marginal volumes growth of 1.4% YoY
for June 2016. The 2-W space reported growth of 7.9% YoY, largely due
to strong growth in scooter volumes (up 17.5% YoY) outpacing the
motorcycle growth (volumes up 3.3% YoY). Volumes of Honda
Motorcycles (HMSI) and TVS Motors registered good growth of 22.5%
YoY & 13.7%YoY respectively. The 3-W segment continued to face
headwinds in the export market, resulting in the overall volumes declining
by 6.6% YoY in June 2016. We believe the Auto sector will continue to
remain in a sweet spot, as multiple factors namely expectation of good
monsoon in 2016, governments focus on vehicle scrappage policy and 7th
pay commission will spur the automotive demand over the next two
years.

4.6

ALL

10.6

Source: Siam

Research Analyst
Nishit Zota
nishit.zota@icicisecurities.com
Vidrum Mehta
vidrum.mehta@icicisecurities.com

ICICI Securities Ltd. | Retail Equity Research

With expectations of an improvement in demand sentiments, we expect

the overall industry to grow 6-8% YoY in FY17E. We believe the PV space
will grow 8-10% YoY. Strong growth momentum in M&HCV volumes is
likely to continue (expect 16-17% YoY growth) while the LCV segment is
expected to recover in FY17E. The 2-W segment is likely to grow 5-7%
YoY, mainly led by growth in the scooter segment. Tractor industry
volumes are expected to grow 14-16% in FY17E, assuming above normal
monsoons and a gradual recovery due to a low base. On a longer term
basis, we remain positive on the growth prospects of the industry with a
rise in incomes augmenting auto penetration levels in the country in
addition to other favourable factors like lower interest rate & good
monsoons. We believe the auto industry will witness a demand recovery
mainly on the back of new launches & refreshes across segments. The
sector is expected to see the positive impact of the Pay Commission that
will incrementally boost PV volumes by ~16% in the next two years.
For June 2016, the BSE Auto Index was up ~4.4% outperforming the
benchmark index which was up ~1%. Among our I-direct auto coverage,
we remain bullish on frontline OEM stocks like Eicher Motors, Tata Motors
and M&M. However, with the favourable impact of operating leverage due
to increased demand as well as lower raw material prices, the earnings
growth trajectory for ancillary stocks is likely to remain on the uptrend.

Two & three wheeler industry

For the month of June 2016, the 2-W volumes registered growth of 7.9%
YoY which is mainly attributable to demand recovery in the rural space
(which is supported by better monsoons in 2016). In terms of category
wise growth, scooter segment continued to outpace the motorcycle
growth, up 17.5% YoY to 470,886 units. The major players in the scooter
space (namely HMSI & TVS) posted robust growth during the month. The
overall motorcycle volume grew 3.3% YoY mainly after the market leader
HMCL motorcycle volume remained flat (up 0.5% YoY to 486,225 units).
The moped segment (driven by TVS Motors) reported strong growth of
26% YoY to 76,953 units.
The 3-W volumes declined 6.6% YoY to 74,744 units, as domestic growth
of 10.2% YoY was offset by 27%YoY de-growth in the export market. The
3-W export market continues to remain challenging for the players.

Market share movement

According to data released by the Society of Indian Automobile
Manufacturers (Siam), the domestic market share of two and threewheeler players as of June 2016 is mentioned below.
The 2-W segment reported decent growth in June 2016;

Exhibit 1: Domestic market share movement in two-wheelers

45

post signs of a demand revival in rural areas. HMSI

40.3
40

reported strong volume growth thereby gaining market

share of ~170bps YoY to 27.2% in June 2016

Jun-15

May-16

Jun-16

38.0 37.6

35
30
25.5

27.0 27.2

(%)

25
20
15

13.0 13.2 13.5

12.2 12.4 12.1

9.0

10

9.5

9.6

5
0
Bajaj Auto

Hero MotoCorp

TVS Motors

HMSI

Others

Source: Siam, Data used is YTD

Exhibit 2: Domestic market share movement in three-wheelers

In June 2016, domestic 3W volumes grew 10.2% YoY.
Market leader BAL reported domestic volume growth of

Others

9.0
8.2

M&M

8.6
8.4

Jun-15

May-16

Jun-16

11.8

21.5% YoY, thereby gaining substantial market share (up

~900bps YoY to 53.9%)

10.8
28.5
28.4

Piaggio

32.6
53.9
55.0

Bajaj Auto
44.9
0

10

20

30

40

50

60

(%)

Source: Siam, Data used is YTD

ICICI Securities Ltd. | Retail Equity Research

Page 2

The domestic motorcycle segment witnessed signs of a

Exhibit 3: Domestic market share movement in motorcycles

demand recovery, with volumes up 7.5% YoY in June 2016.

