India Morning Report: Will India follow the midweek ‘Global Gotchas’ now?

Chinese Bank of China
Chinese Bank of China (Photo credit: epSos.de)

The small budget deal ‘induced’ sell off in US equities as markets talked big about another expectation of a grand bargain gone south was a chimera and institutions maintained trading volumes in the last month of business. Level watchers probably look for any excuse to start off the markets in 2014 in a position to beat the hitting target level under 10% gain estimates for 2014 and is nothing ore than the correction as a big rally build up ensued since November in the Global markets. However, Global and Asian impact correlation aside, markets are due for a bigger move south from India itself to the 6250 levels as the NSE universe of stocks has been totally blindsided remaining the same in the current shucking of picks.

Most good picks maintained their levels in the open and the NSE A/D line continues to show deeper gashes while the BSE transient update continues to hold the open as around 45% advances at 320-400 on last watch

With Capital outlays lagging business recovery, the 38% IIP reported in the core industries ( Infra index) lost the entire 8% and in September while the trade data was positive on yesterday’s release (updated yesterday’s report)

The inflation data will remain strong and so RBI will likely continue with its contraindicated stance of increasing rates into the recovery till Capex comes back ( well into the second half of 2014 ::CY). HDFC Bank leads gainers as ICICI Bank and Axis gets into consolidation while YES and other midcaps react to the economic indicators expected to shoot back up into December’s reports from the gainsaying we have had around a recovery.

The bitcoin logo
The bitcoin logo (Photo credit: Wikipedia)

Bitcoin has made big inroads in the meantime on the global scene if you want your computing time to be used seriously while waiting and we remain on the verge of over-thinking in the rally instead of neglecting weak vacillating December cues from global markets with the Indian Rupee caught on the precipice.

A 9% interest rate is not doing anything great from the Bank and Auto led cyclicals either and not surprisingly at such a time the Bajaj Auto – Hero pair trade has reversed to favour Hero probably to catch up to the gains made by Bajaj Auto in the secular cycle though Hero continues to cede share to Honda in the two wheeler business and this will be estopped in two months to the secular pair trade favoring Bajaj Auto after the markets right the discount on Hero’s final achievements of a sharply focussed new strategy in the Honda break aftermath

IDFC remains a great investment pick and markets are unlikely to follow this day’s downtick into Thursday as markets correct the desire to correlation. Some market watchers already see no further FII inflows to add to the $17 Bln already entered into in this Calendar Year (most of it since April)

Paper Heroes Location 2
Paper Heroes Location 2 (Photo credit: roadkillbuddha)

India Morning Report: Markets rest at new record levels, Banks catch fire

Except of course, Bank of Baroda and Bank of India, the PSU Banks who along with All Bank are in front of the NPA tether and are likely to again underperform in results announcements today undermining the market’s expectations with a definite taste of the macabre doing the paperwork accounting for to decades of profligate lending. In more operational markets language, others like Dr Reddy’s also hold the key to big moves as markets let go of smaller volume picks not in fashionable upside with institutional investors chasing Indian weightage in their indexed EM funds. That of course includes Hero losing share to Honda and Maruti making 3X profits with the Yen a big part of the story this quarter.

English: MSCI Logo
English: MSCI Logo (Photo credit: Wikipedia)

IDFC is likely to get a good post results after taste into portfolios (despite its ext from MSCI) and so it will be crucial that it comprehensively outperform as foreign investors come back to India bonds and equities unconcerned about coalitions and hung parliaments. The No Taper refinement yesterday was not material to their return either though it is not a carte blanche as the more optimistic from Asia might have expected of Lady Yellen.

