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80

94

108

122

136

Se p11 D ec11 Mar12 Jun12 Se p12

MOSLAuto Index Sensex

October 2012

DashboardThe Month ly Aut o Update

Speedometer

12-month relative performance

September 2012 relative performance

Chirag Jain([email protected]); + 91 22 3982 5418

Data Track:September 2012 volume update of auto majors

Sector overview and outlook ........................................................... 2

Hero MotoCorp ................................................................................. 3

Bajaj Auto .......................................................................................... 4

Maruti Suzuki .................................................................................... 6

Mahindra & Mahindra ....................................................................... 8

Tata Motors ...................................................................................... 10

TVS Motor ........................................................................................ 12

Special Report

INDIA AUTO: Channel checks .......................................................... 13

Tata Motors: JLR momentum to sustain ......................................... 16

Sector Gauge:August update

Two-wheelers .................................................................................19

Three-wheelers .............................................................................. 21

Cars and UVs .................................................................................... 23

Commercial vehicles ....................................................................... 25

News and Events ............................................................................... 28

M&M launches Quanto (mini-SUV) at INR582k; receives 3,200 bookings

since launch

BharatBenz starts commercial sales of its heavy duty trucks in India

All new Range Rover revealed at Paris Motor Show

Comparative Valuation

CMP * Rating

(INR) FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E

Ba ja j Auto 1,784 Buy 16.6 18.0 14.3 12.1 12.5 9.6 56.7 43.3 44.5 73.0 60.0 61.2

Hero MotoCorp 1,850 Buy 15.5 17.1 14.9 10.0 10.4 8.5 55.4 41.8 39.7 52.4 45.7 50.4

M&M 870 Buy 17.0 13.6 11.1 10.5 8.5 7.6 23.0 21.7 19.3 23.1 24.3 22.7

Maruti Suzuki 1,364 Buy 23.5 20.3 14.4 12.7 9.2 6.4 10.8 10.5 13.2 13.2 12.4 15.9Tata Motors 273 Buy 12.3 19.5 14.0 4.5 3.8 3.2 38.4 25.2 24.7 24.1 23.9 24.2

* Price as on 3 October 2012 Source: Company/MOSL

P/E (x) EV/EBITDA (x) RoE (%) RoCE (%)

Aggregate Volumes For September 2012*

Segment Sep-12 Sep-11 YoY (%) Aug-12 MoM (%) YTDFY13 YTDFY12 Chg (%)

2-Wheelers 885,193 1,136,523 -22.1 898,893 -1.5 5,870,111 6,181,553 -5.0

Motorcycle 783,933 1,011,681 -22.5 801,826 -2.2 5,250,478 5,517,095 -4.8

3-Wheelers 55,891 57,459 -2.7 46,586 20.0 269,340 322,799 -16.6

Cars 106,446 108,442 -1.8 67,747 57.1 602,898 644,923 -6.5

UVs 51,268 40,058 28.0 48,596 5.5 288,032 201,872 42.7

Commercial Vehicles 64,952 61,472 5.7 58,901 10.3 338,842 319,975 5.9

LCV 41,024 33,282 23.3 36,789 11.5 214,698 173,829 23.5M&HCV 23,928 28,190 -15.1 22,112 8.2 124,144 146,146 -15.1

Tractors 20,085 24,673 -18.6 13,234 51.8 109,418 117,546 -6.9

Total Volumes 1,183,835 1,428,627 -17.1 1,133,957 4.4 7,478,641 7,788,668 -4.0

* Aggrega te of Baja j Auto, Hero MotoCorp, TVS Motor, Maruti, M&M, Tata Motors and Ashok Leyland Source: Company/MOSL

Investors are advised to refer through disclosures made at the end of the Research Report.

Jinesh Gandhi ([email protected]); +91 22 3982 5416

96

100

104

108

112

116

3-Sep 9-Sep 15-Sep 21-Sep 27-Sep

MOSL Au to I nd ex Se ns e x

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Dashboard

October 2012 2

Sector overview and outlookVolume to remain under pressure, margin have bottomed out

Data Track

Key Financial Indicators

FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E

Bajaj Auto 13.7 -2.1 12.8 19.0 18.0 19.3 107.4 99.3 124.3 18.8 -7.5 25.2

He ro MotoCorp 15.4 -2.6 12.5 11.0 10.1 11.1 119.1 108.0 124.1 18.4 -9.3 14.9

M&M 24.2 9.5 10.0 13.3 13.6 13.5 51.2 63.7 78.4 6.6 24.4 22.9

Ma ruti Suzuki -10.8 1.3 16.2 7.1 8.5 9.9 58.2 67.2 94.8 -29.4 15.5 41.1

Ta ta Motors * 10.3 1.5 15.0 14.3 13.7 14.2 37.8 33.2 41.3 38.5 -12.0 24.4

^ Volume growth for stand alon e; * Cons oli dated whe rever appl icabl e, **Adjusted ma rgin s for change i n royalty accounting

Volume Chg (%) EBITDA Margins (%) EPS (INR) * EPS Growth (%) *

Slowdown visible across segments except UVs and LCVs: Slowdown earlier visible

in the M&HCVs, Cars and 3Ws segment is now evident in 2Ws as well with 4% YoY

drop in 2QFY13. However, growth in UVs (+29% YoY) and LCVs (+13% YoY) continue

to remain healthy. Our channels checks indicate that start to the festive season

have not been encouraging. Dealer inventory is high particularly in 2Ws and Cars

segment. Recent hike in diesel prices does not augur well for the CV segment.

Expected softening in interest rates and reform driven improvement in macro

environment and consumer sentiment, coupled with long term drivers remaining

intact are key drivers for volumes over next few years.

Margins to bottom-out in FY12, with gradual improvement from 2HFY13 onwards:

EBITDA margins are estimated to improve in FY13, benefitting from price increases,

higher operating leverage and soft commodity prices. However, volatile Fx and

increasing competitive intensity in some segments would restrict pricing power.

We anticipate price increases coupled with productivity improvement programs

and high operating leverage to drive profitability from 2HFY13 onwards.

Easing of macro headwinds to be key catalyst for demand recovery: Lending rates

are expected from near peak levels, auguring well PV and CV demand. Further,

higher fuel prices have been one of the key impediments to growth. Lastly,

appreciating INR also augurs well for Maruti Suzuki and Hero MotoCorp, but

negative for Bajaj Auto. However, softening in commodity prices would support

profitability. Easing of macro headwinds would be key driver for volume growth,

profitability and in-turn for re-rating of auto stocks.

Valuation and view: Recent reform initiatives undertaken by the government

would help to improve consumer sentiment. This coupled with expected reduction

in interest rates, augurs well for pick-up in economic activity and in-turn demand

for automobile. Changing competitive landscape in the auto sector would be one

of the key determinants of stock performance. While we believe that worst of

competitive pressure is behind for passenger cars, increasing competitive intensity

for both 2W, UVs and CVs pose challenge to incumbent OEMs and near term

overhang on valuations. We prefer Tata Motors, Maruti Suzuki and Bajaj Auto.