60

53.5

Hero MotoCorp maintained its leadership position thereby

maintaining its share on a MoM basis. HMSI market share

Jun-15

May-16

Jun-16

50.6 50.6

50

improved during the month up 10bps YoY to 14.9%

(%)

40
30
20

17.9 18.9 18.6

14.1 14.8 14.9

6.5 7.1 7.1

10
0
Bajaj Auto

Hero Motocorp

TVS motor

Honda

Source: Company, ICICIdirect.com Research

The domestic scooter segment continued to outperform the

Exhibit 4: Domestic market share movement in scooters/scooterettes

motorcycle segment witnessing growth of 17.5% YoY for

Jun-15

70

June 2016. Market leader HMSIs leadership position was

further extended by ~50bps MoM to 58.1%. Further during

May-16

58.6 57.6 58.1

60

the month of June 2016, TVS Motors market share expanded

however HMCL witnessed some contraction in its share.

Jun-16

50

(%)

40
30
20

13.8

16.3 15.4

14.5 12.9 13.4

13.1 13.2 13.2

10
0
Hero Motocorp

TVS Motors

Honda

Others

Source: Siam, Data used is YTD

ICICI Securities Ltd. | Retail Equity Research

Page 3

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

HMCL continues to dominate the executive motorcycle

70

segment (<=125 cc) in India with a market share of ~59%.

20
58.7

60

The launch of Victor GLX helped TVS gain some market

share, which is at 7.6%

15.4 16

50
(%)

7.6

30

(%)

12

40

20
4

18.3

10

0
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16

Bajaj Auto (RHS)

Hero Motocorp (LHS)

TVS (RHS)

HMSI (RHS)

Source: Siam * only top 4 two-wheeler OEMs

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

30

90
74.8

80

25

70

20.1
20

(%)

60
50
15.1

40

15
10

30
20

10

5.0

Hero Motocorp (RHS)

TVS (RHS)

Jun-16

Apr-16

May-16

Feb-16

Mar-16

Jan-16

Dec-15

Oct-15

Nov-15

Sep-15

Jul-15

Aug-15

Jun-15

Apr-15

May-15

Feb-15

Mar-15

Jan-15

Dec-14

Oct-14

Bajaj Auto (LHS)

Nov-14

Sep-14

Aug-14

Jul-14

Jun-14

HMSI (RHS)

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

ICICI Securities Ltd. | Retail Equity Research

Page 4

(%)

BAL continues to dominate the executive motorcycle

segment (<=125 cc) in India with market share ~ 75%

Hero MotoCorp (HERHON)

Hero MotoCorp: Sales volumes

108
93 94 93 93

500

300
200

59

Hero MotoCorps volumes were almost flat, up 1.3% YoY at

549,533 units. The new product launches/refreshes remain key for
HMCL to improve its volumes & market share going ahead.

The motorcycle segment at ~4.9 lakh units increased by 0.5%

YoY. New product launches in the past supported HMCL scooter
volume which was up 8.1% YoY to 63,308 units. The newly
launched Duet clocked volumes of 24,767 units. However, some of
this was offset by volumes of Pleasure & Maestro that declined
52.6% YoY & 17.9% YoY to 12,982 units & 25,559 units,
respectively

Export volumes declined 57.7% YoY to 11,469 units, largely due to

decline in exports of Pleasure (from 16,788 units to 756 units). The
management continues to focus on exports market. It is likely to
expand its global footprint by entering ~50 markets with the target
sales of 12 million units (~10% of total volume) by FY20E

100

86

72

70

54

63

484
433
427
542
531
478
406
470
458
513
527
514
486

('000s)

400

53
65

120

100

80
60

('000s)

600

40
20

0
Jun-16

Apr-16

Feb-16

Dec'15

Oct '15

Aug'15

Jun'15

0
Motorcycles

Scooters

Source: Siam, ICICIdirect.com Research

Exhibit 7: Volume performance (in units)

Segment
Motorcycles
Scooters
Total Sales
Export(inc. above)
Exports (% of sales)

Jun-16
486,225
63,308
549,533
11,469
2.1

Jun-15
%chg
483,813
0.5
58,549
8.1
542,362
1.3
27,083 -57.7
5.0 -291 bps

May-16
513,605
69,512
583,117
15,262
2.6

%chg
-5.3
-8.9
-5.8
-24.9
-53 bps

YTD'17
1,526,565
218,824
1,745,389
38,945
2.2

YTD'16
1,476,737
168,806
1,645,543
45,301
2.8

%chg
3.4
29.6
6.1
-14.0
-52 bps

Source: Company, Siam

Bajaj Auto (BAAUTO)

Bajaj Auto: Sales volumes
450

53

The management has guided that demand will recover going

forward. According to the management volumes for July & August
2016 are likely to be ~325,000 units & ~350,000 units respectively.