Cipla bore a heavy brunt of the funding trade and drags some of the other (Lupin) Pharma choices with it while Glenmark and Cadila will continue carrying the market flag with meaningful bumps from export earnings and real greenfield growth in market development the mid cap strs have shown to be ey

The expiry day seems to be ignoring the 6350 target in the morning session but it may just become a case of having decided on its own expectations for these results candidates. Retail investors shuld not be expected to return in the middle of Diwali spending season or even otherwise. The Indian AMCs have together more than INR 8 Tln under their belt currently and like the taste for FIPS showed are not averse to increasing enchantment with Balanced Funds as Bond markets xpand(General direction ypothesis to play out till 2025)and pension players get active taste of equities along the general direction set back in 1993/2001

Banking hopefuls like Magma Fincorp and Muthoot report results as things look to get better for NBFCs. Now is a good time to load u on infra NBFCs both Powergrid and REC/PFC/PTC

As mentioned yesterday Bharti has crossed  a rubicon with Africa markets reporting profits as new Telecom auctions also level down on expected prices in domestic circles

 

India Morning Report: Markets steady, India facing uphill task

Bajaj
Bajaj (Photo credit: Chandra Marsono)

 

The Indices opened barely in the red after a dull week of Economic data . Trade deficit reported under a $10 Bln for June as Gold imports were blocked out but Inflation on CPI climbed back to 10% in a precursor to fuel inflation expected now to climb back from a barely settled in period of less than 6 months as the drop in Oil is destroyed by the 12% depreciation in the currency. The depleted Forex reserves are already a qustion for the Rupee and the negative IIP for the month is unfortunately unlikely to give confidence in the comeback. Consumption being defeated, one is not sure of the reasons for continuing retail inflation with foo inflation at 12% leading the charge currently.

 

IIP showed a more than 10% contraction in durables Production index and negative growth year/year for non durables as well. WPI for June has also come in below 5% again And while monetary policy will be challenged by the prospects of inflation and depreciation , consumption is actually flling making infation an easy target to even prospects of deflation in terms of sentiment continuing negative in the economy. Investment is yet to come back to the Economy has become a challeneg desite a Forward FDI policy esp for Defence and Telecom on the cards.

 

Auto Sales are down almost 10% on year at 139000 cars and 55 lower for two whelers and though markets continue to treat Bajaj and Hero equally one can see performance for Hero worsening in the war with erstwhile partner Honda in the market and Bajaj has maintained euanimity in shares and market segments nonetheless.

 

Unfortunately apart from the results of this quarter one also does not see further uptick in Exports immediately. Banks despite the low 13.7% growth in Credit for the month of May/June remain fairly healthy in the selected layer as we have pointed out here and Bank  Nifty remains a great pick at 11600 levels markets keeping value priced in line with the economic sentiment

 

Last week, the India Morning Report could not be posted and the same may not be available from Tuesday or Wednesday till the end of the market week on Friday when the trade data and CPI was posted. For JP Morgan and Wells Fargo results refer to advantages.us. Indian Banks report this week and we will be covering Indusind’s results of last week later with YES Bank performance

 

 

 

The Indian Auto Sales Report (March 2012)

Tata Motors seems to be a big winner of the March sweepstakes ( Is that Primary sales and build up of inventories to support a lost cause or true sales, will become apparent by May or June) Pass. Car Sales are up to 36,854 up a third from last year and at least 7000 units from February alone. Nano alone crossed 10,000 units in sales.

Many carmakers expected the prebudget spike in Sales for coming increase in duties. Also the increase in duties may not necessarily hurt retail sentiment in April 2012. Honda was back in March with more than 11,000 cars sold on back of the Brio. Etios and Liva took Toyota to more than 18,000 a 12% increase month on month and doubling from 2011 numbers. Innova still sold 6750 units in the month.

Audi reported a 1000 units sold for the month, probably tax planning for some. Maruti sales were up 6% on month again to 113,000  plus another 13,500 in Exports as Nissan overtakes Vento to #3 in Sedans and City maintaining a 26% share of the market in big cars Maruti exports equalled Hyundai exports at over 13,000 taking Sales to 126k from a 77k low during Q3 2011. Diesel trains continue increasing int he sales mix

Hyundai not to be outdone reported a little under 10% growth from February to more than 39000 units. Ford, GM, volkswagen and Nissan which no not have a single export stat in them lost their various leads and hiccups to bunch around at a little below 10,000 _ GM grew to 9,300, Ford lost momentum over last year to 9,000, Nissan caught iup to almost 6000 in a little less than 3 months and VW almost aught up to 8,300 and normally you would add Skoda to that number.

