During FY10, 2-wheeler industry witnessed a sharp recovery in volumes after witnessing a marked slowdown in H2 FY09. Companies have intermittently reported their highest ever monthly volumes in YTD FY10. During this phase, vital trends for the segment have witnessed material change impacting performance for various companies differently.
- Hero Honda gains market share within scooters segment
- Rising proportion of <125cc motorcycles
- Increasing rural penetration
- Constrained credit availability
- Increasing raw material prices
With the recent budget increasing disposable income and laying stress on rural employment, we believe 2-wheeler volumes will continue to witness steady growth. However, operating margins would be under pressure as prices of key raw material prices continue to rise. We believe, Bajaj Auto with success of its recent launches and higher margins will outperform its peers. We maintain our rating on Bajaj Auto (BUY) and Hero Honda (MP), and downgrade TVS Motors to SELL from MP.
|
|
Click
here to download the complete report
|
|