45

(%)

50

307

36

292

264

253

235

271

248

330

309

290

288

36

100

273

41

200
150

Its 3-W volumes remained flat (down 0.1% YoY), after strong
growth of 24% YoY in domestic volumes was offset by de-growth
of 20.9% YoY in export volumes. Volumes in Nigeria were at
23,000 units (vs. earlier run-rate of 40,000 units)

40

38
41

41

45

37

39

44

41

45

250

50
44

54

50
44

44

48

47

282

('000s)

300

52

50

Bajaj Autos (BAL) 2-W volumes declined by 5% YoY, as growth of

8.8% YoY in domestic volumes was offset by 21.1% YoY degrowth in export volumes. BAL has seen a gradual improvement
in its market share up from 16.5% in March 2015 to 18.6% in June
2016, however is down ~30bps MoM. Volumes of Discover were
at 14,912 units vs.11,463 YoY. The newly launched Avenger & V 15
boosted its volumes, which were at 19,000 units & 26,947 units

55

400
350

40
39
35

33 31

Two-Wheelers

Three-Wheelers

Jun-16

Apr-16

Feb-16

Dec'15

Oct'15

Aug'15

Jun'15

30

% exports

Exhibit 8: Volume performance (in units)

Source: Siam, ICICIdirect.com Research

Segment
Total 2-wheeler sales
2W exports
2W domestic sales
Total 3-wheeler sales
3W exports
3w domestic sales
Total Sales
Total Domestic Sales
Total Exports
Exports as % of sales
Source: Company, Siam

ICICI Securities Ltd. | Retail Equity Research

Jun-16
273,298
104,673
168,625
43,671
18,579
25,092
316,969
193,717
123,252
38.9

Jun-15
%chg
287,582
-5.0
132,582
-21.1
155,000
8.8
43,735
-0.1
23,492
-20.9
20,243
24.0
331,317
-4.3
175,243
10.5
156,074
-21.0
47.1 -822 bps

%chg
May-16
-11.1
307,344
-17.9
127,522
-6.2
179,822
9.8
39,791
20.8
15,379
2.8
24,412
-8.7
347,135
-5.1
204,234
-13.8
142,901
41.2 -228 bps

YTD'17
872,540
323,660
548,880
121,461
46,257
75,204
994,001
624,084
369,917
37.2

YTD'16
%chg
875,235
-0.3
389,013
-16.8
486,222
12.9
137,794
-11.9
87,483
-47.1
50,311
49.5
1,013,029
-1.9
536,533
16.3
476,496
-22.4
47.0 -982 bps

Page 5

TVS Motors (TVSSUZ)

TVS Motors: Sales volumes

TVS volumes (2-W+3-W) for June 2016, at ~2.5 lakh units, were
up 11.2% YoY. The 2-W volumes grew 13.7% YoY while 3-W
volumes declined 35.8% YoY for June 2016

Motorcycle segment volumes grew 7.6% YoY to 95,439 units,

driven by volumes of Apache up 14% YoY to 33,342 units. Its
newly launched Victor GLX clocked 17,251 units supplementing
the growth. However, the same was partially offset by volumes of
Star City & Phoenix, which declined 36.2% YoY & 84.3% YoY.
Scooter segment reported growth of 10.3% YoY. The strong
growth of Jupiter & Wego up 26.2% YoY & 69.7% YoY,
respectively was offset by de-growth in volumes of Zest & Pep+.
Moped volumes were up 26% YoY at 76,953 units

Overall export (16.3% of sales) volumes declined 9.2% YoY to

39,086 units. This was particularly after volumes of 3-W exports
declined 39.4% YoY to 5,939 units

300

76

77
68

65
96

95

72

69
63

68
87

90

67
77

67

63
83

55

65
71

58

60
82

76

91
75
90

106

61

70
73

50

89

100

55

61

61
57

150

77
87

(%)

200

77

250

Motorcycles

Jun-16

Apr-16

Feb-16

Dec '15

Oct '15

Jun'15

Aug'15

Scooters

Mopeds

Source: Siam, ICICIdirect.com Research

Exhibit 9: Volume performance (in units)

Segment
Motorcycles
Scooters
Mopeds
Total 2-W Sales
3-Wheelers
Total Sales
Exports(incl. in above)
Exports as % of sales
Domestice sales

Jun-16
95,439
67,539
76,953
239,931
7,128
247,059
39,086
16.3
207,973

Jun-15
88,675
61,241
61,086
211,002
11,097
222,099
43,025
20.4
179,074

%chg
7.6
10.3
26.0
13.7
-35.8
11.2
-9.2
16.1

May-16
96,485
65,434
76,401
238,320
5,463
243,783
35,545
14.9
208,238

%chg
-1.1
3.2
0.7
0.7
30.5
1.3
10.0
-0.1

YTD'17
282,415
196,314
221,872
700,601
17,337
717,938
102,985
14.7
614,953

YTD'16
254,972
165,042
187,872
607,886
30,229
638,115
119,046
19.6
519,069

%chg
10.8
18.9
18.1
15.3
-42.6
12.5
-13.5
18.5

Source: Company, Siam

Honda Motorcycles & Scooters India (HMSI)

HMSI: Motorcycles & scooter sales volumes

HMSIs June 2016 reported strong volumes growth of 22.5% YoY

to 427,222 units led by strong growth in scooter segment whose
volume were up 16.7% YoY to 265,361 units respectively. This
further helped HMSI to expand its 2-W market share by 170bps
YoY to 27.2%

Domestic motorcycle volumes were up 17.4% YoY primarily led

by strong volumes of its newly launched LIVO, CB Unicorn, CB
Hornet 160R volumes were at 19,727 units, 10,333 units and 7,038
units, respectively. Volumes of domestic CB Shine grew by 15.4%
YoY to 74,286 units. Domestic scooter volume grew 16.7% YoY,
led by 15.1% YoY & 107.7% YoY growth in Activa and Dio. Its
newly launched NAVI clocked volumes of 4,780 units. However
volumes of Aviator declined by 25.9% YoY in June 2016