The weekend has probably extended reporting times for the month’s auto sales at end of the fiscal.  GM has not been happy either in India or China and Ford ready wit h a new plant inaugurated last week for adding 275000 powertrains ( petrol and diesel) to its India Capacity. Nissan has already started exports last month

CV Sales at M&M and Tata Motors also continued to show near 17-20% growth on the 2011 numbers. Volvo/Eicher selling 6000 units, M&M 47,000 incl its 23,000 odd MUV sales and Tata Motors 58,000 passenger units in a 103,000 odd for the month.

Two wheeler sales also likely to hold at 565000 for Hero, 365000 for Bajaj and 200000 for the new #3 Honda. Hero reportedly losing confidence over Honda’s aggressive promotions in the economically affordaable segments while the Bajaj estimate is a good 3% over its highest score yet.

India Auto Sales Report (January 2012)

the Toyota Etios Liva Diesel

Hat Tip: team-bhp.com has a long lasting resource hopefully, which really works up the Indian Auto sales numbers, best I have seen yet

In January 2012 the recovery chords from December continued into a more coherent score as Maruti reported domestic sales of more than a 100k and exports growth of 53% or more than 7000 units to 14.5k units for the month. Mahindra continued its better performance with almost 45k vehicles for the month of which 19,325 were passenger cars/MUVs/SUVs.

According to the India WSJ, Maruti’s Diesel models scored a 34% uptick while petrol models declined 6% in the mix, making it a 75:25 from a 80:20 till now

The old 2,3 at 14% share each ramped up behind Maruti with Tata Motors and Hyundai scoring 34,600 and 33,900 respectively Hyundai’s exports of 12,000 units put it firmly in no. 2 with 49,901 in January 2012

Ford and GM posted single digit declines to 9,200 and 8,200 respectively  while Toyota came back stongly with 7,700 units of the Eon to 17,500

VW and Nissan also managed to sell more than 5000 units and the luxury segments would have probably added only 250 other vehicles incl VW and Audi

Skoda sold more than 3000 units under new management while Honda grew back from 1000 units in December but still sold only 1,725 units for the month

Thus Cars sales for the month have grown more than 20% from December 2011 to 270k or a 3.2 mln annual run rate incl exports

SIAM reports 2011 total sales to 19,46,000 units and the 10% yoy growth likely takes it to 2.2 mln four wheelers and another million in Commercial Vehicles from 800k in 2011 at a faster clip

In the Two wheelers, Hero Moto scored a consistent 520k and Honda came in third with less than 190k while Bajaj Auto reports tomroow at the 330k figure

India Earnings season: Hero Moto corp expected to grow 16% and profits 28%

In the next few hours Bajaj Auto’s 20% growth will be compared to Hero Motocorp having already beaten its own profit expected with a 22% growth expanding margins to 21.3%

Hero had the largest volume gains in the latest quarter bringing market share back to 40% even as erstwhile partner Honda caught up to a formidable #3 with a 200k per month sales

Bajaj Sales still compare at 68% of Hero’s INR 61 bln for the quarter after Hero grew 16.86% y-0-y, Hero’s profits grew 43% Quarterly volumes were the highest at 1.6 mln units in three months with Bajaj trailing at 1 mln

Its Operating profit margins on adjusted basis counted as low as 12.7% while unadjusted basis still compares at 15.7% against 17.6% for Bajaj Auto strictly on business expenses at both companies

Hero’s sales are higher by 14% over September 2011 but its not known if its shares in the higher margin >125 cc has increased from the low 6% last quarter Bajaj sells 18% in the higher CC categories for its profit margins and has also included growing CV (Auto sales) in these data

India Auto Sales Report (December 2011)

Ford Ikon, visão dianteira
Image via Wikipedia

In the month of December, most car makers enjoyed the reprieve in Exports with domestic sales recovery also showing in the numbers. However while Hyundai increased both domestic and total numbers to 29,500 and 48,950, its exports remained below the 20,000 mark. Maruti struggled with only 78,000 units in domestic sales and 92,000 overall as its limited production of diesel units and the break in wholesale demand was attributed for the continued weakness by the sales team at the company. Its exports of 14,000 units were a dull beat 33% behind Hyundai but up 50% on its own count from 2010.

