According to a survey of 30 two-wheeler dealers in various Indian cities:
- Dealers expect the current festive season to drive higher sales compared to the previous year. Most feel growth will peak during the festive period before stabilizing.
- While rural sales have been strong, there are signs that urban sales are recovering as well due to improving economic conditions and consumer sentiment.
- Access to financing also remains important, though credit availability is still below historical highs despite a recent improvement.
The document provides Sony's consolidated financial results for FY2011 and Q4 FY2011, as well as forecasts for FY2012. Key highlights include:
- Sales and operating income decreased in FY2011 due to unfavorable foreign exchange rates, the impact of natural disasters, and deteriorating market conditions. A large net loss was recorded.
- Sales were forecast to increase 14% in FY2012, with an operating income forecast due to improvements in Consumer Products & Services and Professional, Device & Solutions segments.
- Results by segment showed lower sales and losses in Consumer Products & Services and Professional, Device & Solutions in FY2011, with forecasts of recovery in FY2012.
Nordstrom reported financial results for fiscal year 2001 with net sales increasing 1.9% to $5.6 billion and net earnings growing 22.3% to $124.7 million. Nordstrom saw comparable store sales growth and increased sales per square foot. The company focused on offering great styles, value, and customer service during challenging times for retail. Nordstrom implemented Perpetual Inventory to improve inventory management and the customer experience.
TM as a Malaysia number 1 Information Communication Technologies provider. We have provide the Internet services, Communication Services, Web Hosting, and other Business Solution Packages.
This document is the 1998 annual report letter to shareholders from Cummins Engine Company. It discusses Cummins' focus on creating value for customers and shareholders. In 1998, Cummins saw record sales of $6.3 billion but fell short of earnings targets due to special charges. The letter outlines Cummins' financial objectives of 9% earnings before interest and taxes in strong markets and at least 3% in recessions. It also discusses actions Cummins is taking to improve profitability through restructuring, reducing costs, and improving gross margin and cash flow to increase shareholder value over the long term.
Localiza Rent a Car S.A. presented its 3Q06 results, highlighting significant growth. Key points include:
- 62.8% growth in net income and increases in car rental business volume of 40.5% and fleet rental volume of 23.2%.
- Expansion of integrated business platform to 133 agencies, 14,250 cars, and presence in 8 countries.
- Strategies focus on organic growth, market consolidation, and scale gains to expand business volume and achieve long-term profitable growth.
This investor presentation provides an overview of Tata Motors and the Indian automobile industry. It states that any projections or expectations described are forward-looking statements and actual results could differ materially. It then gives time periods for the quarterly and year-to-date financial data referenced. Finally, it establishes Tata Motors as the market leader in commercial vehicles in India, with the largest product portfolio and as a top global manufacturer of buses and trucks.
1) GSG aims to improve revenue growth by targeting new customer segments like small businesses and expanding existing markets through value-added product offerings.
2) Key issues include slow revenue growth, saturated enterprise segment, lack of expertise in small business segment. The strategy is to target small businesses, improve solutions for existing customers, and restructure operations.
3) The plan outlines focusing on the small business segment, identifying high-potential industries, changing sales channels, marketing, products, and company structure to support the new strategy and capture growth opportunities.
The North Face is investing heavily in marketing in China to encourage outdoor participation, as there is not a strong tradition of this. In 2010, over 70% of its China marketing budget went towards events like an expedition to climb a famous mountain to get more Chinese outdoors. The North Face and Vans, which opened many new stores in China in 2010, benefited the most from VF's additional $100 million global marketing investment in 2010, which helped drive revenue growth. VF revenues rose 7% to $7.7 billion with gross margins reaching a record high of 46.7%, and Outdoor & Action Sports now accounts for 42% of total revenues, up from 22% five years ago.
The document provides Sony's consolidated financial results for FY2011 and Q4 FY2011, as well as forecasts for FY2012. Key highlights include:
- Sales and operating income decreased in FY2011 due to unfavorable foreign exchange rates, the impact of natural disasters, and deteriorating market conditions. A large net loss was recorded.
- Sales were forecast to increase 14% in FY2012, with an operating income forecast due to improvements in Consumer Products & Services and Professional, Device & Solutions segments.
