Q4 FY13 Results Preview

India Infoline News Service | Mumbai |

Q4 FY13 Results Preview

Automobiles
  • Indian Auto OEM’s witnessed weak volume performance in Q4 FY13 when compared with Q4 FY12. The macro situation remained challenging with fuel prices remaining high and little respite on interest rates. M&HCV space remained the most impacted, but Ashok Leyland clocked in a much better relative volume performance when compared with the market leader Tata Motors indicating market share gains. LCV’s continued to grow in robust fashion benefiting both the players. Two wheeler space also weakened, especially the motorcycle segment.

  • M&M continued to ride well on growth in UV and pick-up truck segments, which was partially offset by slowdown in the tractor segment owing to weak demand from southern and western regions, resulting in total volume growth of 6.5% yoy. Discount levels remained high during the quarter owing to general weakness in auto industry. The trend remained prominent in M&HCV and petrol car categories.

Q4 FY13 volumes
Company Name Q4 FY13 Q4 FY12 Q3 FY13 yoy (%) qoq (%)
Ashok Leyland 34,627 35,669 22,666 (2.9) 52.8
Bajaj Auto 981,242 1,017,167 1,127,741 (3.5) (13.0)
Hero Motocorp 1,527,351 1,527,027 1,573,135 0.0 (2.9)
Maruti 343,709 360,334 301,453 (4.6) 14.0
M&M 198,895 186,799 211,678 6.5 (6.0)
Tata Motors 196,370 280,000 203,852 (29.9) (3.7)
TVS Motors 509,210 528,102 518,496 (3.6) (1.8)
Source: Company, IIFL Research
  • Commodity prices continued to cool off and the yoy fall would comfort the margins of all major OEM’s. Further, currency movement of yen against rupee has been favourable for Maruti. Sharp depreciation of yen over the past two quarters (~18% since September 2012) would enable Maruti to report improved margins, however we foresee the full benefit to kick in from Q1 FY14 onwards. Hero Motocorp would also benefit from the favourable movement of yen in recent quarters. GBP depreciation vs. USD, CNY and RUB will help JLR’s margins in the quarter.

  • In the battery space, Amara Raja Batteries and Exide are likely to report improved set of numbers due to lower raw material costs (yoy) and continued strong demand in replacement market. 

  • In terms of product mix, Ashok Leyland would see its average realizations (+2% qoq estimated) improving sequentially on back of higher share of M&HCV’s sold (vis-à-vis Q3 FY13). Its bottom line would also be aided by proceeds received from sale of ~1% of its stake in IndusInd bank during the quarter. M&M’s mix was seen adverse with lower tractor volumes. We build in 20bps sequential decline in margins for M&M.

  • In auto space, we prefer Maruti Suzuki which is positioned to benefit at operational level from the depreciation in JPY against USD. Among auto-ancillaries, we prefer to stay invested in the battery sector where we have revenue visibility on back of robust replacement demand. Our top picks are Maruti, Amara Raja, Exide and Hero Motocorp. 

Q4 FY13 estimates
Company Sales (Rs mn) OPM (%) PAT (Rs mn)
Q4 FY13 yoy (%) qoq (%) Q4 FY13 yoy (bps) qoq (bps) Q4 FY13 yoy (%) qoq (%)
Ashok Leyland   36,516 (15.3) 53.4 10.5 (40) 620    1,675 (35.3) 125.9
Bajaj Auto   46,547 0.1 (14.0) 18.2 (157) (47)   7,044 (8.8) (14.0)
Hero Motocorp   60,135 (0.4) (2.8) 12.8 (253) 22   5,032 (16.6) 3.1
Maruti   127,078 8.4 13.5 9.0 168 104   7,151 11.8 42.7
M&M   101,392 8.0 (5.9) 11.0 67 (24)   7,379 (3.7) (11.8)
Tata Motors   531,656 4.4 15.4 14.1 3 80   26,028 (58.4) 59.1
TVS Motors   17,493 7.5 (2.8) 6.1 2 15   520 (9.1) (0.8)
Apollo Tyres   31,714 (1.9) (1.4) 11.6 46 (27)   1,583 0.9 (12.3)
Exide   15,991 10.0 9.3 11.8 (285) 54   1,183 (17.0) 13.7
Amara Raja   8,123 20.9 7.0 15.3 106 (78)   822 41.0 1.7
Motherson Sumi   66,920 4.2 0.4 7.8 110 10   1,584 18.7 (2.3)
Swaraj Engines   1,212 3.4 (1.9) 14.8 (69) (5)   135 0.5 (2.0)
Source: Company, India Infoline Research
 

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