Comparative Valuation

CMP * Rating

(INR) FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E

Bajaj Auto 1,784 Buy 16.6 18.0 14.3 12.1 12.5 9.6 56.7 43.3 44.5 73.0 60.0 61.2

He ro MotoCorp 1,850 Buy 15.5 17.1 14.9 10.0 10.4 8.5 55.4 41.8 39.7 52.4 45.7 50.4

M&M 870 Buy 17.0 13.6 11.1 10.5 8.5 7.6 23.0 21.7 19.3 23.1 24.3 22.7

Ma ruti Suzuki 1,364 Buy 23.5 20.3 14.4 12.7 9.2 6.4 10.8 10.5 13.2 13.2 12.4 15.9

Tata Motors 273 Buy 12.3 19.5 14.0 4.5 3.8 3.2 38.4 25.2 24.7 24.1 23.9 24.2

* Price a s on 3 October 2012 Source : Company/MOSL

P/E (x) EV/EBITDA (x) RoE (%) RoCE (%)

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Dashboard

October 2012 3

Data Track

Hero MotoCorp: two-wheelers

The disappointment in

Sep-12 wholesale

volumes is reflection of

weak retail demand and

high channel inventory

build-up.

Hero MotoCorpSep-12 volumes below est; 4th consecutive month of disappointment

Highlights

Hero MotoCorps Sep-12 volumes de-grew 26.4% YoY (-8.8% MoM) to 404,787 (v/s

est 445,000). This is the fourth consecutive month of negative surprise. FY13YTD

volumes have declined by ~3.2%.

Our channel interaction indicates inventory levels of more than 6 weeks with

dealers. Considering the high channel inventory, we believe Hero MotoCorp has

limited scope to further build up inventory for the festive season. Thedisappointment in Sep-12 wholesale volumes is reflection of weak retail demand

and high channel inventory build-up.

Demand pick-up in festive season would be critical for achieving its 4-5% volume

growth guidance for FY13. However, initial signs of festive demand have not been

encouraging.

HMCL has announced capacity addition of 2m units by 2QFY14. It is investing

INR25.75b on two plants (capacity of 0.75m at Rajasthan by 1QFY14 and 1.25m at

Gujarat by 2QFY14) and an R&D center. The company will be funding these

investments through internal accruals and cash of ~INR40b as at March 2012.

Our estimates currently factors in 3% volume de-growth in FY13 to 6.07m units,

implying residual run-rate of 516,500 units/residual de-growth of ~2. Our estimates

would see further downgrades as we model for sustained weakness in volumes.

The stock trades at 17.4x FY13E EPS of INR108.0 and 15.2x FY14E EPS of INR124.1.

Maintain Buy.

Hero MotoCorp: Financial & Valuation Summary

Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE

End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%)

3/11A 192,450 20,077 100.5 -10.0 - - - - 62.5 59.2

3/12A 233,681 23,781 119.1 18.4 15.8 14.2 8.8 10.1 55.4 52.4

3/13E 230,292 21,566 108.0 -9.3 17.4 15.3 7.3 10.6 41.8 45.7

3/14E 265,789 24,779 124.1 14.9 15.2 13.3 6.0 8.7 39.7 50.4

Snapshot of volumes for September

Sep-12 Sep-11YoY

(%)Aug-12

MoM

(%)YTDFY13 Chg (%) FY13E

YoY

(%)

Residual

Gr. (%)

ResidualMonthly

Run rate

FY13 YTDMonthly

Run rate

Total volume 404,787 549,625 -26.4 443,801 -8.8 2,975,097 -3.2 6,073,823 -2.6 -2.0 516,454 495,850

Source: Compa ny/MOSL

Bloomberg HMCL IN

Equi ty Share s (m) 200

CMP (INR) 1,850

52-Wk Range (INR) 2,279/1,703

1,6,12 Rel. Perf. (%) 2/6/24

M.Cap. (USD b) 7.1

300,000

365,000

430,000

495,000

560,000

625,000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

FY11 FY12 FY13

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Dashboard

October 2012 4

Bajaj AutoSep-12 volumes in-line, 3W surprise positively; upside risk to our estimates

Data Track

Bloombe rg BJAUT IN

Eq ui ty Sh ares (m) 289.4

CMP (INR) 1,784

52-Wk Ra nge (INR) 1,839/1,351

1,6,12 Re l.Perf.(%) -4/0/15

M.Cap. (USD b) 9.3

Volume de-growth is

largely owing to festive

season this year being amonth later than it was

last year

Highlights

Bajaj Autos total volumes de-grew 14% YoY (+4.4% MoM) to 360,152 (v/s est of

356,500). Domestic volumes de-grew by 18% YoY (+6% MoM) to 226,930 (v/s est of

221,500), whereas exports declined 6% YoY (+1% MoM) to 133,222 units (v/s est135,000 units).

Overall motorcycle volumes de-grew 15% YoY (+4% MoM) to 315,314 (v/s est

315,000). Volume de-growth is largely owing to festive season this year being a

month later than it was last year. We estimate motorcycle volume de-growth of

1% to 3.8m units, implying residual growth of 2.2% and run-rate of 314,047 units,

implying upside risk to volumes if demand picks-up during festive season.

Recently launched Pulsar 200 NS and Discover 125 ST continues to ramp-up well

with overall contribution of ~44,000 units (~32,000 units in Aug-12 & 20,000 in Jul-

12). Pulsar and Discover contributed to ~64% of motorcycle volumes.

Three-wheeler sales de-grew by 3.5% YoY (+11% MoM) to 44,838 (est 41,500 units),

driven by pick-up in export volumes to Sri Lanka. We model 3W volumes de-

growth of ~10% in FY13 to 0.46m units, implying residual run-rate of 40,895 units

(de-growth of 1%).

Our estimates could see upgrades if demand picks-up in 2Ws during festive season

and 3W volume momentum sustains. The stock trades at 18x FY13E EPS of INR99.3

and 14.3x FY14E EPS of INR124.3. Maintain Buy.

Bajaj Auto: Financial & Valuation Summary

Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE

End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%)

3/11A 163,981 26,150 90.4 43.9 - - - - 66.7 76.0

3/12A 195,290 31,069 107.4 18.8 16.6 15.9 8.5 12.1 56.7 73.0

3/13E 195,245 28,748 99.3 -7.5 18.0 17.1 7.1 12.5 43.3 60.0

3/14E 226,449 35,980 124.3 25.2 14.3 13.8 5.8 9.6 44.5 61.2


Sep-12 Sep-11YoY

(%)Aug-12

MoM


YoY

(%)

Residual

Gr. (%)

Residual

Monthly

Run rate

FY13 YTD

Monthly

Run rate

Total volume 360,152 417,686 -13.8 344,906 4.4 2,128,179 -5.7 4,257,832 -2.1 1.8 354,942 354,697

Motorcyc les 315,314 371,208 -15.1 304,352 3.6 1,911,147 -4.0 3,795,432 -1.0 2.2 314,047 318,525

Total Two-Wheel 315,314 371,208 -15.1 304,352 3.6 1,911,147 -4.0 3,795,432 -1.0 2.2 314,047 318,525

Th re e -Wh ee l ers 44,838 46,478 -3.5 40,554 10.6 217,032 -18.6 462,400 -10.2 -1.3 40,895 36,172

Source: Compan y/MOSL

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Dashboard

October 2012 5Source: Company/MOSL

Three-wheeler volumes (units)

Export volumes (units)

Three-wheeler volumes

positively surprises

Exports are impacted by

custom duty hike in

Sri Lanka

Two-wheeler volumes (units)

Discover and Pulsar

contribute ~64% to

two-wheeler volumes

Market mix

remains stable

Market mix

180,000

245,000

310,000

375,000

440,000

Ap r Ma y Jun Ju l Aug Sep Oct Nov Dec Jan Feb Mar

FY11 FY12 FY13

24,000

31,000

38,000

45,000

52,000

Apr Ma y Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Mar

FY11 FY12 FY13

40,000

80,000

120,000

160,000

200,000

Ap r May Ju n Jul Aug Sep Oct No v De c Ja n Fe b Ma r

FY1 1 FY12 FY1 3

0%

25%

50%

75%

100%

May-

08

Jul-

08

Sep-

08

Nov-

08

Jan-

09

Mar-

09

May-

09

Jul-

09

Sep-

09

Nov-

09

Jan-

10

Mar-

10

May-

10

Jul-

10

Sep-

10

Nov-

10

Jan-

11

Mar-

11

May-

11

Jul-

11

Sep-

11

Nov-

11

Jan-

12

Mar-

12

May-

12

Jul-

12

Sep-

12

D omestic Exports

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Dashboard

October 2012 6

Data Track Maruti SuzukiSep-12 above est driven by ramp-up at Manesar & new Alto

Ramp-up at Manesar and

new Alto pre-launch

inventory filling led to

surprise in volumes.