- Results by segment showed lower sales and losses in Consumer Products & Services and Professional, Device & Solutions in FY2011, with forecasts of recovery in FY2012.
Nordstrom reported financial results for fiscal year 2001 with net sales increasing 1.9% to $5.6 billion and net earnings growing 22.3% to $124.7 million. Nordstrom saw comparable store sales growth and increased sales per square foot. The company focused on offering great styles, value, and customer service during challenging times for retail. Nordstrom implemented Perpetual Inventory to improve inventory management and the customer experience.
TM as a Malaysia number 1 Information Communication Technologies provider. We have provide the Internet services, Communication Services, Web Hosting, and other Business Solution Packages.
This document is the 1998 annual report letter to shareholders from Cummins Engine Company. It discusses Cummins' focus on creating value for customers and shareholders. In 1998, Cummins saw record sales of $6.3 billion but fell short of earnings targets due to special charges. The letter outlines Cummins' financial objectives of 9% earnings before interest and taxes in strong markets and at least 3% in recessions. It also discusses actions Cummins is taking to improve profitability through restructuring, reducing costs, and improving gross margin and cash flow to increase shareholder value over the long term.
Localiza Rent a Car S.A. presented its 3Q06 results, highlighting significant growth. Key points include:
- 62.8% growth in net income and increases in car rental business volume of 40.5% and fleet rental volume of 23.2%.
- Expansion of integrated business platform to 133 agencies, 14,250 cars, and presence in 8 countries.
- Strategies focus on organic growth, market consolidation, and scale gains to expand business volume and achieve long-term profitable growth.
This investor presentation provides an overview of Tata Motors and the Indian automobile industry. It states that any projections or expectations described are forward-looking statements and actual results could differ materially. It then gives time periods for the quarterly and year-to-date financial data referenced. Finally, it establishes Tata Motors as the market leader in commercial vehicles in India, with the largest product portfolio and as a top global manufacturer of buses and trucks.
1) GSG aims to improve revenue growth by targeting new customer segments like small businesses and expanding existing markets through value-added product offerings.
2) Key issues include slow revenue growth, saturated enterprise segment, lack of expertise in small business segment. The strategy is to target small businesses, improve solutions for existing customers, and restructure operations.
3) The plan outlines focusing on the small business segment, identifying high-potential industries, changing sales channels, marketing, products, and company structure to support the new strategy and capture growth opportunities.
The North Face is investing heavily in marketing in China to encourage outdoor participation, as there is not a strong tradition of this. In 2010, over 70% of its China marketing budget went towards events like an expedition to climb a famous mountain to get more Chinese outdoors. The North Face and Vans, which opened many new stores in China in 2010, benefited the most from VF's additional $100 million global marketing investment in 2010, which helped drive revenue growth. VF revenues rose 7% to $7.7 billion with gross margins reaching a record high of 46.7%, and Outdoor & Action Sports now accounts for 42% of total revenues, up from 22% five years ago.
Amara Raja Batteries-Management Meet NoteAngel Broking
- Management indicated strong demand for batteries from the growing automobile industry and pickup in industrial activities.
- The company plans capacity expansions to meet increasing demand and expects to clock 15% CAGR in industrial batteries over the next few years.
- While demand from telecom batteries has contracted, the company expects 6-7% annual growth and is optimistic about long-term replacement demand.
- Fleet Management Solutions operating revenue increased 2% to $713.9 million driven by a 6% increase in contractual revenue, while commercial rental revenue declined 13% and fuel services revenue declined 3%.
- Net before tax earnings for FMS increased 8% to $80.8 million, with earnings as a percentage of operating revenue increasing to 11.3% from 10.7% in the prior year.
- The company reaffirmed its full year 2007 earnings forecast of $4.30 to $4.40 per share, with second quarter earnings forecasted at $1.04 to $1.07 per share.
- Fleet Management Solutions operating revenue increased 2% to $713.9 million driven by a 6% increase in contractual revenue, while commercial rental revenue declined 13% and fuel services revenue declined 3%.
- Net before tax earnings for FMS increased 8% to $80.8 million and net before tax earnings as a percentage of operating revenue increased to 11.3% from 10.7% in the prior year.
- The company reaffirmed its full year 2007 earnings forecast of $4.30 to $4.40 per share, with second quarter earnings forecasted to be $1.04 to $1.07 per share.
