Auto sales numbers analysis
Bajaj Auto reports recovery in 2W exports
Bajaj Auto’s August-17 total volumes grew by 3% to 3.35lakh units. Growth in the domestic volumes was flat at 0.2%. Within the domestic business, motorcycle volumes declined by 1.7% while CV volumes grew by 13.3%. In the exports however, company has seen 7.5% growth with 2W exports growing by 6.7% and CV exports growing by 11.8%. While company has been reporting recovery in the CV exports for last few months, the highlight of the August-17 volumes is the recovery in the 2W exports business which has been under pressure over the last three months. Company in the June quarter results indicated that it has entered in the new countries and we believe that it has helped Bajaj Auto to show improvement in the exports volumes. We continue to maintain accumulate rating on the stock.
Ashok Leyland reports fastest growth after Oct-16
Ashok Leyland’s total volumes jumped up by 25% to 13,634 units in August-17. We had expected total volumes of 12,367 in August-17 so the actual numbers are 10% ahead of our expectations. The MHCV volumes were up 29% while LCV volumes were up by 14%. This is clearly a strong indication of robust demand environment. The company has launched an Intelligent Exhaust Gas Recirculation technology (iEGR) and has guided of strong demand in the remainder of the year owing to iEGR. Company had reported a poor set of numbers in the first two months of the current fiscal owing the BSIV transition; however after that phase gotten over, AL has been consistently maintaining double digit growth in the volumes. For the past three months, i.e. June-17 to August-17, company has reported total 17% yoy growth in the volumes which is much higher than 3% growth it achieved in FY17. We maintain accumulate rating on Ashok Leyland with a price target 127.