Mgmt expects further

ramp-up to add 15k units/

month

Bloomberg MSIL IN

Equity Shares (m) 302.1

CMP (INR) 1,36452-Wk Range (INR 1,498/906

1,6,12 Rel.Perf.(%) -2/12/4

M.Cap. (USD b) 7.9

Maruti Suzuki: Financial & Valuation Summary

Year Total Inc. PAT Con. EPS EPS Con. P/E P/CE P/BV EV/ RoE RoCE

End (INR m) (INR m) (INR) Gr. (%) (x) (x) (X) EBITDA (%) (%)

3/11A 369,199 23,101 82.4 -9.2 - - - - 16.5 22.13/12A 355,871 16,351 58.2 -29.4 23.5 14.2 2.6 12.7 10.8 13.2

3/13E 427,281 19,993 67.2 15.5 20.3 10.7 2.2 9.2 10.5 12.4

3/14E 500,583 28,234 94.8 41.1 14.4 8.2 1.9 6.4 13.2 15.9

Highlights

Domestic volumes at 88,801 (v/s est 66,000) was driven by ramp-up at Manesar

and new Alto pre-launch inventory filling. Ertiga continues to do well with ~6,750

units. Mini segment (M800, Alto, Wagon-R, A-Star) volume momentum improved,

with 5% YoY (+77% MoM) growth in volumes, driven by pre-launch inventory filling

of new Alto. While Dzire volumes ramped-up to 11,694 units (v/s 3,085 units in

Aug-12), Swift volumes are estimated to have ramped-up to ~11,000 units (v/s 800

units in Aug-12). However, demand for petrol vehicles remained under pressure.

The management has indicated that Manesars operations would normalize by

end-Oct and it has currently ramped-up operations to ~1,000 cars/day (v/s capacityof 1,700 cars/day). It expects further ramp-up to add ~15,000 units/month, of which

~5,000/month would be of A-Star exports. However, considering normal operations

at SPIL (diesel engine plant), we believe MSIL would built diesel engine inventory

for usage upon normalization of operations. We estimate loss of ~36,000 units in

FY13, as believe that it can makes-up for lost volumes in 4QFY13.

We are revising our estimates to factor in for faster than estimated ramp-up. Our

estimates now factors in for volume growth of 3.8%/15% in FY13/FY14 to 1.18m/

1.35m units, JPY/INR of 0.685/0.663 and ~10bp/10bp increase in staff cost in FY13

and FY14, resulting in -10bp/+140bp change in EBITDA margins in FY13/FY14 (excl

SPIL). As a result, our consol. EPS has seen upgrade of ~3%/1% for FY13/FY14 to

INR67.2/94.8 and cash EPS upgrade of ~2/1% to INR127/INR166.

The stock trades at 14.4x FY14 consol EPS of INR94.8 and 8.2x FY14 Cash EPS.

Maintain Buy with price target of INR1,660 (~10x FY14 CEPS/17.5x FY14 EPS).


Sep-12 Sep-11YoY

(%)Aug-12

MoM


YoY

(%)

Residual

Gr. (%)

Residual

Monthly

Run rate

FY13 YTD

Monthly

Run rate

Total volume 93,988 85,565 9.8 54,154 73.6 526,275 -1.4 1,176,780 3.8 8.4 108,417 87,713

Domes tic 88,801 78,816 12.7 50,129 77.1 473,221 0.0 1,054,925 4.8 9.1 96,951 78,870

A1 1,400 1,993 -29.8 1,382 1.3 8,583 -28.9

C 12,620 11,737 7.5 11,593 8.9 59,166 -24.5

A2 55,563 55,053 0.9 26,739 107.8 289,060 -10.6

A3 11,982 9,607 24.7 3,532 239.2 76,011 37.5

A4 12 14 NA 0 NA 35 NA

UV 7,224 412 NA 6,883 5.0 40,366 NA

Export 5,187 6,749 -23.1 4,025 28.9 53,054 -12.7 121,855 -4.3 3.3 11,467 8,842


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Dashboard

October 2012 7

Export volumes (units)

Segment mix (domestic)

Source: Company/MOSL

Monthly volumes (units)

Export de-grew

by 23% YoY

A2 & A3 segments

dominate the

segment mix; UVs

contribution rising

Export contribution to

volumes fell

to ~11% in FY12 from

14.5% in FY10

Demand for petrol car

remains weak

Market mix

40,000

65,000

90,000

115,000

140,000

Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Ma r

FY11 FY12 FY13

0

5,000

10,000

15,000

20,000

Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Mar

FY11 FY12 FY13

0%

25%

50%

75%

100%

M

ay-08

Jul-08

Sep-08

N

ov-08

Jan-09

M

ar-09

M

ay-09

Jul-09

Sep-09

N

ov-09

Jan-10

M

ar-10

M

ay-10

Jul-10

Sep-10

N

ov-10

Jan-11

M

ar-11

M

ay-11

Jul-11

Sep-11

N

ov-11

Jan-12

M

ar-12

M

ay-12

Jul-12

Sep-12

A1 A2 A3 + A4 MPVs + UVs

0%

25%

50%

75%

100%

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

Domes ti c Sa les Exports

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Dashboard

October 2012 8

MahindraandMahindra:Financial&ValuationSummaryYear NetSales S/APAT*S/AEPS* Cons. Con.EPS P/E Cons. RoE RoCE EV/ EV/End (INRm) (INRm) (INR) EPS(INR) Gr(%) (x) P/E(x) (%) (%) Sales(x ) EBITDA

3/11A 234,603 25,732 43.0 48.0 18.1 25.0 26.8

3/12A 318,535 28,888 48.3 51.2 6.6 18.0 17.0 23.0 23.1 1.6 13.63/13E 393,584 33,149 55.4 63.7 24.4 15.7 13.6 21.7 24.3 1.3 11.1

3/14E 443,341 36,511 61.0 78.4 22.9 14.3 11.1 19.3 22.7 1.2 10.4

* S/A including MVML

Data Track Mahindra & MahindraSep-12 volumes in line; growth in pick-up segment moderates, passenger

remains strong; tractor sales continues to decline

Recently launched

Quanto has garnered

3200 bookings. Also,

XUV5OO has an order

book of 14k units with

waiting period ranging

from 6-15 weeks across

markets.

Bloomberg MM IN

Equity Sha res (m) 587.2

CMP (INR) 870

52-Wk Range ( INR) 875/6221,6,12 Re l.Perf.(%) -2/6/5

M.Cap. (USD b) 10.0

Highlights

M&Ms September-12 volumes came at 68,427 (v/s est 69,400), down 1% YoY (+16%

MoM). Sales stood marginally lower due to moderation in growth for the pick-

ups/LCVs. Our FY13 volume estimate of 9.5% growth implies 8.8% residual growth

with monthly run-rate of 62,619 units.