This document provides an overview and analysis of the Indian storage battery industry. Some key points:
1) The Rs 9,700 crore Indian storage battery industry grew revenues 30% annually and net income 50% annually from FY2005-2010 due to rising vehicle and industrial demand.
2) The industry is expected to grow revenues 19.7% annually from FY2010-2013, with the auto battery segment growing 20% and industrial battery segment 19.4% annually.
3) Exide Industries is expected to outperform Amara Raja Batteries in earnings growth due to Exide's captive lead smelter lowering raw material costs. Exide's earnings are forecast to grow 17%
The document discusses Magma Fincorp Limited, a retail finance company in India. It summarizes Magma's business overview, including that it provides financing to small entrepreneurs in rural and semi-rural India. It also highlights Magma's financial highlights for fiscal year 2011, including total disbursements of Rs. 5415 Cr (~USD 1.1B), total assets of Rs. 10907 Cr (~USD 2.22B), total income of Rs. 874 Cr (~USD 178M), and profit after tax of Rs. 122 Cr (~USD 24.8M). The document outlines Magma's strategy to continue expanding its product portfolio and market presence across India.
Castrol India reported unaudited financial results for the first quarter ended March 31, 2009. Net sales increased 3% to Rs. 506 crores compared to the same period last year. Profit before tax was flat at Rs 117 crore while profit after tax grew 5% to Rs. 76 crores. The managing director commented that considering the difficult economic environment, the results were satisfying and the company maintained profits through aggressive cost cutting while defending margins. The outlook statement expressed confidence in growing financial performance for the full year through superior products and strong customer relationships despite uncertain market conditions.
Group 1 Automotive is a top five U.S. automotive dealer group with over 170,000 vehicle sales in 2008 and $4.3 billion in annual revenue. In the first quarter of 2009, revenues decreased 32.2% to $1.02 billion compared to $1.5 billion in the first quarter of 2008. Parts and service generates 70% of gross profits and covers 75-85% of fixed costs. The company expects to dispose of some dealerships that do not provide acceptable returns in 2009 but does not plan additional acquisitions.
The annual report summarizes Advance Auto Parts' strong financial results for 2004. Some key points:
- 2004 was another record year, with sales reaching $3.77 billion and comparable operating income growing 38.8% to $328.8 million.
- The company executed well on customer-focused initiatives and took advantage of the strong automotive industry.
- Advance Auto Parts operates over 2,650 stores across 39 states and territories, with over 37,000 employees.
- Leadership is committed to continued growth and improving operating margins through initiatives like new store openings and supply chain efficiencies.
The annual report summarizes Advance Auto Parts' strong financial results for 2004. Some key points:
- 2004 was another record year, with sales reaching $3.77 billion, a 10% increase over 2003.
- Comparable operating income grew 14% to $328.8 million. Earnings per share increased 20% to $2.49.
- The company opened 125 new stores, ending the year with 2,652 stores across 39 states.
- Leadership thanked team members for their commitment and customers for their business. The CEO announced plans to retire and transition leadership to the COO.
- The report emphasized the company's focus on clean stores, the right parts availability, competitive pricing, and growing
Honda Motor Co. is a Japanese automaker founded in 1948 by Soichiro Honda. It has a network in 30 countries worldwide and serves 19 million customers. Honda ranks 31st on the Fortune 500 list with revenues over $87 billion and profits of over $5.2 billion, up 16.6% from the previous year. Honda introduced the Civic compact car in 1972, which won the car of the year award in 1972-1974. The document then discusses the various generations of the Honda Civic and outlines objectives for analyzing factors affecting Civic sales and Honda's performance in Pakistan.
BMW is a prominent German automobile manufacturer known for its premium brands like BMW, MINI, and Rolls-Royce. While BMW has been successful providing high-quality luxury vehicles, the automotive industry is changing with factors like globalization, new competitors, and shifting customer preferences. BMW's strategy of product differentiation through superior performance and driving dynamics now faces challenges sustaining its competitive advantage in the current environment.