Export volumes grew 13.1% YoY to 19,243 units, primarily led by

growth in the scooter segment. With HMSIs focus more on
domestic markets, the export segment remains a small part of the
companys volume pie contributing 4.5% of total volumes

450
400

265

268

245
121

272
241
129

208
99

236

208
104

257
139

270

268

200

227

250

121

('000s)

300

264

350

143

147

159

126

162

50

121

100

147

150

Motorcycles

Jun-16

Apr-16

Feb-16

Dec'15

Oct'15

Aug'15

Jun'15

Scooters

Source: Siam, ICICIdirect.com Research

Exhibit 10: Volume performance (in units)

Segment
Motorcycles
Scooters
Total Sales
Exports(incl.above)
Exports as % of sales
Domestice sales

Jun-16
142,618
265,361
427,222
19,243
4.5
407,979

Jun-15
%chg
121,469
17.4
227,405
16.7
348,874
22.5
17,015
13.1
4.9 -37 bps
331,859
22.9

May-16
147,479
268,423
436,358
20,456
4.7
415,902

%chg
-3.3
-1.1
-2.1
-5.9
-18 bps
-1.9

YTD'17
449,053
805,903
1,294,655
56,739
4.4
1,237,916

YTD'16
390,900
640,506
1,056,891
42,500
4.0
1,014,391

Source: Company, Siam

ICICI Securities Ltd. | Retail Equity Research

Page 6

%chg
14.9
25.8
22.5
33.5
36 bps
22.0

Four-wheeler industry
The overall passenger vehicles segment for June 2016 registered growth
of 7.6% YoY to 277,063 units. The domestic PV space was up 2.7% YoY
while exports volumes grew by 34% YoY. Within the sub-segments of PV
space, the utility vehicles (UVs) reported strong volume growth of 51%
YoY supporting the overall PV growth. The volumes of other two
segments, cars & vans declined by 1.7% YoY & 1.9% YoY respectively.
Market leader, MSIL, underperformed the PV space, with its overall
volumes down 13.9% YoY to 98,840 units after company faced
disruptions in its production activity.
For June 2016, utility vehicle (UV) volumes were up 51% YoY at 68,308
units, largely outperforming the overall PV market. The UV1 sub-segment
registered growth of 74.8% YoY to 45,823 units, mainly driven by
Hyundais Creta (volumes at 12,762 units) & Fords Ecosport (volume
stood at 10,865 units; up 71% YoY). Maruti Suzukis Vitara Brezza volumes
came in at 6,677 units. M&Ms TUV300 & KUV100 volumes stood at 1,770
units & 3,603 units, respectively, for June 2016. Volumes in the UV2
segment grew 21.4% YoY to 20,575 units, mainly due to Toyotas (Innova
volume up 97.2% YoY to 8,171 units) & Honda Cars (new BR-V volumes
stood at 3,064 units).
The commercial vehicles segment witnessed growth of 7.3% YoY to
66,215 units. The M&HCV growth surprising moderated; up marginally
1.4% YoY to 25,904 units. Volumes of the market leaders in the space
namely Tata Motors & Ashok Leyland moderated in June 2016. The LCV
segment continued to witness strength over the past couple of months,
registering volume growth of 11.4% YoY to 40,311 units, supported by
good growth in M&M and Tata Motors LCV volumes.

Market share movement

According to Siam, the domestic market share for passenger vehicles (PV)
and commercial vehicles (CV) in June 2016 was as follows:
Exhibit 11: Domestic market share movement in passenger vehicles
MSIL (continues to dominate the passenger vehicle

21.3
19.2
20.7

Others

segment) with its leadership position; however its share

was impacted in June 2016 (down ~240bps MoM to

May-16

Jun-16

1.0
1.0
1.5

GM

46.2%) post production disruptions. On the other hand,

Jun-15

Hyundais maintained its market share at 17.7%.

8.5
8.9
8.2

M&M
5.3
4.6
5.7

Tata Motors

17.7
17.7
17.2

Hyundai

46.2
48.6
46.8

Maruti
0

10

20

(%)

30

40

50

60

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

ICICI Securities Ltd. | Retail Equity Research

Page 7

Exhibit 12: Market share movement in A2 segment

The A2 segment is the bread & butter category of the

80

passenger car segment. The segment growth has

70

moderated over the last couple of months owing to a lack

60

of options among diesel variants

63.6

58.4

50
(%)

40

32.6

31.5

30
20
10

Hyundai

Jun-16

Apr-16

May-16

Feb-16

Mar-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Jul-15

Aug-15

Jun-15

Apr-15

May-15

Feb-15

Mar-15

Jan-15

Dec-14

Oct-14

Nov-14

Sep-14

Aug-14

Jul-14

Jun-14

Maruti

Source: Siam, Top two PV OEMs considered

The M&HCV growth moderated in June 2016, up 1.4% YoY.