UV volumes grew 14.9% YoY (+6.5% MoM) to 39,404 (v/s est 40,000), driven by

healthy growth in passenger UVs and launch of Quanto (mini SUV based on Xylo

platform). However, growth in pick-up segment moderated to 7% YoY to 14,417

units (v/s FY12 growth of ~45%). Our FY13 estimates factor in 20% YoY growth in

UVs to 461,137, implying residual run-rate of 39,860 (14.5% residual growth).

3-wheeler volumes de-grew 17.2% YoY (+0.7% MoM) to 6,048 (v/s est 6,300). Our

FY13 estimates factors in flat volumes, implying residual run rate of 6,071 (6.2%residual growth).

Speaking on the performance for the month of Sep-12 , Mr Pravin Shah, Chief

Executive, Automotive Division said, We are happy with the performance and

growth that we have achieved during September 2012 over the festive season

month of September 2011. Post reduction in CRR, banks have started cutting

lending rates and are also looking at reducing vehicle loan rates. We are hopeful

of a good performance in the upcoming festive season.

Over 3200 bookings of the recently launched Quanto (mini SUV) have been

received. M&M also stated that XUV5OO has an order book of 14k.

Tractor sales declined by 18.6% YoY (+51.8% MoM) to 20,085 units (v/s est ~20,000units), as festive dispatches to dealers this year would be reflected in Oct/Nov.

We expect FY13 volumes to drop by 5% for M&M (industry growth at 0-2%) to

223,606, implying a residual run-rate of 19,031 units.

The stock trades at 13.6x FY13E consolidated EPS of INR63.7 and 11.1x FY14E

consolidated EPS of INR78.4. Maintain Buy.


Sep-12 Sep-11YoY

(%)Aug-12

MoM


YoY

(%)

Residual

Gr. (%)

Residual

Monthly

Run rate

FY13 YTD

Monthly

Run rate

Total volume 68,427 68,810 -0.6 59,070 15.8 376,684 10.5 786,766 9.5 8.6 68,347 62,781

UV 39,404 34,307 14.9 37,006 6.5 221,976 26.6 461,137 20.0 14.5 39,860 36,996

LCV 990 968 2.3 724 36.7 6,123 -1.2 14,514 5.0 10.1 1,399 1,021

Veri to 1,900 1,560 21.8 2,102 -9.6 8,151 -6.4 20,069 12.5 30.5 1,986 1,359

Three-Wheelers 6,048 7,302 -17.2 6,004 0.7 31,016 -6.4 67,440 0.0 6.2 6,071 5,169

Tractors 20,085 24,673 -18.6 13,234 51.8 109,418 -6.9 223,606 -5.0 -3.1 19,031 18,236


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Dashboard

October 2012 9

Tractor volume (units)

Tractor volumes

de-grew 19% YoY

Utility vehicle volumes (units)

Product mix


Tractors and UVs

dominate the segment

mix, but we expect the

share of three wheelers

and LCVs to increase

UV volumes continue

to remain strong

12,000

21,000

30,000

39,000

48,000

Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r

FY11 FY12 FY13

4,000

12,000

20,000

28,000

36,000

Apr Ma y Jun Jul Aug Se p Oct Nov Dec Jan Feb Mar

FY11 FY12 FY13

0%

25%

50%

75%

100%

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

UVs Tractors LCVs, 3-wheelers Cars

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Dashboard

October 2012 10

Data Track Tata MotorsSep-12 in-line at 75,773 (-4% YoY, +5.5% MoM, v/s est 77,000); M&HCV volumes

remain under pressure

M&HCV volume

continues to be under

pressure, with no major

seasonal improvement

MoM.

Highlights Total September-12 volumes de-grew 4% YoY (+5.5% MoM) to 75,773 units (v/s est

77,000). While domestic CVs grew by 5.3% YoY (+7.8% MoM) led by continued

strong momentum in LCV sales, the domestic PVs declined by 17.7% YoY (-3%

MoM). Based on our volume growth estimate of 3.3% for FY13, implied residual

run-rate is ~87,803 units (3.9% residual growth).

Domestic CV volumes grew 5.3% YoY (7.8% MoM) to 48,680 (v/s est 48,350) led by

strong LCV growth of 18.9% YoY (+9.6% MoM) to 33,393 (v/s est 31,750). However,

M&HCV volume continues to be under pressure, with de-growth of 15.8% YoY

(+4.1% MoM) to 15,287 (v/s est 16,600), with no major seasonal improvement

MoM. Our FY13 estimates factor in volume growth of 4.8% for CVs (incl exports)with M&HCV volume decline of 11.7% and ~14.9% growth in LCVs.

Domestic passenger cars de-grew by 18.5% YoY (-3.4% MoM) to 17,133 (v/s est

17,833), driven by 87% YoY (-15.6% MoM) growth in Nano volumes. Nano volumes

came at 5,491 (v/s 6,507 in Jul-12). Ex Nano, domestic car volumes de-grew 35.6%

YoY (+3.8% MoM) impacted by 23%/52% YoY decline in Indica/Indigo volumes

respectively. We factor in a drop of 1.5% in passenger cars volumes in FY13.

Domestic UV volumes de-grew 14.9% YoY (-1.4% MoM) at 4,519 (v/s est 4,610). Our

FY13 estimate assumes volume growth of 10%.

We factor in overall volume growth of 3.3% in FY13. FY13 JLR volumes are estimated

at ~362,500 (+15%). The ordinary/DVR stock is currently trading at 8.3x/5x FY13E and 6.6x/4x FY14E

consolidated EPS. Maintain Buy with target price of INR370/INR223 for ordinary/

DVR shares.


Sep-12 Sep-11YoY

(%)Aug-12

MoM


YoY

(%)

Residual

Gr. (%)

Residual

Monthly

Run rate

FY13 YTD

Monthly

Run rate

Total volume 75,773 78,783 -3.8 71,826 5.5 409,864 2.6 936,680 3.3 3.9 87,803 68,311

HCV's 16,332 19,583 -16.6 15,515 5.3 82,639 -20.2 195,380 -11.7 -4.2 18,790 13,773

LCV's 37,007 32,118 15.2 33,230 11.4 192,662 15.3 417,900 14.9 14.5 37,540 32,110

Cars 17,794 21,743 -18.2 18,374 -3.2 108,873 2.3 261,290 -1.5 -4.1 25,403 18,146

UV's 4,640 5,339 -13.1 4,707 -1.4 25,690 13.5 62,110 10.0 7.6 6,070 4,282

of which e xports 5,441 6,217 -12.5 4,373 24.4 27,749 -10.7

Source: Compan y/MOSLTotal volumes estimated by assuming export volumes

Bloombe rg TTMT IN

Actua l Eq. Sh (m) 3,173.8

CMP (INR) 273

52-Wk Range ( INR) 321/138

1,6,12 Re l. Perf. (%) 7/-11/57

M.Cap. (USD b) 17.3

Tata Motors: Financial & Valuation Summary

Year Sales Adj. PAT Adj. EPS Norm. P/E Norm. RoE RoCE EV/ EV/

End * (INR m) (INR m) (INR) EPS (INR) Ratio P/E (x) (%) (%) Sales (x) EBITDA (x)

3/11A 1,221,279 90,695 27.3 15.4 10.1 17.8 47.3 26.5 0.0 0.0

3/12A 1,656,545 125,568 37.8 22.2 7.3 12.4 38.4 24.1 0.6 4.5

3/13E 1,971,042 110,482 33.2 14.0 8.3 19.6 25.2 23.9 0.5 3.8

3/14E 2,185,850 137,408 41.3 19.5 6.6 14.0 24.7 24.2 0.4 3.2

* Consoli dated; ^ Normal ized for capi talized e xpens es

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Dashboard

October 2012 11

LCV volumes (units)