Maruti Suzuki is India's largest passenger car manufacturer with a 55% domestic market share in FY09. The stock is recommended as a buy with a 12-month target price of Rs 1066, significantly higher than the current price of Rs 564.7. Maruti Suzuki faces competition from other automakers that have entered the Indian market, but it has been able to maintain its leading position through expansion and new product introductions. The report provides an analysis of Maruti Suzuki's financials, industry trends, and opportunities and threats in the automotive sector.
1) The document provides an earnings conference call forecast for Q4 2007 and full year 2008. It includes details on Q4 2007 results, 2008 forecasts, and questions and answers.
2) Key highlights of Q4 2007 results include earnings per share of $1.24, up 15% from prior year. Operating revenue was up 4% and total revenue up 5%.
3) The forecast expects continued growth in 2008 from contractual revenue increases and favorable foreign exchange rates across all business segments.
- The company reported higher 4Q07 earnings per share compared to 4Q06, though some of the increase was due to tax benefits. Excluding these benefits, comparable earnings per share grew 9%.
- Revenue increased for all business segments compared to last year, driven by contractual revenue growth and favorable exchange rates.
- Earnings improved across segments due to various factors like improved contractual performance, lower expenses, and better international results. This was partially offset by declines in some areas.
- For the full year, earnings per share and comparable earnings per share also increased compared to 2006, though challenges remain around commercial rental and used vehicle sales.
- The company reported higher 4Q07 earnings per share compared to 4Q06, though some of the increase was due to tax benefits. Excluding these benefits, comparable earnings per share grew 9%.
- Revenue increased for all business segments compared to last year, driven by contractual revenue growth and favorable exchange rates.
- Earnings improved across segments due to various factors like improved contractual performance, lower expenses, and better international results. This was partially offset by declines in some areas.
- For the full year, earnings per share and comparable earnings per share also increased compared to 2006, though operating revenue growth was modest at 4%.
- The company reported third quarter 2006 earnings per share of $1.06, up 8% from the prior year. Excluding a pension accounting charge, EPS was $1.12, up 14%.
- All business segments saw revenue growth. Fleet Management Solutions revenue was up 5% and Supply Chain Solutions revenue increased 19%.
- The debt to equity ratio increased to 160% at the end of the third quarter of 2006, compared to the long term target midpoint of 125-150%.
- The company reported third quarter 2006 earnings per share of $1.06, up 8% from the prior year. Excluding a pension accounting charge, EPS was $1.12, up 14%.
- All business segments saw revenue growth. Fleet Management Solutions revenue was up 5% and Supply Chain Solutions revenue increased 19%.
- The company's debt to equity ratio was 160% at the end of the third quarter 2006, an increase from 143% at the end of 2005 but still below the long-term target range.
1. Mahindra and Mahindra (M&M) reported good results for the first quarter of the fiscal year 2011, with net sales up 21.6% and operating profit up 27.4% compared to the same period last year.
2. Net profit beat analyst expectations by 11%, reaching Rs. 562 crore due to lower than expected tax rates and higher interest income.
3. The report recommends maintaining a "Buy" rating for M&M, setting a target price of Rs. 772 based on the company's core business valuation and value of investments.
Exide Industries Ltd reported strong third quarter results driven by a 15% increase in battery sales volumes. Higher sales volumes and continued cost reductions led to a 90% increase in operating profit. While lead prices increased substantially, Exide was able to partially offset higher costs through capturing a larger share of lead from its captive smelters. The analyst maintains a 'Hold' rating on Exide, seeing continued momentum from the automotive and power sectors, but views the stock as fairly valued based on current earnings multiples.
Amara Raja Batteries-Management Meet NoteAngel Broking
- Management indicated strong demand for batteries from the growing automobile industry and pickup in industrial activities.
- The company plans capacity expansions to meet increasing demand and expects to clock 15% CAGR in industrial batteries over the next few years.
- While demand from telecom batteries has contracted, the company expects 6-7% annual growth and is optimistic about long-term replacement demand.
- Fleet Management Solutions operating revenue increased 2% to $713.9 million driven by a 6% increase in contractual revenue, while commercial rental revenue declined 13% and fuel services revenue declined 3%.
- Net before tax earnings for FMS increased 8% to $80.8 million, with earnings as a percentage of operating revenue increasing to 11.3% from 10.7% in the prior year.
- The company reaffirmed its full year 2007 earnings forecast of $4.30 to $4.40 per share, with second quarter earnings forecasted at $1.04 to $1.07 per share.