Exhibit 13: Domestic market share movement in commercial vehicles

On the other hand, LCV continued with its demand

recovery, with volumes up 11.4% YoY. Thus, overall growth

Jun-15

50

for the CV segment came in at 7.3% YoY

May-16

Jun-16

44.6 44.7 43.9

45
40
35
(%)

30

24.0 23.5 23.7

25
16.8 16.7 17.3

20

14.6 15.2 15.1

15
10
5
0
ALL

M&M

Tata Motors

Others

Source: Siam Data used is YTD

The moderation of growth in the M&HCV segment as

Exhibit 14: Segmental share in CVs

against volume recovery in the LCV space resulted the

70 64.2

MHCV/LCV ratio to come in at 39:61 in June 2016 as

60

against 43:57 in June 2015. For September 2015, the ratio

60.9

50

was at 48:52, more tilted towards M&HCV, as the industry

39.1

40 35.8
(%)

witnessed some pre-buying due to implementation of ABS

from October 1, 2015

30
20
10

M&HCV

LCV

Source: Siam

ICICI Securities Ltd. | Retail Equity Research

Page 8

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Oct-14

Sep-14

Aug-14

Jul-14

Jun-14

Tata Motors: Domestic sales volume

Tata Motors (TELCO)

60

Tata Motors standalone volumes grew 10.3% YoY to 44,276 units.

The growth was largely seen in LCV & Cars segment, which was
offset by de-growth in the M&HCV and UV space for June 2016

Domestic M&HCV volumes declined 11.4% YoY; however LCV

volumes continued to witness volume recovery, up 13.5% YoY.
The domestic car segment was up 37.4% YoY to 11,705 units,
mainly driven by its newly launched Tiago volumes at 4,205 units.

JLRs wholesale volumes were up 35.2% YoY at 47,197 units.

Jaguar volumes were up 82.6% YoY to 12,942 units, driven by XE
volumes ~3,800 units & F-Pace volumes at ~4,800 units. Land
Rover volumes increased 23.1% YoY to 34,255 units, mainly
driven by Discovery & Discovery Sport. In terms of region, North
America market witnessed strong growth while growth in Europe
& Chinese market stood in the range of 14%-19%. Volumes in the
UK moderated to <10% in June 2016

12.6

8.8

Jun-16

Apr-16

Feb-16

Dec'15

Oct'15

Jun'15

Aug'15

CV Sales

31.6

31.2

10.8
44.1

28.6

11.1

8.3

10.6

11.4
35.3

36.0

31.7

28.3

12.3

11.9

10.7

10.7

13.2
30.3

33.0

10

29.5

20

28.8

(000's)

30

29.5

40

8.9

50

PV Sales

Source: Company, ICICIdirect.com Research

Jaguar Land Rover sales volume

20

Exhibit 15: Volume performance (in units)

Segment
Domestic MHCV
Domestic LCV
Domestic Pass.Car Sa
Domestic UV
Exports
Total Sales
Jaguar
Landrover
Total JLR Sales
Source: Company, Siam

Apr'15
May'15
Jun'15
Jul'15
Aug'15
Sept'15
Oct'15
Nov'15
Dec'15
Jan'16
Feb'16
Mar'16
Apr'16
May'16
June'16

55
50
45
40
35
30
25
20
15
10

(000's)

40

40.9
46.2
47.2

60

51.1
48.5
51.0
51.0
45.5
52.3

80
40.7
38.9
34.9
32.6
33.1

(% share of total volumes)

100

% Jaguar

% LR

JLR total volumes(RHS)

Source: Company, ICICIdirect.com Research

12

10.6

120

8
6.8
6

Jun-16

Apr-16

Feb-16

Dec'15

Oct'15

0
Aug'15

0
Jun'15

Source: Siam, ICICIdirect.com Research

%chg
-23.8
16.8
50.3
-3.1
26.5
10.5
4.0
1.5
2.1

YTD'17
35,101
43,191
28,598
3,023
13,816
123,729
34,572
99,762
134,334

YTD'16
32,417
39,017
26,617
4,919
13,542
115,795
21,202
93,250
114,452

%chg
8.3
10.7
7.4
-38.5
2.0
6.9
63.1
7.0
17.4

Domestic volumes grew 10.2% YoY to 92,133 units. Stiff

competition in the mini car segment (Alto and WagonR) impacted
its volumes, down 19.3% YoY. Volumes of DZire Tour (used for
cabs & fleet operators) were down 28.5% YoY at 2,893 units.
Volumes of its new launches namely S-Cross & Baleno & Vitara
Brezza came in at 286 units, 9,182 units & 6,677 units respectively.

Export volumes declined 44.7% YoY to 6,707 units, with its share
declining to 6.8% of total sales vs. 10.6% in June 2015

20

Total Sales

May-16
13,312
13,714
7,787
830
4,428
40,071
12,442
33,762
46,204

Maruti Suzukis volumes declined 13.9% YoY, underperforming

the PV space (up 7.6% YoY). This was after MSIL faced production
disruption (due to fire incident at Subros, key vendor of the
company) & on account of annual maintenance shut down.