Car volumes (units)


Product mix in the CV segment

LCV volumes

remains robust

Domestic car volumes

grew 18% YoY

M&HCV volumes (units)

M&HCV volumes

continue to disappoint

LCVs account for ~70% of

the CV product portfolio

8,000

14,000

20,000

26,000

32,000

38,000

Apr Ma y Jun Jul Aug Sep Oct Nov De c Ja n Feb Ma r

FY11 FY12 FY13

4,000

10,000

16,000

22,000

28,000

Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Feb Mar

FY11 FY12 FY13

8,000

16,000

24,000

32,000

40,000

48,000

Apr May Jun Jul Aug Sep Oct Nov De c Ja n Fe b Mar

FY11 FY12 FY13

0%

25%

50%

75%

100%

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

M&HCVs LCVs

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Dashboard

October 2012 12

TVS MotorVolumes de-grew 20.7% YoY; while motorcycles de-grew 30.9% YoY

Data Track

Motorcyle volumes (units)

Motorcycle volumes

decline

Scooters and mopeds (units)

Sales mix


Scooters and

mopeds have been the

key volume driver

Scooter volumes also

under pressure

Snapshot of volumes for June

Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTDFY13 Chg (%)

Total volume 154,647 194,898 -20.7 161,255 -4.1 835,062 -9.3

Motorcycles 53,673 77,726 -30.9 53,355 0.6 300,402 -17.0

Scooters 38,193 52,253 -26.9 40,895 -6.6 191,920 -12.4

Mopeds 58,874 60,205 -2.2 63,704 -7.6 326,453 1.9


60,000

78,000

96,000

114,000

132,000

Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Fe b Mar

FY11 FY12 FY13

0%

25%

50%

75%

100%

May-0

8

Jul-0

8

Sep-0

8

Nov-0

8

Jan-0

9

Mar-0

9

May-0

9

Jul-0

9

Sep-0

9

Nov-0

9

Jan-1

0

Mar-1

0

May-1

0

Jul-1

0

Sep-1

0

Nov-1

0

Jan-1

1

Mar-1

1

May-1

1

Jul-1

1

Sep-1

1

Nov-1

1

Jan-1

2

Mar-1

2

May-1

2

Jul-1

2

Sep-1

2

Motorcycles Scooters & Mopeds

50,000

62,000

74,000

86,000

98,000

Ap r Ma y Jun Jul Au g Se p Oct Nov De c Ja n Fe b Mar

FY11 FY12 FY13

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Dashboard

October 2012 13

Special Report INDIA AUTO: Channel checks2-W channel checks suggest weak demand, inventory pile-up; Early signs of

dealers offering discounts

Demand continues to remain weak, despite the start of festive season

Our channel interactions indicate continued weakness in demand in the two-wheeler

industry.

While demand in the Kerala market increased marginally YoY during the festive

season (Onam in August), it stood below the expectation of dealers/OEMs. Kerala

being a relatively high-end/premium segment market, Bajaj benefited with the

help of its new launches leading to double digit growth in sales. However, in

other markets, Bajajs new launches, though received positive response, is

cannibalizing sales of its existing product range.

Festive demand during Ganesh Chaturthi festival in Maharashtra has been weak

as customers delay purchases in view of weak income growth and inflationary

trend in the economy.

Dealer inventory remains high at over 30 days across players (including

HMSI), leaving limited room for festive build-up

Our channel interaction indicated inventory levels of over 30 days across players

Hero (45-50 days), Bajaj (35-40 days), HMSI (30 days), and Yamaha (45 days).

With weak festive demand and already high inventory, we expect wholesale

dispatches during festive season to be lower YoY, particularly for Hero MotoCorp

as it corrects high channel inventory.

We interacted with a cross-section of 2-wheeler dealers across India. Key takeaways:

Demand continues to remain weak, despite the start of festive season

Dealer inventory remains high at over 30 days across players (including HMSI),

leaving limited room for festive build-up

Retail sales under pressure for HMSI as well, despite reporting strong wholesale

volume growth

Discounts/incentives stable but players pushing sales through finance schemes;

West worst hit

Japanese players enjoy higher market share in the Southern market

VALUATION & VIEW: Bajaj Auto better placed than Hero MotoCorp.

Channel inventory remains high across players (est days)

Source: Company, MOSL

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Dashboard

October 2012 14

Retail sales under pressure for HMSI as well, despite reporting strong

wholesale volume growth

While HMSI continues to report healthy volume growth, our channel check suggests

weak demand and inventory pile-up with dealers.

The strong growth in wholesale volumes is largely a reflection of network

expansion (currently ~600 dealers v/s ~450 last year) and inventory pile-up with

dealers (around 30 days).

HMSIs volume growth is expected to moderate on the back of weak demand,

high channel inventory and capacity expansion (2nd plant) is in the base.

Growth rate to moderate with weak retail demand, high channel inventory & as capacity expansion is in the base


Discounts/incentives stable but players pushing sales through financeschemes; West worst hit

Past experience suggest minimal positive impact of discounts on demand. This,

together with high base and negative impact on brand, is keeping companies

away from offering discounts/freebies. However, selectively dealers have started

offerings discounts/freebies given high inventory.

Regionally, East and South remains relatively healthy, followed by North. Western

market is the worst hit.

West is the largest 2W market followed by South and North

Note: Based on FY12 sales Source: Company, MOSL

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Dashboard

October 2012 15

Japanese players enjoy higher market share in the Southern market

All the three Japanese players viz HMSI, Yamaha and Suzuki have relatively higher

market share in the southern market.

Our channel interaction indicated that with higher education levels and higher

exposure to brands/technology, customers perceive Japanese brands to be

superior to Indian brands.

Thus, it would be imperative over the long term for Indian brands to consistently

bring in superior products to sustain and grow their market position.

Share of sales from the Southern market is higher than Industry average for Japanese players

Note: Based on FY12 sales Source: Company, MOSL

Valuation & view: Bajaj Auto better placed than Hero MotoCorp

After 3 years of strong volume growth, domestic two-wheeler volumes arewitnessing some pressure over last 6 months. This coupled with increased

competitive intensity could put pressure on market share and profitability for

incumbents.

We believe recovery in demand in upcoming festive season would be very critical

to maintain profitability.

We believe Bajaj Auto is better placed vis--vis Hero MotoCorp due to its

diversified product/market mix and would be less impacted to any increase in

competitive intensity.

Financials and ValuationsVolume gr. (%) EPS (INR) EPS Gr. (%) P/E (x) P/CEPS (x) EV/EBITDA(x) P/B(x) RoE (%)

FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E FY12 FY13E

Bajaj Auto 13.7 -2.1 107.4 99.3 18.8 -7.5 16.6 18.0 15.9 17.1 12.1 12.5 10.5 8.5 56.7 43.3

Hero Honda 15.4 -2.6 119.1 108.0 18.4 -9.3 15.5 17.1 14.0 15.0 10.0 10.4 12.5 8.6 55.4 41.8


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Dashboard

October 2012 16

Special Report Tata Motors: JLR momentum to sustain; 13.4% volume

CAGR over FY12-15Strong FCF to drive de-leveraging despite significant investment program

JLR product action, market expansion to drive 13.4% CAGR (FY12-15)

Luxury vehicle market volume momentum remains intact. Top 4 players grew ~9.3%

in FY13YTD (Apr-Aug) led by 21% growth in China. Luxury SUV (JLR's strength) growth

remains robust across markets; FY13YTD, SUV volume growth is 40% for JLR and 18%

for Mercedes Benz. Expect JLR's volumes to grow ~15% in FY13 leading the 13.4%

CAGR over FY12-15E on the back of product expansion (40 product actions over 5

years) and further market penetration. JLR's China volumes should benefit from

expected ~18% CAGR in the market over CY11-15, JLR's own dealer expansion and

Chery JV enabling JLR to compete better with a production base in China.

