【出版时间及名称】:2010年4月印度汽车行业研究报告
【作者】:德意志银行
【文件格式】:pdf
【页数】:92
【目录或简介】:
Robust demand outlook, but margins to decline
The stock performance of auto companies depends on the interplay of demand vs.
rising input costs and competition. Players are increasing capacity and jostling to
enter new market segments, signalling buoyant demand. But the heightened
competition could temper margins, which are at historic peaks. Based on the
above-mentioned factors and current valuations, our ladder of preference is Tata
Motors (TAMO), Mahindra (MAHM), Ashok Leyland (AL), Hero Honda (HH), Bajaj
Auto and Maruti.
Deutsche Bank AG/Hong Kong
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local
exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche
Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.
MICA(P) 106/05/2009
Industry Update
Top picks
Tata Motors Ltd (TAMO.BO),INR784.65 Buy
Mahindra & Mahindra (MAHM.BO),INR502.65 Buy
Companies featured
Tata Motors Ltd (TAMO.BO),INR784.65 Buy
2009A 2010E 2011E
P/E (x) – 28.2 9.5
EV/EBITDA (x) 25.1 9.3 5.8
Price/book (x) 1.6 4.9 3.0
Mahindra & Mahindra (MAHM.BO),INR502.65 Buy
2009A 2010E 2011E
P/E (x) 12.8 15.0 12.7
EV/EBITDA (x) 7.1 7.7 6.4
Price/book (x) 2.0 4.0 3.4
Maruti Suzuki Limited (MRTI.BO),INR1,350.95 Hold
2009A 2010E 2011E
P/E (x) 13.3 14.8 13.6
EV/EBITDA (x) 7.9 8.6 7.3
Price/book (x) 2.4 3.3 2.7
Ashok Leyland Ltd (ASOK.BO),INR55.20 Hold
2009A 2010E 2011E
P/E (x) 18.0 18.6 14.5
EV/EBITDA (x) 10.5 11.3 9.3
Price/book (x) 0.7 2.0 1.8
Hero Honda Ltd (HROH.BO),INR1,919.50 Hold
2009A 2010E 2011E
P/E (x) 12.5 17.4 15.6
EV/EBITDA (x) 7.3 12.8 11.2
Price/book (x) 5.6 10.4 8.1
Bajaj Auto Limited (BAJA.NS),INR2,050.50 Hold
2009A 2010E 2011E
P/E (x) 8.3 16.5 13.2
EV/EBITDA (x) 6.3 11.6 9.0
Price/book (x) 4.8 9.8 6.3
Global Markets Research Company
Margins: We expect a 100-200bps fall over FY10-12E
Since the beginning of FY10E, auto company EBITDA margins have expanded 300-
600bps over FY09 (avg) to hit historic peaks. With rising input costs and
competition, we expect a 100-200bps fall over the next two years, inching closer
to long-term averages. A long-term correlation analysis of margins and volume
using data for 31 quarters (1QFY03-3QFY10) reveals a meaningful correlation only
for CV companies (TAMO and AL). For Maruti, Bajaj and Hero Honda, margins
minimally correlate to volume growth.
Tata Motors: Our preferred sector pick, maintain Buy (target price Rs900)
A continued reduction in structural costs at Jaguar Land Rover and buoyant
domestic volume drive TAMO’s EPS (2-year CAGR FY10-12E of 100%). JLR’s key
challenge is to sustain a contemporary product slate to maintain its relative
competitive position. We remain positive about TAMO’s improving cash flow and
management’s recent moves to accelerate the deleveraging of its balance sheet.
Mahindra: Favourable valuations, but monsoon key to stock performance
MAHM trades at 10x FY11 core EPS, a 33% discount to sector peers such as
Maruti. Recent commentary from the Bureau of Meteorology (Australia) suggests
that El Niño conditions are fading, which are typically associated with a normal
monsoon. Mahindra’s dominance in the well-consolidated tractor market would
help to manage margins and give it the ability to raise prices to offset input costs.
Maruti: Capacity constraints and competition – downgrade to Hold
Despite Maruti’s robust market position, credible competition, rising raw material
costs and capacity constraints could hinder growth and margins. Further, the
resurgence in urban demand blunts Maruti’s competitive advantage of a wide
distribution network. We expect Maruti’s domestic market share to fall 300bps to
44% by F12E. With current capacity of 1.2m pa, it can grow sales by 20% over its
FY10 sales (1m units) until new capacity comes on stream by end-FY12E.
2W: Minimal room for upside surprise, but 6% FCFF yield limits downside
We believe the strong outperformance of HH and Bajaj (22% vs. Sensex 6M)
discounts most positives. While the current valuations of 15x FY11 core EPS limit
upside, the healthy FCFF yield also limits downside.
Valuation – a mix of DCF and relative multiples
We value all auto companies except Tata Motors and M&M on a DCF basis, as the
sector provides enough visibility on cash flow and capex. Tata Motors is valued on
an EV/EBITDA basis, whereas M&M is valued on a core P/E basis. This report
changes ratings, target prices or estimates for several companies under our
coverage. For a detailed listing of these changes, see page 4
Table of Contents
Key highlights .................................................................................... 4
Minimal upward revision in estimates ......................................................................................4
Deutsche Bank vs consensus: We are significantly above consensus on Tata Motors............4
Stock performance....................................................................................................................5
Input costs will begin to bite............................................................ 6
Raw material prices have moved up significantly .....................................................................6
Sensitivity to raw material costs ...............................................................................................7
Growth rate trends............................................................................ 8
Growth: Strongest for commercial vehicles followed by PVs...................................................8
Margin trends .................................................................................... 9
Margins: Taking a long-term view.............................................................................................9
Do margins correlate with volume growth?..............................................................................9
Margins: the short-term trend – from famine to feast in four quarters ...................................11
Interest rates and liquidity ............................................................. 14
Liquidity has more impact on auto demand than absolute level of interest rates...................14
Four-wheelers: market snapshot ................................................... 16
Two-wheelers: Market snapshot.................................................... 21
Commercial vehicles ....................................................................... 24
Quarterly estimates......................................................................... 28
Growth momentum should continue in 4QFY10E ..................................................................28
Valuation comparison ..................................................................... 30
Tata Motors Ltd ............................................................................... 32
Maruti Suzuki Limited..................................................................... 40
Mahindra & Mahindra ..................................................................... 52
Ashok Leyland Ltd........................................................................... 62
Hero Honda Ltd................................................................................ 72
Bajaj Auto Limited........................................................................... 82