(%)

115
122
118
114
134
121
119
114
117
129
127
123
99

('000s)

80

40

%chg
-11.4
13.5
37.4
-53.1
10.3
10.3
82.6
23.1
35.2

10

100

60

Jun-15
11,450
14,112
8,516
1,715
5,078
40,154
7,087
27,821
34,908

Maruti Suzuki India (MARUTI)

Maruti Suzuki India: sales volumes

140

Jun-16
10,147
16,017
11,705
804
5,603
44,276
12,942
34,255
47,197

Export %

Exhibit 16: Volume performance (in units)

Segment
Omni, Eeco,Versa
Swift,Ritz, Celerio,
Dzire,Baleno
SX4, Swift Dzire Tour,
Ciaz
Total Passengers
Gypsy, Vitara,Ertiga,Brezza
Total Domestic
Exports
Total Sales
Exports as % of sales

Jun-16
9,874

Jun-15
10,465

%chg
-5.6

May-16
12,164

%chg
-18.8

YTD'17
36,558

YTD'16
34,136

%chg
7.1

67,683

80,037

-15.4

79,659

-15.0

224,948

234,725

-4.2

4,868
82,425
9,708
92,133
6,707
98,840
6.8

6,593
97,095
5,531
102,626
12,130
114,756
10.6

-26.2
-15.1
75.5
-10.2
-44.7
-13.9

7,743
99,566
13,596
113,162
9,872
123,034
8.0

-37.1
-17.2
-28.6
-18.6
-32.1
-19.7

21,486
282,992
39,348
322,340
26,103
348,443
7.5

21,283
290,144
15,550
305,694
35,635
341,329
10.4

1.0
-2.5
153.0
5.4
-26.7
2.1

Source: Company, Siam.

ICICI Securities Ltd. | Retail Equity Research

Page 9

Ashok Leyland (ASHLEY)

Ashok Leyland (ALL) volumes for the second consecutive month

took a breather with volumes growth coming in at 6.2% YoY to
11,108 units vs. >20% growth in the past. The M&HCV segment
volumes were up 8% YoY to 8,685 units. The LCV segment of ALL
remained largely flat, up 0.4% YoY to 2,423 units

The M&HCV goods segments volumes registered growth of 11.7%

YoY to 6,741 units. However, M&HCV passenger segments
reported de-growth of 3.2% YoY to 1,944 units

Overall exports declined 48.9% YoY to 653 units, with overall

volume share at 5.9% vs. 12.2% in June 2015

2.4
2.4

2.3

Jun-16

7.5
8.7

13.2
Mar-16

Apr-16

7.9

10.8
Feb-16

Jan-16

M&HCV

May-16

2.7

2.5

11.2

2.7
9.7
6.3
Dec'15

Nov'15

2.6
7.2
Oct'15

2.6

2.6
2.6
8.9

12.1
Sep'15

Aug'15

2.4

2.2
Jul'15

8.8

8.0
Jun'15

(000's)

18
16
14
12
10
8
6
4
2
0

3.5

Ashok Leyland: Total sales

Exhibit 17: Volume performance (in units)

LCV

Segment
M&HCV Passenger
M&HCV Goods

Source: Siam, ICICIdirect.com Research

LCV
Passenger Vehicles
Total Sales
Exports
Exports as % of sales
Source: Company, Siam

Jun-16
1,944
6,741
2,423
11,108
653
5.9

Jun-15
2,008
6,036

%chg
-3.2
11.7
0.4
NA
6.2
-48.9

2,413
0
10,457
1,278
12.2

May-16
1,763
5,706

%chg
10.3
18.1

2,406
0
9,875
905
9.2

0.7
NA
12.5
-27.8

YTD'17
5,395
18,628
7,142
31,165
2,226
7.1

YTD'16 %chg
5,167
4.4
16,314
14.2
6,673
7.0
28 -100.0
28,182
10.6
3,408
-34.7
12.1

Mahindra and Mahindra (MAHMAH)

Mahindra and Mahindra: Sales volume

35

40.7
39.0

41.9

44.0

41.6

35.6

36.1

40

34.7

(000's)

45

37.9

42.8

50

43.8

51.4

55

M&Ms overall automotive volumes were up 8% YoY to 39,011

units. Its core UV segment (including exports) grew 9.3% YoY
supported by its new launches (TUV300 & KUV100) however, the
same was below industry UV volumes up 51.3% YoY

The newly launched TUV300 & KUV100 clocked volumes of 1,770

units and 3,603 units, respectively. However, growth in new
launches was offset by the existing by Bolero & XUV5O0. New
launches and facelifts continue to hold the key for M&M in the
extremely competitive space

M&Ms tractor volumes grew 20.3% YoY to 30,191 units, mainly

on account of the low base and pent-up demand. Domestic tractor
volumes were up 20.5% YoY to 28,797 units while export volumes
were up 17% YoY to 1,394 units. In FY16, tractor industry volume
de-grew by 10.5% YoY however, above normal monsoon forecast
is likely to drive volumes in FY17E

52.7

60

30
25
20
Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec'15

Nov'15

Oct'15

Sep'15

Aug'15

Jul'15

Jun'15

15

Source: SIAM, ICICIdirect.com Research

Exhibit 18: Volume performance (in units)