- Fleet Management Solutions operating revenue increased 2% to $713.9 million driven by a 6% increase in contractual revenue, while commercial rental revenue declined 13% and fuel services revenue declined 3%.
- Net before tax earnings for FMS increased 8% to $80.8 million and net before tax earnings as a percentage of operating revenue increased to 11.3% from 10.7% in the prior year.
- The company reaffirmed its full year 2007 earnings forecast of $4.30 to $4.40 per share, with second quarter earnings forecasted to be $1.04 to $1.07 per share.
This document provides an overview and analysis of the Indian storage battery industry. Some key points:
1) The Rs 9,700 crore Indian storage battery industry grew revenues 30% annually and net income 50% annually from FY2005-2010 due to rising vehicle and industrial demand.
2) The industry is expected to grow revenues 19.7% annually from FY2010-2013, with the auto battery segment growing 20% and industrial battery segment 19.4% annually.
3) Exide Industries is expected to outperform Amara Raja Batteries in earnings growth due to Exide's captive lead smelter lowering raw material costs. Exide's earnings are forecast to grow 17%
The document discusses Magma Fincorp Limited, a retail finance company in India. It summarizes Magma's business overview, including that it provides financing to small entrepreneurs in rural and semi-rural India. It also highlights Magma's financial highlights for fiscal year 2011, including total disbursements of Rs. 5415 Cr (~USD 1.1B), total assets of Rs. 10907 Cr (~USD 2.22B), total income of Rs. 874 Cr (~USD 178M), and profit after tax of Rs. 122 Cr (~USD 24.8M). The document outlines Magma's strategy to continue expanding its product portfolio and market presence across India.
Castrol India reported unaudited financial results for the first quarter ended March 31, 2009. Net sales increased 3% to Rs. 506 crores compared to the same period last year. Profit before tax was flat at Rs 117 crore while profit after tax grew 5% to Rs. 76 crores. The managing director commented that considering the difficult economic environment, the results were satisfying and the company maintained profits through aggressive cost cutting while defending margins. The outlook statement expressed confidence in growing financial performance for the full year through superior products and strong customer relationships despite uncertain market conditions.
Group 1 Automotive is a top five U.S. automotive dealer group with over 170,000 vehicle sales in 2008 and $4.3 billion in annual revenue. In the first quarter of 2009, revenues decreased 32.2% to $1.02 billion compared to $1.5 billion in the first quarter of 2008. Parts and service generates 70% of gross profits and covers 75-85% of fixed costs. The company expects to dispose of some dealerships that do not provide acceptable returns in 2009 but does not plan additional acquisitions.
The annual report summarizes Advance Auto Parts' strong financial results for 2004. Some key points:
- 2004 was another record year, with sales reaching $3.77 billion and comparable operating income growing 38.8% to $328.8 million.
- The company executed well on customer-focused initiatives and took advantage of the strong automotive industry.
- Advance Auto Parts operates over 2,650 stores across 39 states and territories, with over 37,000 employees.
- Leadership is committed to continued growth and improving operating margins through initiatives like new store openings and supply chain efficiencies.
The annual report summarizes Advance Auto Parts' strong financial results for 2004. Some key points:
- 2004 was another record year, with sales reaching $3.77 billion, a 10% increase over 2003.
- Comparable operating income grew 14% to $328.8 million. Earnings per share increased 20% to $2.49.
- The company opened 125 new stores, ending the year with 2,652 stores across 39 states.
- Leadership thanked team members for their commitment and customers for their business. The CEO announced plans to retire and transition leadership to the COO.
- The report emphasized the company's focus on clean stores, the right parts availability, competitive pricing, and growing
Honda Motor Co. is a Japanese automaker founded in 1948 by Soichiro Honda. It has a network in 30 countries worldwide and serves 19 million customers. Honda ranks 31st on the Fortune 500 list with revenues over $87 billion and profits of over $5.2 billion, up 16.6% from the previous year. Honda introduced the Civic compact car in 1972, which won the car of the year award in 1972-1974. The document then discusses the various generations of the Honda Civic and outlines objectives for analyzing factors affecting Civic sales and Honda's performance in Pakistan.