Hyundai
Image by conhunter via Flickr

The A2 segment bills 42,500 units for Hyundai with moer than 6,500 units in A3 sales. The year’s numbers

Mahindra Group V-C Anand Mahindra
Image via Wikipedia

were a respectable 615,000 for the Koreans in India incl. 242,000 Exports.

The General Motors business increased to more than 9,000 while Ford was happier with 7,500 sales for the month and Nissan counting 50% growth at 1,500 units in December 2011. Mercedes underlined the year’s 7500 sales with a 750 units sold in December.

Honda cars remained stuck at 1000 units instead of the 5000 plus sold last year each month. Tata Motors recovered from last year’s fracas with 29000 units sold. Incl Exports, Car sales are up to more than 220,000 units again incl Mahindra and Mahindra’s 19,000 units and Toyota’s massive 16,000 sales.   Volkswagen reported full year sales of 78,000 from the country with 75,000 small cars in Polo and Vento and 1,688 Jettas ( in 5 months) Ford completed 100,000 units in sales in November http://bit.ly/s8crJ8

In two wheelers, Bajaj Auto’s 305,000 includes its CV sales of nearly 15%, while Hero grew its large base to 524,000 units for the month and Honda came in at number 3 with a good 191,000 two wheelers sold.

 

English: Bangalore Taxi
Image via Wikipedia

The retail consumption level off: Hero Honda perks up

Hero Honda rider
Image by Danny McL via Flickr

After sifting thru monthly Auto sales nos. ith great aplomb in 2010 and much muted in 2011, we did warn you that the Indian retail consumption story and the car sales are no longer tracking and are way behind the $5 Tln chinese economy where $2.5 Tln is the Consumer component. India’s $700 mln consumer consumption yet relies a great deal on two wheeler sales though and while Honda now sells 100k a month on its own, its partnership with Hero Honda was always the leader in the motorcycle segment since its advent in 1991.

Its quarter’s sales are up to $1.4 bln ( Rs 56.38 bln) up 33% yoy Profit Margins remained in the double digits (<10%, but almost there) with a Net of $139.5 mln. Its Apr-Jun sales were 1.31 mln motorcycles as reported earlier this week(BS Motoring) with June coming at 512k much a consistent 20% jumpp  year on year despite Honda moving on into an independent motorcycle producer, which terminates their active role in the JV later this year

Hero honda did give an ant i indication before the uptick when the markets opened and we will look for whats amiss here too as we adopt the Indian Auto and Motorcycle consumption story as a leitmotif of our India research here

The retail consumption level off – Hero reports lower Q4

Hero Honda Passion
Image via Wikipedia

Profits year on year are down 16% and the auto number s for March have definitely scared observers as well. The profit deceleration is hihger than expected ( misses Bloomberg poll estimates by 2% ) Sales growth numbers are respectable yoy like for others as Bajaj Auto and Maurti, Hyundai ( even yoy pretty bad)

India just does not have the profile to switch to SME players in this age and till the dollar gets to levels of below Rs 40 to a Dollar, the Trillion Ruipee EV companies are likely to be good enough for PE or individual global portfoliso. Index ETFs are anyway 75% of the FDI with $1 bln per month likely to continue. disposable incomes allowed food and fuel inflation without concerns yet, but going forward the larger imported inflation and the transmission to manufacturing and the retail demand curves ( durables, autos, services) have been the immediate market concerns that need facts to displace the pessimism

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