M&HCV segment could witness strong revival in FY14

Likely bottoming out of IIP growth (1.4% in FY13, lowest since FY92), expected interest

rate downcycle, and favorable macro impetus (e.g. FDI in retail) should augur well for

M&HCV business. We expect Tata Motors' (TTMT) M&HCV volume to grow 10% in

FY14, recovering from likely 12% de-growth in FY13. LCV volume momentum remains

strong with ~20% growth in FY13YTD. Expect 15% CAGR in LCV volumes over 2 years,

driven by SCVs.

Consolidated EBITDA margin to improve in FY14, strong FCF despiteaggressive capex

We expect Consolidated EBITDA margin to recover 50bp in FY14 to 14.2%. JLR's EBITDA

margin should improve 60bp to 15% in FY14 on the back of better mix and operating

leverage. We believe TTMT has multiple levers to support/improve margins over

next 3-4 years. Our estimates for FY15 are yet to factor in any benefits from the Chery

JV and own engine plant in UK & India. Our estimates suggest consolidated FCF

generation of INR274b over FY13-15, despite investing ~INR600b, transforming it into

a net cash company by FY15.

8% upgrade in FY14 EPS; Buy with TP of INR370/223 (ordinary/DVR)We believe JLR is on the right strategic path and is investing in the right areas, resulting

in its evolution to a much stronger and balanced player in the luxury vehicle market.

The CV business, which contributes ~35% to fair value, is expected to witness recovery

in FY14, resulting in significant improvement in standalone operations. We are

upgrading our FY14 consolidated EPS by 8.1% to INR41.1 to factor in for improvement

in JLR's product mix. The ordinary/DVR stock is currently trading at 8x/4.8x FY13E and

6.5x/3.9x FY14E consolidated EPS. Maintain Buy with revised target price of INR370

(FY14 SOTP based) for ordinary share and INR223 for DVR (40% discount to ordinary).

Also refer our Report dated

1 October 2012

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Dashboard

October 2012 17

Domestic model-wise volumes for September 2012*

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Dashboard

October 2012 18

Domestic model-wise volumes for September 2012* (Contd...)

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Dashboard

October 2012 19

Sector Gauge Two-wheelersDomestic volumes moderate

Two-wheelers: Domestic volume trend (units)

Domestic market share in 2-wheelers

Domestic two-wheeler

volumes show signs

of slowdown

Increasing competition in

2-wheeler segment,with HMSI consistently

gaining market share

Two-wheelers: Volume snapshot Mar-12

Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTD FY13 Chg (%) FY12 Chg (%)

Total Domestic 2W 1,057,857 1,107,782 -4.5 1,132,696 -6.6 5,710,082 6.8 13,424,594 14.3

% of Tota l 2W 87 87 88 87 87

Total Motorcycle 766,059 836,887 -8.5 821,821 -6.8 4,216,829 3.3 10,086,547 11.9

% of Domes tic 2W 72 76 73 74 75

Scooters & Mopeds 291,798 270,895 7.7 310,875 -6.1 1,493,253 18.0 3,338,047 22.5

% of Domes tic 2W 28 24 27 26 25

Exports 161,061 172,261 -6.5 158,429 1.7 842,606 -2.1 1,957,613 27.8

% of Tota l 2W 13 13 12 13 13

Total 2W 1,218,918 1,280,043 -4.8 1,291,125 -5.6 6,552,688 5.6 15,382,207 15.9

Source: SI AM/MOSL

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

FY11 FY12 FY13

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Dashboard

October 2012 20

Motorcycles: domestic volume trend

Motorcycles: domestic market share

Two-wheelers: Product mix

Two-wheelers: export volumes (units)

Slowdown in domestic

motorcycle volumes

Motorcycles dominate

2W segment

Export volumes

also remain under

pressure

Hero MotoCrop

continues to dominate

motorcycle segment,

although HMSI's

increasing its

market share

400,000

600,000

800,000

1,000,000

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

FY11 FY12 FY13

0%

25%

50%

75%

100%

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

He ro MotoCorp Ba ja j Auto HMSI Yama ha TVS Motor

0%

25%

50%

75%

100%

Apr-08

Ju

n-08

Au

g-08

O

ct-08

De

c-08

Fe

b-09

Apr-09

Ju

n-09

Au

g-09

O

ct-09

De

c-09

Fe

b-10

Apr-10

Ju

n-10

Au

g-10

O

ct-10

De

c-10

Fe

b-11

Apr-11

Ju

n-11

Au

g-11

O

ct-11

De

c-11

Fe

b-12

Apr-12

Ju

n-12

Au

g-12

Motorcycle Scooters & Mopeds

100,000

125,000

150,000

175,000

200,000

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

FY11 FY12 FY13

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Dashboard

October 2012 21

Sector Gauge Three-wheelersDemand remains weak

Three-wheelers: volume trend (including exports)

Three-wheelers: domestic segment mix

3W volumes impacted

due to lower exports

Passenger segment

dominates three-

wheelers with over 80%

contribution

Three-wheelers: Volume snapshot Mar-12

Aug-12 Aug-11 YoY (%) Jul-12 MoM (%) YTD FY13 Chg (%) FY12 Chg (%)Total Domestic 3W 45,386 45,468 -0.2 44,286 2.5 200,921 0.6 513,276 -2.4

% of Total 3W 63 58 68 65 59

Passenger 37,553 36,509 2.9 36,470 3.0 163,490 4.5 406,259 -4.5

% of Domestic e W 83 80 82 81 79

Total Goods 7,833 8,959 -12.6 7,816 0.2 37,431 -13.4 107,017 6.3

% of Domestic 3W 17 20 18 19 21

1T 251 1,952 -87.1 330 -23.9 1,095 -73.0 17,704 -17.6

% of Goods Vehicle 3 22 4 3 17

Exports 26,710 32,329 -17.4 21,063 26.8 107,752 -35.0 361,753 34.0

% of Total 3W 37 42 32 35 41

Total 3W 72,096 77,797 -7.3 65,349 10.3 308,673 -15.5 875,029 9.9

Source: SI AM/MOSL

32,000

44,000

56,000

68,000

80,000

92,000

Apr Ma y Jun Jul Aug Se p Oct Nov Dec Jan Feb Ma r

FY11 FY12 FY13

0%

25%

50%

75%

100%

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

Pas s e nge r Goods

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Dashboard

October 2012 22

Three wheelers: passenger segment market share

Three wheelers: goods segment market share

Bajaj Auto continues to

dominate passenger

segment

... Piaggio continues to

lead in the goods

segment

0%

25%

50%

75%

100%

Apr08

Jun08

Aug08

Oct

08

Dec08

Feb

09

Apr09

Jun09

Aug09

Oct

09

Dec09

Feb

10

Apr10

Jun10

Aug10

Oct

10

Dec10

Feb

11

Apr11

Jun11

Aug11

Oct11

Dec11

Feb

12

Apr12

Jun12

Aug12

Baja j Auto Pi aggi o M&M TVS Others

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Dashboard

October 2012 23

Sector Gauge Cars and UVsPassenger cars remain sluggish, while UVs continue to grow

