Automobile Newsletter - January 9 to 13, 2017

SIAM December data: Demonetisation hurts domestic car sales, drop by 8%
According to the data released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales for the month of December 2016 are down by 1,58,617 units or 8.14% as compared to the sales in December 2015. Domestic Passenger vehicles' sales for the month of December 2016 are down by 2,27,824 units or 1.36% as compared to the sales in December 2015. Motorcycle sales for the month of December 2016 are down by 5,61,690 units or 22.5% as compared to the sales in December 2015.

Tata Motors' subsidiary, JLR's December sales exemplary
Jaguar Land Rover has achieved its best ever December sales. The total sales stand at 55,375 vehicles which is up by 12% YoY. The company was able to achieve this growth largely due to new product launches by the company, under the brand name Land Rover. The global business of the company has flourished on a YoY basis. China, North America, Europe and UK business of the company are up in the range of 16 to 36%. On the other hand, its parent company Tata Motors is trading in the green. In the last one year, the scrip has given a return of 42.45%. It is trading with P/E of 12.16.

Maruti Suzuki's December production down on a YoY basis
Maruti Suzuki's production for the month of December was down by 0.4% at 1.07 lakh units vs 1.08 lakh units YoY. Maruti Suzuki, formerly known as Maruti Udyog has more than 45% of market share in terms of passenger cars. Recently, the company has given a discount, ranging from Rs 10,000 -18,000 on its various models. The stock of the company in the last one year has given a return of 33.93%. The stock has outperformed the Sensex as well as the Auto index in the last one year period.

ICRA revises credit ratings of Ashok Leyland's instruments
In a recent development, ICRA has upgraded various financial instruments of Ashok Leyland. The Rs 400 crore debt of the company has been upgraded to AA stable from AA- stable. The commercial paper and short term debt of Rs 900 crore has been reaffirmed to A1+. Long term fund based of Rs 900 crore long term loans of Rs 55 crore has been upgraded to AA from AA-. In the last one year the stock has given a return of 6.44%. The stock is trading with a P/E of 28.12.

Domestic News

VST Tillers falls after December sales reports
VST Tillers Tractors Ltd sold 1,407 units of Power Tillers in December 2016 as against sales of 1,495 units in the previous month. The sale of Tractors came in at 611 units as against 684 units sold in November 2016.

Minda Industries looking at equity dilution for debt reduction
Minda Industries may soon come up with a fund raising plan. According to new developments, Minda Industries is in the process of evaluating an option for dilution of its equity. On the other hand, company is getting orders from Maruti Suzuki regularly.  Currently the company has a debt of around 10-11%, which it plans to reduce by 1% this fiscal. In the last one year, the stock has given a return of 85.48%. Currently, it is trading with a P/E of 18.86. Minda Industries has outperformed the BSE Small-cap index and the Auto index in the period of one year.

BMW Group India delivers 7,861 units in 2016, registers 14% growth
BMW Group India has delivered 7,861 cars, including 7,500 BMW cars and 361 MINI cars, to customers in calendar year 2016. Sales for the BMW Group India grew up by 14% in 2016 as compared to 2015. Frank Schloeder, President (act.), BMW Group India said, “2016 has not been an easy year for the automotive industry and that applies equally to BMW Group India. During the course of the year, developments in the Indian economy and policy framework shook the mechanisms of the auto industry. BMW Group India was faced with challenges no less than any other automobile manufacturer and was confronted with strong pressure from the beginning of the year. Despite a challenging business environment, BMW Group India has increased sales and market share.”

Vikram Pawah appointed as President of BMW Group India
Vikram Pawah has been appointed as the President of BMW Group India effective 1 March 2017. Pawah brings more than 25 years of international experience both in the automotive and non-automotive industry. He started his career at Jay Engineering Works, India and has held multiple leadership positions within Honda Cars in India and Australia. Most recently, he was the Managing Director of Harley-Davidson India. Having completed his assignment, Frank Schloeder acting President, BMW Group India will return to BMW Group Headquarters in Germany, where he will assume the position of Head of Business Steering - Luxury Class. During his assignment of over 3 years, Mr. Schloeder has held the position of Director Marketing, where he effectively steered the BMW brand in India. In his tenure as acting President, BMW Group increased both its sales and market share in the Indian luxury car segment.

Auto sales at 16 year low for December and yet few auto stocks do well
Auto sales hit a new low for December touching its 16-year low even as demonetisation is to be blamed for the same. The total sales declined 18.66% as demonetisation is seen to be affecting the auto sales across the board. It is not a surprise that the hit in sales was across the segments and various players viz., scooters, motorcycles and cars as it was widely expected that demonetisation will be affecting sales for the auto makers.