BMW is a prominent German automobile manufacturer known for its premium brands like BMW, MINI, and Rolls-Royce. While BMW has been successful providing high-quality luxury vehicles, the automotive industry is changing with factors like globalization, new competitors, and shifting customer preferences. BMW's strategy of product differentiation through superior performance and driving dynamics now faces challenges sustaining its competitive advantage in the current environment.
Maruti Suzuki is India's largest passenger car manufacturer with a 55% domestic market share in FY09. The stock is recommended as a buy with a 12-month target price of Rs 1066, significantly higher than the current price of Rs 564.7. Maruti Suzuki faces competition from other automakers that have entered the Indian market, but it has been able to maintain its leading position through expansion and new product introductions. The report provides an analysis of Maruti Suzuki's financials, industry trends, and opportunities and threats in the automotive sector.
1) The document provides an earnings conference call forecast for Q4 2007 and full year 2008. It includes details on Q4 2007 results, 2008 forecasts, and questions and answers.
2) Key highlights of Q4 2007 results include earnings per share of $1.24, up 15% from prior year. Operating revenue was up 4% and total revenue up 5%.
3) The forecast expects continued growth in 2008 from contractual revenue increases and favorable foreign exchange rates across all business segments.
- The company reported higher 4Q07 earnings per share compared to 4Q06, though some of the increase was due to tax benefits. Excluding these benefits, comparable earnings per share grew 9%.
- Revenue increased for all business segments compared to last year, driven by contractual revenue growth and favorable exchange rates.
- Earnings improved across segments due to various factors like improved contractual performance, lower expenses, and better international results. This was partially offset by declines in some areas.
- For the full year, earnings per share and comparable earnings per share also increased compared to 2006, though challenges remain around commercial rental and used vehicle sales.
- The company reported higher 4Q07 earnings per share compared to 4Q06, though some of the increase was due to tax benefits. Excluding these benefits, comparable earnings per share grew 9%.
- Revenue increased for all business segments compared to last year, driven by contractual revenue growth and favorable exchange rates.
- Earnings improved across segments due to various factors like improved contractual performance, lower expenses, and better international results. This was partially offset by declines in some areas.
- For the full year, earnings per share and comparable earnings per share also increased compared to 2006, though operating revenue growth was modest at 4%.
- The company reported third quarter 2006 earnings per share of $1.06, up 8% from the prior year. Excluding a pension accounting charge, EPS was $1.12, up 14%.
- All business segments saw revenue growth. Fleet Management Solutions revenue was up 5% and Supply Chain Solutions revenue increased 19%.
- The debt to equity ratio increased to 160% at the end of the third quarter of 2006, compared to the long term target midpoint of 125-150%.
- The company reported third quarter 2006 earnings per share of $1.06, up 8% from the prior year. Excluding a pension accounting charge, EPS was $1.12, up 14%.
- All business segments saw revenue growth. Fleet Management Solutions revenue was up 5% and Supply Chain Solutions revenue increased 19%.
- The company's debt to equity ratio was 160% at the end of the third quarter 2006, an increase from 143% at the end of 2005 but still below the long-term target range.
1. Mahindra and Mahindra (M&M) reported good results for the first quarter of the fiscal year 2011, with net sales up 21.6% and operating profit up 27.4% compared to the same period last year.
2. Net profit beat analyst expectations by 11%, reaching Rs. 562 crore due to lower than expected tax rates and higher interest income.
3. The report recommends maintaining a "Buy" rating for M&M, setting a target price of Rs. 772 based on the company's core business valuation and value of investments.
Exide Industries Ltd reported strong third quarter results driven by a 15% increase in battery sales volumes. Higher sales volumes and continued cost reductions led to a 90% increase in operating profit. While lead prices increased substantially, Exide was able to partially offset higher costs through capturing a larger share of lead from its captive smelters. The analyst maintains a 'Hold' rating on Exide, seeing continued momentum from the automotive and power sectors, but views the stock as fairly valued based on current earnings multiples.