Passenger vehicles: Volume snapshot Mar-12


Total Domestic PVs 184,238 191,914 -4.0 204,969 -10.1 1,046,382 7.1 2,617,373 4.6

% of Total PVs 83 79 81 82 84

Total Cars 118,022 145,066 -18.6 143,496 -17.8 748,861 0.5 2,017,194 2.3

% of Domes tic PVs 64 76 70 72 77

A1 & A2 84,939 104,142 -18.4 100,643 -15.6 537,305 -3.6 1,511,941 -1.7

% of Ca rs 72 72 70 72 75

A3 26,547 35,390 -25.0 36,929 -28.1 180,517 12.7 451,949 21.4

% of Ca rs 22 24 26 24 22

A4 & above 6,536 5,534 18.1 5,924 10.3 31,039 14.2 53,304 -12.6

% of Ca rs 6 4 4 4 3

UVs 45,062 26,425 70.5 44,878 0.4 207,651 55.9 365,418 15.6

% of Domestic PVs 24 14 22 20 14MPVs 21,154 20,423 3.6 16,595 27.5 89,870 -9.4 234,761 9.9

% of Domestic PVs 11 11 8 9 9

Exports 36,848 49,646 -25.8 47,882 -23.0 223,534 1.3 507,743 14.3

% of Total PVs 17 21 19 18 16

Total PVs 221,086 241,560 -8.5 252,851 -12.6 1,269,916 6.0 3,125,116 6.1

Source: SI AM/MOSL

Cars: domestic volume (units)

UVs & MPVs: domestic volume (units)

Volumes remain

sluggish

Volumes improve

led by Ertiga, Duster and

Quanto

16,000

28,000

40,000

52,000

64,000

76,000

Apr May Jun Jul Aug Se p Oct Nov Dec Jan Feb Ma r

FY11 FY12 FY13

80,000

120,000

160,000

200,000

240,000

Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Feb Mar

FY11 FY12 FY13

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Dashboard

October 2012 24

0%

25%

50%

75%

100%

Apr08

Jun08

Aug08

Oct08

Dec08

Feb

09

Apr09

Jun09

Aug09

Oct09

Dec09

Feb

10

Apr10

Jun10

Aug10

Oct10

Dec10

Feb

11

Apr11

Jun11

Aug11

Oct11

Dec11

Feb

12

Apr12

Jun12

Aug12

Ma ruti TataMotor Hyunda i GM Honda

20,000

29,000

38,000

47,000

56,000

65,000

Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r

FY11 FY12 FY13

Passenger vehicles: export volume (units)

Cars: domestic market share

UVs: domestic market share

Passenger vehicles: segment mix

Export volumes

pick-up

Maruti's market share

improves, driven

by Ertiga

A2 dominates the

passenger vehicles

segment

Maruti's market share

impacted by Manesar

lock-out

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Dashboard

October 2012 25

Sector Gauge Commercial vehiclesLCVs remains strong, while M&HCV declines

M&HCVs: domestic volume - buses (units)

M&HCVs: Domestic volume - goods (units)

M&HCV volumes

remains muted

Commercial vehicles: Volume snapshot Mar-12


Total Domestic CVs 66,766 64,242 3.9 65,008 2.7 314,982 4.6 809,278 18.4

% of Total CVs 91 91 88 90 90

Total M&HCV 25,003 27,442 -8.9 23,171 7.9 114,222 -11.9 348,869 8.0

% of Domestic CVs 37 43 36 36 43

Goods 21,103 23,440 -10.0 18,833 12.1 92,552 -16.2 299,287 8.8

% of M&HCVs 84 85 81 81 86

Pa ssenger 3,900 4,002 -2.5 4,338 -10.1 21,670 12.7 49,582 3.3

% of M&HCVs 16 15 19 19 14

Total LCVs 41,763 36,800 13.5 41,837 -0.2 200,760 17.0 460,409 27.7

% of Domestic CVs 63 57 64 64 57

Goods 37,970 32,801 15.8 36,778 3.2 177,405 18.0 411,229 30.2

% of LCVs 57 51 57 56 51Pa ssenger 3,793 3,999 -5.2 5,059 -25.0 23,355 10.3 49,180 9.8

% of LCVs 6 6 8 7 6

Exports 6,759 6,703 0.8 8,491 -20.4 36,292 7.8 92,327 24.8

% of Total CVs 9 9 12 10 10

Total CVs 73,525 70,945 3.6 73,499 0.0 351,274 4.9 901,605 19.0

Source: SI AM/MOSL

0

8,000

16,000

24,000

32,000

40,000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Fe b Ma r

FY11 FY12 FY13

0

1,500

3,000

4,500

6,000

7,500

Apr Ma y Jun Jul Aug Se p Oct Nov Dec Jan Fe b Mar

FY11 FY12 FY13

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Dashboard

October 2012 26

M&HCVs: domestic market share, goods (%)

M&HCVs: domestic market share, buses (%)

LCVs: domestic volumes (units)

LCVs continue

robust growth

Tata Motors continue

to dominate M&HCV

goods segment

0%

25%

50%

75%

100%

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

Ta ta M oto r A sho kLe yl a nd Ei ch e r

0%

25%

50%

75%

100%

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

Ta ta Moto r As h okLe yl an d Ei che r S wa ra j

0

10,000

20,000

30,000

40,000

50,000

60,000

Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Mar

FY13 FY11 FY12

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Dashboard

October 2012 27

LCVs: domestic market share (%)

Goods: segment-wise break-up (%)

Tata Motors dominates

the domestic LCV

segment

LCVs contribution

to CVs increased

0%

25%

50%

75%

100%

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

LCVs

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Dashboard

October 2012 28

News and Events

M&M launches Quanto (mini-SUV) at INR582k; receives 3,200 bookings

since launch

M&M launched its mini SUV Quanto with starting price of INR582k (ex-showroom

Thane). It is the smallest UV in Mahindras stable with sub-4 mtr in length and powered

by 1.4-litre diesel engine (3 cylinders) and thus qualifies for lower excise duty of 12%

(v/s 24%/27% for above 4mtr vehicle/ & >1.5ltr engine). It has a seating capacity of 7

people, including 2 in the last row. Quanto is based on Ingenio platform, on which

Xylo is made. Between Xylo and Quanto, M&M currently has capacity of ~7,000 units/

mth at its Chakan plant. On the occasion of the launch, Dr Pawan Goenka, President,

Automotive & Farm Equipment sectors, Mahindra & Mahindra: With the Quanto,

Mahindra is aiming to fill a need gap in the Indian automotive market for a versatileand compact SUV. We expect the Quanto to offer an exciting upgrade at a premium to

customers who are otherwise looking for premium diesel hatchbacks or entry level

diesel sedans.

BharatBenz starts commercial sales of its heavy duty trucks in India

Daimler India Commercial Vehicles (DICV), the 100% Indian subsidiary of Daimler AG,

launched three heavy duty trucks under the BharatBenz brand. The three trucks

launched, are the first in a range of 17 models that Bharat Benz plans to launch over

the next 17 month. Speaking on the occasion, Marc Llistosella, Managing Director and

CEO, DICV said: Today is an important milestone for all of us at Daimler and Indiantrucking. From today, Indian truck buyers will have a new choice. A choice, for trucks

that are more fuel efficient, more reliable and in the end makes them more successful.

BharatBenz is here, and we are proud to have delivered on the promise we made

since 2010 - to launch our trucks in September 2012. We will drive the change in the

Indian market with a whole new product, sales and service experience for our

customers.