Mahindra and Mahindra: Tractor sales

23.0

14.7

13.6

15.1

21.4

21.7

28.1
18.1

12.9

15

11.7

20

15.5

(000's)

25

25.1

30

30.2

35

%chg
9.3
6.3
-10.6
7.0
-6.1

May-16
18,648
11,852
1,257
32,744
3,869

%chg
-15.4
14.2
2.9
-6.5
13.2

YTD'17
55,909
37,226
3,663
98,956
12,005

YTD'16
49,543
35,888
3,337
88,952
12,166

33,282

5.1

36,613

-4.4

110,961

101,118

9.7

2,852

41.0

4,043

-0.6

10,569

8,449

25.1

39,011

36,134

8.0

40,656

-4.0

121,530

109,567

10.9

10.3

7.9

8.7

7.7

Tractors - Domestic

28,797

23,899

20.5

22,148

30.0

71,649

59,150

21.1

- Exports
Total Tractors
Exports as % of sales

1,394
30,191
4.6

1,191
25,090
4.7

17.0
20.3

870
23,018
3.8

60.2
31.2

2,946
74,595
3.9

3,208
62,358
5.1

-8.2
19.6

Segment
UVs
4-Wheeler pickups
M & HCV
Total 4wheeler Sales
3-Wheeler

Jun-16
15,777
13,540
1,293
30,610
4,381

Jun-15
14,433
12,737
1,447
28,617
4,665

Total Domestic Auto Sales

34,991
4,020

Exports
Total Auto Sales

10

Exports as % of sales

Source: SIAM, ICICIdirect.com Research

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec'15

Nov'15

Oct'15

Sep'15

Aug'15

Jul'15

Jun'15

9.9

Source: Company, Siam

ICICI Securities Ltd. | Retail Equity Research

Page 10

%chg
12.8
3.7
9.8
11.2
-1.3

Top Model wise volumes for June 2016

Exhibit 19: Top 10 passenger vehicle Models sold in India (in units)
S.No.
1

Models
Alto

Jun-15
21,115

Models
Alto

Jun-16
15,750

DZIRE

18,973

DZIRE

13,492

Swift

17,313

Grand i10

12,678

Wagon R

13,221

Wagon R

11,962

Elite i20

10,841

Kwid

9,459

Grand i10

8,970

Swift

9,033

Celerio

8,078

Elite i20

8,990

City

7,187

Innova

8,171

Amaze

6,834

Creta

7,700

10

Bolero

6,093

Baleno

6,967

Source: Siam

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

S.No.
1

Models
Activa

Splendor

Passion

HF Deluxe

Activa

Jun-16
226,686

195,108

Splendor

204,609

124,463

HF Deluxe

106,486

84,987

Glamour

80,348

CB Shine

65,350

Passion

76,639

TVS XL Super

59,304

TVS XL Super

74,599

Glamour

57,477

CB Shine

74,286

CT

54,362

Jupiter

46,145

Pulsar

50,962

Pulsar

43,794

Jupiter

36,650

CT

43,049

9
10
Source: Siam

ICICI Securities Ltd. | Retail Equity Research

Jun-15
196,913

Models

Page 11

News & views

Mahindra & Mahindra has launched a hybrid version of its new

generation Scorpio priced between | 9.74 lakh and | 14.01 lakh (exshowroom Navi Mumbai). In another development, the company is
planning to raise |5,000 crore through issuance of its securities on
private placement which would be used to augment resources for
ongoing capital expenditure, short and long term working capital and
for general corporate purposes.

Hero MotoCorp (HMCL), has launched its first in-house developed

motorcycle, the new Splendor iSmart 110 and is priced |53,300 (exshowroom, Delhi). The motorcycle has been built on a completely
new chassis and frame.

Tata Motors (TML) is increasing their focus on alternative fuel

technology such as electrics and hybrids and is planning to invest
significantly towards such technologies. In another development, TML
will seek shareholders approval at the upcoming annual general
meeting (AGM) scheduled on 9th August 2016 to raise ~|3,000 crore
through non-convertible debentures (NCDs) in FY17E. The company
intends to use the proceeds to fund ongoing capital expenditure and
for general corporate purposes.

Maruti Suzuki (MSIL) has signed a memorandum of understanding

(MoU) with Government of Andhra Pradesh, to set up, manage and
run Institute of Driving Training and Traffic Research at Venkatachalam
village in Darsi, Prakasham district of Hyderabad. The infrastructure is
spread across 20 acres of land & will be provided by the Andhra
Pradesh Government, while MSIL would run and manage the institute.
The infrastructure is expected to be complete by 2018.

Ashok Leyland (ALL) has bagged order for nearly 3600 buses from
various STUs which would be executed in FY17E. The management
continues to maintain growth in the domestic M&HCV market and
believe that the industry is likely to post 15%-20% in FY17E.