1. Sector Update October 01, 2009
Two-Wheelers Dealer Survey
Over the past few months two-wheeler volumes have been on a steady rise, primarily driven
by strong growth in rural volumes. However, off late there have been indications of a
recovery in urban volumes. To understand the ground realities, we conducted a dealer
survey for two wheeler manufacturers with focus on tier-I and tier-II cities. Our coverage
encompassed 30 dealers from cities of Mumbai, Delhi, Chennai, Hyderabad, Nashik,
Bangalore, Ahmedabad, Jaipur, Nagpur, Indore, Coimbatore, Amritsar and Vadodara. Hero
Honda dealers accounted for 47% of the dealers surveyed, while 37% were Bajaj Auto
dealers and remaining 17% were from a mix of TVS Motors and multi-brand dealers. Most of
the dealers felt that the current festive season would be better than previous year and the
current growth trend is likely to peak out following the festive season.
Breakup of dealers surveyed Expectations about future demand growth
ALL, 2 Unsure
Yamaha, 1 13%
Negative
TVS, 2 Hero Honda, 10%
14
Bajaj, 11
Positive
77%
Source: India Infoline Research
Key reasons for the current recovery
50 %
45
Percentage of dealers
40
35
30
25
20
15
10
5
0
Rural Demand
market share
Festival
recovery ( Job
Stability, Credit
No recovery
season
prefer bikes
Dealers effort
Govt. efforts
Traffic
New launches
Fuel efficiency
for customer
generation
Gain in the
satisfaction
Economic
Young
of the
Source: India Infoline Research
Festive season a key driver for growth
About 57% of the respondents believe that the current festival season has been the driving force for
the recent recovery in urban volumes. Number of bookings surged following the end of inauspicious
period of “Shradpaksha”. Going ahead too, many dealers feel that robust volumes in the current
season would be the key to a robust performance for the current year. In fact, 77% of the dealers feel
that current festive season would be significantly better than previous. However, 23% were still
apprehensive about a relatively better current festive season.
2. Two Wheelers Dealer Survey
Economic recovery improving consumer sentiment
About 20% of the dealers believe that economic recovery has also supported growth in recent times.
Interestingly one of the dealers quoted “this time around we shall have dual force generating growth in
the current year. One, current demand and secondly, the deferred demand during the tough times of
economic instability.” Few dealers cited other demographic reasons such as younger generation
preferring bikes, fuel efficiency vis-à-vis cars and increasing traffic.
Manufacturer’s efforts vital for enhancing brand value
One-third of the dealers stressed on manufacturer’s ability to distinguish its products and services from
other players as an important factor for enhancing brand value. New launches and new variants, which
are in tune with customer requirements, are an essential for increasing market share. Few dealers also
pointed out individual dealers’ service quality as an influencing factor.
Credit availability improving but still below historical highs
Credit financed sales of two wheelers dropped from levels of about 55% to about 45% during the
previous year. However, off late the ratio has improved to about 50% following improved financing by
private banks (according to 53% of dealers). The improvement has been on account of lower
delinquencies in the recent past. Credit sales for 65% of the surveyed Hero Honda dealers had credit
sales less than 30% of their total volumes. For Bajaj Auto, 55% of dealers had credit sales more than
40% of their volumes.
Outlook remains positive
77% of the dealers were positive about near term growth prospects of the industry, while remaining
were skeptical about sustainability of the growth. The growth is expected to peak during the current
festival season, fall during the following two months and will then stabilize during Q4 FY10. During Q4
FY10, corporate buying would increase as they avail depreciation benefits. Urban growth is expected to
remain strong in the current festive season and then peak out. However, we believe rural sales would
continue to remain robust.
Stocks adequately factoring near term earnings growth
With robust recovery in volumes over the past few months, auto stocks significantly outperformed the
broader indices. While Bajaj Auto surged 264% YTD, Hero Honda jumped 106% as compared to 73%
gains in Sensex. Hero Honda currently trades at 16.5x FY11E earnings of Rs101.4 and Bajaj Auto is
trading at 16.2x FY11E earnings of Rs92.2. We maintain our Market Performer rating on both Bajaj
Auto and Hero Honda with target price of Rs1,542 (revised) and Rs1,724 respectively.
Survey response: Cash v/s credit sales Estimates of industry credit sales
50 % 60 (%)
45
40 55
35
30 50
25
20 45
15
10 40
5
0 35
100% 0% - 20% - 40% - 60% - 80% -
cash 20% 40% 60% 80% 100% 30
sales FY03 FY08 FY09 FY10 FY13
Source: India Infoline Research Source: Crisil
Sector Update 2