All new Range Rover revealed at Paris Motor Show

Land Rover has revealed the all-new Range Rover (4 th generation) at the Paris

International Motor Show. Designed and engineered at Land Rovers developmentcentres in the UK, the worlds first SUV with a lightweight all-aluminium body, the

new Range Rover will be produced in a state-of-the-art new low-energy

manufacturing facility at Solihull, UK. Over 370 million has been invested in the

Solihull plant to create the worlds largest aluminium body shop. Presenting the new

Range Rover, John Edwards, Land Rover Global Brand Director said This is a vehicle

that will take us to the next level of success. Range Rover is our flagship and a true

British success story, designed, engineered and built in Britain. Its distinctive design,

breadth of capability and class-leading refinement and comfort has always made it

unique. When we asked our customers what they wanted us to change, they told us

dont change it, just make it better. We set out to create not just the worlds finestluxury SUV, but the worlds finest luxury vehicle.

Major developments in the auto sector

September 2012

Range Rover (4th generation)

M&M launches Quanto

BharatBenz HCV truck

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Dashboard

October 2012 29

Yamaha launches Ray scooter, eyes 1m and 2.8m units in India by 2014 &

2018 respectively

Yamaha entered the Indian scooter market with the launch of its new scooter Ray

priced at INR46,000 (ex-showroom Delhi). It is an automatic scooter powered by a

new 113cc engine that makes 7.1PS at 7500rpm and 8.1Nm of torque. The company

claims a 0-60kmph time of 12s and a fuel efficiency of 62.1kmpl. It was also reported

that Hiroyuki Suzuki, Chief Executive & MD at India Yamaha Motors said the company

plans to sell 0.65m units by next year from current 0.4m units. Yamaha is targeting 20%

share in the scooter segment by 2016, he added. It was also mentioned that Yamaha

has started exporting bikes to few Latin American countries and may increase export

volumes in coming years. By 2014, Yamaha aims to sell 1m units and subsequently

touch 2.8m by 2018. The companys proposed Chennai manufacturing plant will be

operational by 2014 and total production capacity will touch 2.8m by 2018, according

to the reports.

TVS launches 125cc Phoenix motorcycle, plans to increase market share to 17%

To strengthen its position in the executive motorcycle segment, TVS Motor has

launched Phoenix 125cc motorcycle. The company claims that the motorcycle has got

a host of new features with a powerful engine which under standard test conditions

returns a mileage of 67 kmpl. It would compete with Hero MotoCorps Super

Splendour, Glamour125cc, Bajaj Autos Discover 125cc and Hondas CB Shine 125cc.

M&M planning to invest INR15b on a new platform in collaboration with

Ssangyong Motors

Mahindra & Mahindra will reportedly invest INR15b on a new platform to be developed

in collaboration with its Korean subsidiary Ssangyong Motors. According to a media

report, Pawan Goenka, President, Automotive & Farm Equipment Sectors, Mahindra

& Mahindra said This joint development will be taken up over the next three years.

While this investment will be on one platform, we will invest more on joint

development on other range. The report mentioned that Goenka said, We will launch

Rexton, a high-end SUV from the SsangYong stable by Diwali. This will be in a segment

that is higher than our successful SUV XUV 500.

Nissan launches Evalia; plans to launch 10 new models by 2017 including

two Datsun branded vehicles

Nissan has launched its MUV Evalia priced between INR0.85m-0.99m (ex- showroom

Delhi). Mated to a 5-speed manual transmission, the front-wheel drive MPV is

powered by a 1.5-litre dCi diesel engine that produces 85PS of power and 200Nm of

torque and can accommodate 8 occupants. Nissan claims that the Evalia can hit 60km/

h in 12.7 seconds owing to its monocoque construction that gives it a lower kerb

weight compared to competing MPVs. The ARAI figure stands at 19.3kmpl which

reportedly translates to a 50% better overall efficiency compared to competition.

Nissan aims to sell about 2,000-2,500/month units of Evalia and plans to expand

production capacity either through new plants or the existing plant. The Japanese

auto maker is now firming up further expansion plans in India and announced its

intentions to launch 10 new models by March 2017, including two Datsun branded

vehicles as well.

Nissan launches Evalia

Ssangyong Motors (Rexton)

TVS launches 125cc Phoenix

Yamaha launches Ray scooter

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Dashboard

October 2012 30

Volvo Eicher JV planning to invest INR10b by 2013

VE Commercial Vehicles Ltd has reportedly said it will invest INR10b by 2013 on various

activities, including expansion of engine production capacity, launch new products

and enhancing R&D. The reports quoted VEVC Managing Director Siddhartha Lal as

saying We have set a capex of INR10b for 2012 and 2013. Our investment plans are on

track and there is no downturn effect on it. According to the reports, the firm has a

capacity to produce 60,000 engines a year. It is setting up a new plant to roll out 100k

engines, which is based on Volvo technology, every year. The new plant will be

commissioned by the middle of next year, Lal added.

Volkswagen India planning to invest INR7b in next two years

Volkswagen Group has stated that it will invest 100 million euros (over INR7b) in India

in the next two years for upgrading products and facilities, according to the reports.

The reports quoted Volkswagen Group Chief Representative, India, John Chacko as

saying We need investments in improving our facilities, doing minor model changes

for our exports and other areas. We are investing about 100 million euros for the

entire group in the next two years in India. Chacko stated that As a group we had

planned to invest INR20b that is on hold since lots of policy decisions are confusing.

We are however still putting pressure on Maharashtra government on various policy

issues.

Toyota Kirloskar Motor to invest INR9b on expanding production capacity

to 310k units per annum

Toyota Kirloskar Motor (TKM) will reportedly invest INR9b in India to increase the

production capacity at its Bangalore facility from current 210k to 310k units/per annum

by March next year. Toyota Kirloskar Motor Vice-Chairman Vikram Kirloskar was quoted

as saying We will invest INR9b to expand the capacity of our Bangalore plant by

March next year. The production capacity will increase to 3.1 lakh annually from the

2.1 lakh units at present.

Italian truck maker Iveco looking re-enter Indian truck market

It has been reported that the Italian truck maker Iveco, a part of the EUR59.6b Fiat

Group, is making a second attempt to enter the fast-growing truck market in India.

The report stated the company CEO Alfredo Altavilla said that, Iveco is scouting for alocal partner and India is on the top of its priority list. He was quoted as saying The

only way to be successful in India is to have a strong local partner. India is one of the

important markets in the World; it is the topmost on my priority list.

It was reported that the Iveco had a 15 percent stake in Indias second-largest truck

maker, Ashok Leyland till 2006, before it sold off its share to the promoter, Hinduja

Group, for INR6b. Iveco was instrumental in offering the technology support to Ashok

Leyland, but it has never existed as a standalone brand in India. In 2007, the company

also entered into an MoU with Tata Motors but the MoU did not fructify into a formal

agreement, according to the report.

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Timely analysis and insights on

all economic data releases and

developments

Our findings and conclusions

based on primary research, so as

to uncover perception and

discover reality

Highlights of interactions with

corporate CEOs. The focus here is

not so much numbers, but what's

behind them

Takeaways and insights from

visits to plant sites, construction

sites, new retail outlets, etc,

with the relevant pictures

What various subject matter

experts have to say on wide-

ranging topics e.g. telecom

policy to terrorism, rural

economy to black economy

Highlights of interactions with

politicians and bureaucrats for

insights into policy matters for

the economy and various sectors

This will highlight the bright

spots in an otherwise bleakscenario in the economy or any

sector or company Our whistleblower series to

highlight concerns which are

likely to have significant

implications for growthNotes from analysts' diary during

their extended travels, meeting

managements, visiting sites,

conducting channel checks

Sector Periodicals

Product Gallery

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