Q3 FY13 Results Preview

India Infoline News Service | Mumbai |

Q3 FY13 Results Preview

Automobiles
  • Indian Auto OEMs witnessed a decent volume performance in Q3 FY13 when compared with Q3 FY12. However, this has to be seen along with the fact that the impact of inventory built up for festive season happened in September 2011 vis-à-vis October 2012. On the other hand macro environment has been difficult given that fuel prices have remained high and there has been no respite on interest rates. Consequently, M&HCV was the most impacted segment leading to sharp falls for both Tata Motors and Ashok Leyland. Strong growth in LCV volumes helped arrest the decline for both players. Maruti witnessed robust growth both on sequential and yoy basis owing to the impact of shutdowns in respective periods. Two-wheeler players witnessed flattish quarter but most domestic players lost market share. M&M continued to see strong growth in its automotive segment, while tractor volumes saw sequential recovery on the back of late revival in monsoons.

Q3 FY13 volumes

Company Name Q3 FY13 Q3 FY12 Q2 FY13 yoy (%) qoq (%)
Ashok Leyland 22,666 23,175 29,840 (2.2) (24.0)
Bajaj Auto 1,127,741 1,075,441 1,049,208 4.9 7.5
Hero Motocorp 1,573,135 1,589,286 1,332,805 (1.0) 18.0
Maruti 301,453 239,528 230,376 25.9 30.9
M&M 211,678 190,743 191,077 11.0 10.8
Tata Motors 204,482 227,112 221,090 (10.0) (7.5)
TVS Motors 518,496 529,681 485,999 (2.1) 6.7

  • Discounts picked up during the quarter owing to the difficult demand environment. The trend was more prominent in petrol passenger cars and M&HCVs. Changes in product mix will have a further bearing on realizations. For Tata Motors, higher proportion of light commercial vehicles would result sequential fall in domestic realizations, while strong volumes for Land Rover may result in qoq higher realizations for JLR. For Maruti, higher contribution from diesel variants which are dearer in comparison to petrol variants would translate into better realizations to be offset by higher discounts. For Ashok Leyland, higher proportion of Dost volumes will negatively impact realizations.
  • During Q3 FY13, rupee strengthened, although marginally on sequential basis. Maruti and Hero Motocorp with high import contribution will see some relief on margins. Other players are expected to gain from the cool off in commodity prices seen over the past couple of quarters, which will be partly offset by higher discounts.
  • Bharat Forge is expected to see sequential fall in revenues owing to slowdown in M&HCV demand. Amara Raja Batteries and Exide are likely to report improved set of numbers due to lower raw material costs (yoy) and strong demand in replacement market. Revenues for Apollo Tyres are expected to grow by 9% on yoy basis driven by 12% growth in the domestic market and 15% increase in revenues for South African market. We expect revenues for European operations to increase by modest 2% on yoy basis. Decline in rubber prices (~13% yoy) in addition to continued revival in the demand in the South African market is expected to translate into healthy expansion in OPM for the company. 
  • Bajaj Auto and Maruti have triggers to beat consensus estimates on the upside, while Ashok Leyland can disappoint the street.
  • Higher interest rates, increased product prices, rising petrol prices and high base effect might restrict the volume growth. In the auto space, valuations no longer appear cheap. Relatively we prefer staying invested in M&M and Maruti. In the auto ancillary space we like Amara Raja Batteries and Exide Industries.
Q3 FY13 estimates
Company Sales (Rs mn) OPM (%) PAT (Rs mn)
Q3 FY13 yoy (%) qoq (%) Q3 FY13 yoy (bps) qoq (bps) Q3 FY13 yoy (%) qoq (%)
Ashok Leyland 24,285 (15.7) (26.3) 8.1 79 (204) 69 (89.7) (95.2)
Bajaj Auto 54,626 7.9 9.9 18.9 (204) 52 8,275 4.1 11.7
Hero Motocorp 61,504 2.0 18.6 14.5 (113) 64 5,901 (3.7) 33.9
Maruti 108,227 37.3 30.3 7.6 231 148 4,759 131.4 109.2
M&M 110,039 31.3 12.1 11.7 (50) 30 8,756 32.2 (2.9)
Tata Motors 493,151 9.0 13.6 14.2 (176) 69 29,018 (15.2) 38.1
TVS Motors 18,037 2.4 6.7 6.5 (6) 50 578 2.2 27.8
Apollo Tyres 35,102 8.7 4.0 11.5 146 64 1,707 73.5 11.4
Bharat Forge 14,087 (11.9) (1.5) 13.9 (333) (1) 534 (48.2) (34.2)
Exide 15,878 27.0 4.4 13.2 (4) 83 1,354 29.8 12.6
Amara Raja 7,666 25.0 6.7 16.2 (115) (23) 845 28.1 20.5
Motherson Sumi 60,682 58.0 3.0 7.2 56 27 1,
 

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