India Morning Report: Yes, a resurgent festive season and the earnings were WOW!

October's Palette
October’s Palette (Photo credit: dibytes)

will it, won’t it. A flavour thats missing from most mature markets and though SEA markets might still like to flatter JP Morgan and Goldman Sachs for their unlisted and pre IPO equity investments in these frontier markets and the shallower yet tepidly multi bagging SEA markets, the big moolah is in India and thats where most Foreign investors are headed again with the trade winds during Winter.

The US holiday season may be a little marred by the disasters on East Coast with Hurricane Sandy causing $2 B illion a day New York City to buckle under with never ending losses ( of 20% of the daily GDP) we trundle forth after a big ‘flat off’ September and October as the Twowheeler sales data for October pours in. Bajaj Auto starts the day off with a 411,000 sales figure including a 50000 three whler sales across all markets topping its best performance in twao wheelers in October alone with 62,000 Boxers, 155,000 Discovers and 85,000 Pulsars electrifying the market and Hero ‘s resurgence may not stem its market share losses but definitely brings back volumes and margins to that business.

Across the shores, Coke is powered by the Indian Festive season too, though Intel suffers from emptying assembly lines in the December quarter as Atom cannot ramp up to the steep increase in mobile form factors and Sales . Intel alone has lost margins of close to 10-15% in the December quarter to a measly 55% as Apple also takes a rain check on global volumes.

India’s smaller stories on the other hand have the robustness to climb to bigger budgets in Advertising, marketing and promotions and bring the house down with digitization also , with a little official help hitting the required numbers in the metros and increaasing the known C&S market by almost 50% and accruing immediate subscription revenues of an additional 20% to the cable players and available new market share to Satellite players as well.

Retail and Aviation FDI maybe robust stories as well as they seem to have started off on a surer footing though at the infuriating pace India is well cordoned foff for in global investment books. Earnings reports continue to underwrite a consumer and healthcare stock boom in this rally as the banks continue on robust credt growth after the additional provisioning also destroyed the banknifty members except the private banks

Did you know that it would take $1.5 Tln from the Federal Government to take US Trsry interest rates back above 2%.The resulting weakness in the Dollar is also likely to continue thru 2013 and mean that the 105000 Marutis sold in October will come at a much steeper cost to the compan y int he coming months but it seems to be a season for the price hikes everyone had been stalling and Rupee’s strength might well recover all the margin Maruti needs while letting the sun rise in the east again over Japan

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 report (Annual Sales – 2011)

India auto sales for 2011 ended at 1.95 mln, neighbour to the same number a year ago instead of growing thru a bad year for sales and unlikely to grow further on a good Jan Fenb March 2011 till the end of the Fiscal according to he Industry watchdog SIAM report (Reuters)

The forecast for the Fiscal 13 ( till march 2013) moves to a 10% growth after a 30% 2010 and a 0-3% 2011

English: The Price Is Right Auto Sales Logo
Image via Wikipedia

Commercial vehicles had a better time, December sales of 72k vehicles making the yearly total of 775k , 11% higher than 2010 and enroute to growing by 20% this year , we’d say look for the millionth bus/truck sold in FY13

October Auto Sales (India 2011)

India’s festival time auto sales were expected to take October 4 wheeler sales to 170,000 after consecutive months below the 150k mark Maruti’s market share has dipped to below 40% and October has seen only 55600 Marutis

In the meantime Ford has improved its share by 31% in the first 10 months and VW, Toyota are also

Maruti Suzuki A Star

growing at the expense of Maruti by an even higher percentage on a smaller base Ford has improved sales from 77k till Oct 2010 to 102k for the same 10 month period in 2011

Latest reports

Maruti     : 55,595 (51k domestic)
Hyundai : 33,000 (excl. exports)
TataMo  : 24,000 (Nano 3696 up 26%)
Ford       : 11,000?
GM        : 10,200 (static , just caught up with Ford volumes in the last 6 months)
VW, Toyota: High growth on 3k-5k base may catch up with GM sooner than you think

It looks like October tunrned out a good month for personal consumption spend and durables (unsecured  loans) as Autos stayed below 150k sales.

2 wheelers have been growing at 20% y-o-y while Car sales are down at least 15% year on year and are not expected to improve soon

Hero reported another 512k and Bajaj another 320k having worked out its kinks in the UP factory

Maruti’s dealer surveys show that canceling customers have been walking into Toyota Liva and VW dealerships who brought out new models after June

To Munsiyari on a Maruti, Uttarakhand.
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

India Earnings Season: Institutionalising housing infrastructure (HDFC results)

HDFC again underlines India’s NBFC structure / Institutional structures for finance & Credit companies across Infrastructure and Housing.

Additionally it emphasises that India’s disappointment riddled 2011 still means a more than 20% in sales year on year and 12 % profit QOQ. HDFC manages a 30% increase in Sales and 23% increase in profits for the quarter. Sales are up to $947 million for the quarter and Profits are an important 25% margin at $285.5mln (Net Profits after tax) with Net NPAs at NIL

Provisions have been maintained as mandated by NHB

Defaults are more likely if interest rate hikes continue into 2012 howwever fresh lending maybe under pressure immediately after the 50 bps hike

HDFC maintained spreads at 2.3% and including tail income from securitised/sold assets it upped NIMs to 4.57%

Construction companies had a great FY11, Sobha Developers for example intends to build an inventory of 11 million sft up ahead and is currently carrying only 130k inventory in fully built units and of the 2.7 mln sft under construction, less than 30% inventory is unsold.

Sobha was one of the unleveraged players having reduced debt to $350 mln at March 2010 Profits were more even than last time going to $11 mln for the Quarter at an ave realisation of INR4500 psft or $112.0 while for the year profits rose to $45mln at an average realisation of $100 psft (INR4000)

Meanwhile, Healthcare – Pharma major Ranbaxy PAT dropped from 20% or $240 mln last March to less than 15% to $75 million this quarter while sales were also lower at an expected $535mln clip

India Earnings Season: Kotak gets into the field of vision at the same levels

Same turnover, the glitch in NPas was minor and they are back to 0.7%, Sales are tired holding NII and fee based income up 15% y-o-y , definitely the bank mapped by the bears on India as representative and definitely not a good future for growth in either Credit or deposits. Insurance, brokerage and allied businesses continue to score in hinterlands of ethics and brand remains Uday, upfront and sincere..a window to India’s wealthy’s expectations in a scam riddled nation. Anyway I do not know if they are ever going to even attempt strategising very sure they are right about everything and traditional markets of wealth being their only succour even though the Gujjus keep spurning them. Is a Swiss bank tax haven actually our basis for the bank of the future if it is not over dependent on technology?

New bank licences will probably end up as modified NBFCs and I do not say glorified as Kotak’s example shows, everyone wants only Cosmo branches and traditional markets and then insight pebnetrates only 5% of the market. Sahara anyone?

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