ICICI Securities Ltd. | Retail Equity Research

Page 12

ICICIdirect.com Research Universe (Auto & Auto ancillary)

CMP
Sector / Company
(|)
TP(|) Rating
Amara Raja (AMARAJ)
900
900 Hold
Apollo Tyre (APOTYR)
156
160 Hold
Ashok Leyland (ASHLEY)
97
110 Hold
Bajaj Auto (BAAUTO)
2719 2780
Buy
Balkrishna Ind. (BALIND)
701
675 Hold
Bharat Forge (BHAFOR)
737
790 Hold
Bosch (MICO)
24270 24000
Buy
Eicher Motors (EICMOT)
19829 22500
Buy
Exide Industries (EXIIND)
182
195
Buy
Hero Mototcorp (HERHON)
3266 2880 Hold
JK Tyre & Ind (JKIND)
90
90 Hold
M&M (MAHMAH)
1442 1500
Buy
Mahindra CIE (MAHAUT)
180
225
Buy
Maruti Suzuki (MARUTI)
4416 4285 Hold
Motherson (MOTSUM)
315
260 Hold
Tata Motors (TELCO)
455
540
Buy
Wabco India (WABTVS)
5700 5500 Hold
Source: ICICIdirect.com Research

M Cap
(| Cr)
15373
7869
27318
78685
6775
17160
76208
53558
15445
65218
2047
85151
5814
133453
41648
140106
10830

ICICI Securities Ltd. | Retail Equity Research

EPS (|)
FY16 FY17E FY18E
28.0
31.4
38.9
22.0
18.9
19.7
1.2
2.5
5.5
97.2 126.2 147.7
55.7
45.1
56.3
28.0
33.0
40.2
398.7 498.5 649.8
477.4 608.2 733.2
7.3
8.6
10.0
119.5 156.9 168.5
20.4
20.5
22.4
48.3
59.7
64.9
2.7
9.9
12.5
151.3 197.2 238.6
9.6
13.7
18.2
37.2
48.5
58.8
107.9 128.5 167.6

P/E (x)
FY16 FY17E FY18E
32.1 28.7 23.1
7.1
8.3
7.9
82.2 38.1 17.5
28.0 21.5 18.4
12.6 15.5 12.5
26.3 22.3 18.3
54.6 43.7 33.5
41.5 32.6 27.0
24.8 21.1 18.2
27.3 20.8 19.4
4.4
4.4
4.0
29.8 24.1 22.2
66.6 18.1 14.4
29.2 22.4 18.5
32.7 23.0 17.3
12.2
9.4
7.7
52.8 44.3 34.0

EV/EBITDA (x)
FY16 FY17E FY18E
17.6 16.1 13.1
4.4
5.7
5.5
31.6 14.0 10.7
16.1 14.8 12.2
7.2
8.1
6.5
12.9 11.9 10.5
35.6 29.7 23.1
22.1 18.4 14.8
13.8 11.6
9.5
12.1 11.5 10.0
3.9
3.6
3.0
16.6
9.6
8.5
19.9 12.6 10.5
13.0 11.5
9.7
11.0
9.2
7.5
3.8
3.1
2.5
36.4 30.4 24.0

RoCE (%)
FY16 FY17E FY18E
31.1 28.4 29.0
20.9 14.6 13.6
7.2 23.0 27.2
35.6 35.4 36.8
18.7 15.9 18.9
16.4 18.1 18.0
15.1 16.6 18.7
42.6 41.5 38.9
18.7 19.8 21.4
45.9 50.4 43.8
21.4 20.6 21.9
14.6 16.5 16.7
7.5 14.0 15.5
22.7 21.2 22.1
22.3 26.9 32.2
17.0 17.1 18.4
19.4 19.1 20.3

RoE (%)
FY16 FY17E FY18E
22.8 21.2 21.7
18.1 14.3 13.2
6.5 13.1 23.6
26.3 29.3 30.4
19.3 15.9 18.9
18.2 18.6 19.3
17.8 19.0 21.6
37.2 35.3 32.1
14.0 14.8 15.4
36.5 39.4 35.9
26.5 21.2 19.3
14.5 14.4 13.9
7.4 13.0 15.1
16.9 18.9 19.3
30.0 37.2 41.2
15.3 15.3 15.7
22.5 22.1 22.7

Page 13

Exhibit 21: Auto raw material index

The in-house raw material index reflects the combination of

RM Auto Index

various input materials (steel, rubber, aluminium, plastics)

240

for OEMs, which have February 2009 as base year at 100.

The chart shows a declining trend in the past; however

220

from January 2016 onwards the prices have started

200

moving northwards, giving primary signs that the benefit of

166

180

lower input cost has peaked out.

160
140
120
100
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16

80

Source: Bloomberg, Reuters, Company, ICICIdirect.com Research

Exhibit 22: Currency movements

180
160
140
120
100
80

US$INR

US$JPY

US$EUR

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd. | Retail Equity Research

Page 14

Jun-16

Mar-16

Dec-15

Sep-15

Jun-15

Mar-15

Dec-14

Sep-14

Jun-14

Mar-14

Dec-13

Sep-13

Jun-13

Mar-13

Dec-12

Sep-12

Jun-12

Mar-12

Dec-11

60

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

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd. | Retail Equity Research

Page 15

ANALYST CERTIFICATION
We /I, Nishit Zota, MBA (Finance) and Vidrum Mehta, MBA (Finance) research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or
view(s) in this report.

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ICICI Securities Ltd. | Retail Equity Research

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