Endurance Technologies commences operations at new machining plant in Germany
Endurance Technologies Ltd announced that Endurance Amann GmbH, Company's wholly owned subsidiary in Germany, has commenced operations at its new machining plant from 10 January.

JBM Auto gears up on bourses
JBM Auto Limited, caters to automotive Original Equipment Manufacturing (OEM) industry, and has touched a high today at Rs 267.20, gaining 8.35%. The stock has witnessed a spurt in volumes by more than 2.61 times. The company has seen growth in the revenue at an average of 10% over the past five years. The company’s EPS was 23.46 in the year 2014, while it has declined to 5.84 in the year 2016. Revenue for Q2FY17 has decreased by 7.56% as compared to revenue in Q1FY17. The PE ratio of the stock is 19.59 while Industry PE is 29.53. It has given ~40% returns in last one year.

Apollo receives 2 more design patents
APL Apollo Tubes Limited (APL Apollo), India's leading branded steel tubes manufacturer, on Wednesday announced that it has received two more patents for product design, which makes it 8 design patents in total, under the company’s assets. The patents cover the shape and configuration of “window frame” and “metal tube” products. These patents will be good for 10 years, and can further be extended for a period of another 5 years. “We are extremely delighted to receive design patents for two more of our product categories, which is in succession to four hollow section patents received last month," commented Sanjay Gupta, chairman of the Company while talking about the development.

Steel Strips Wheels bags new order
Steel Strips Wheels has bagged an order to supply wheels over a period of 3 months in the EU trailer market. Order comprises of 13” steel wheels to be supplied starting from February 2016. The stock of the company has reacted sharply to the news and is trading in green. On a YoY basis, the stock has given a return of 63.20%. The stock is trading with a P/E of 15.05. In the last three years on an annualised basis, it has given a return of 71.16%. During the same period, the Small-cap index has given a return of 24.54%; whereas the Auto index has given a return of 21.50%.

Eicher Motors hikes prices for its LCVs & HCVs
Start 2017 and we are already seeing change in pricing strategy adopted by various automakers. Gurgaon based Eicher Motors, famously known for its Royal Enfield brand, has decided to hike the prices for its Light Commercial Vehicles (LCVs), medium CVs and Heavy Commercial Vehicles (HCVs). The price hike for the LCVs and medium CVs will be in the range of Rs 6,000 to Rs 25,000. The price hike for the heavy commercial vehicles will be in the range of Rs 34,000 to Rs 1,00,000.

JK Tyre increases its product prices by 1-3%
In a fresh development, Delhi-based tyre manufacturer JK Tyre & Industries Limited have decided to increase the prices of its products by 1 to 3%. Automobile sector companies have been negatively impacted due to demonetisation. The impact can be seen clearer when the auto companies come out with its Q3 numbers highlighting the top-line and bottom-line growth.

Force Motors issues Commercial Paper
Force Motors has issued a Commercial Paper aggregating to more than Rs 2,000 crore with the tenure of upto 180 days. However, in the last one year the stock has given outstanding results. It has surged by 56.18% in the last one year. The stock of the company is currently trading with a P/E of 28.61. On an annualised basis, in the last three years it has given a return of 130.76%. In the last one year it has outperformed the BSE Mid-cap index and the Auto index. Four mutual fund houses have invested in the stock of the company, namely Motilal Oswal, Canara Robeco, Sundaram and IDBI Mutual Fund.

Truckola adopts FASTags and Diesel Cards to beats the truckers demonetisation blues
At a time when many cargo transport companies have been facing issues due to a shortage of cash, Truckola, an asset-free, full-solution, tech-enabled interstate FTL transportation service provider, has been achieving healthy business growth. The platform has posted a 23% mom revenue growth in December 2016, thanks in large part to the post-demonetisation adoption of cashless transaction tools such as FASTags and diesel cards. Cashless toll payments accounted for more than 98% of all transactions conducted through Truckola in December, as opposed to the pre-demonetisation average of 21%.

International News

Tata Motors Group global wholesales at 95,081 in December
The Tata Motors Group global wholesales in December 2016, including Jaguar Land Rover, were at 95,081 units, higher by 4%, over December 2015. Cumulative wholesales for the fiscal were 8,22,807 units, higher by 9%, over FY15-16. Global wholesales of all Tata Motors’ commercial vehicles and Tata Daewoo range in December 2016 were 30,879 units, lower by 5%, compared to December 2015. Cumulative commercial vehicles wholesales for the fiscal were 2,84,681 units higher by 4%, over FY15-16. Global wholesales of all passenger vehicles in December 2016 were at 64,202 units, higher by 8%, compared to December 2015. Cumulative passenger vehicle wholesales for the fiscal were 5,38,126 vehicles, higher by 6%, over FY15-16.