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Auto sales numbers for the month of September

Ashok Leyland continues with strong growth in MHCV volumes
Ashok Leyland September-17 volumes were better than expected. Total volumes grew by 27.5% yoy to 15,370 units vs. our expectation of 13,926 units. MHCV volumes grew by 31.8% yoy to 11,804 units while LCV volumes grew by 15.3% to 3,566 units. The MHCV volumes have been growing by about 30% for the last two months indicating a robust demand for the BSIV compliant vehicles based on the new technology, iEGR. For the last two months, Ashok Leyland’s LCV volumes have grown by 14-15% whereas cumulatively between May-2017 to July-2017, company reported 26% yoy growth indicating that LCV growth is slower in the past two months (August to Sept 2017). We maintain accumulate rating on the stock with price target of Rs 134.
Hero MotoCorp numbers slightly below expectations
Hero MotoCorp reported 6.8% yoy growth in the 2W volumes in Sept-2017. The numbers were slightly below our expectations, especially considering the ongoing festive season. Company sold total 7,20,739 vehicles which are highest ever in its history. We expect growth to pick up in the second half in the current fiscal due to the weak base of 2HFY17 and strong demand scenario for the two wheelers that we are witnessing. We maintain accumulate rating on the stock with a price target of Rs 4,226.
Bajaj Auto reports good numbers, 3Ws shows solid recovery
Bajaj Auto ‘s September-2017 numbers have been better than expectations. Total volumes (2W + 3W) grew by 13.8% vs our expectation of 10%. Domestic motorcycle volumes grew by 7.3% yoy, this is highest growth in the last 12 months. Company in the earlier 10 months had reported decline in the domestic motorcycle volumes. The motorcycle exports grew by 20.5% yoy, this is second month in row when motorcycle exports have grown. Total motorcycle volumes in the month grew by 11.4%. The surprise however was the 32% growth in 3W volumes which have grown in both domestic (37% growth) and export markets (25.5% growth). Total 3W volumes grew by 32% yoy which is highest growth in the last 18 months.  We maintain accumulate with price target of Rs 3350.
Maruti’s September numbers below expectations
MSIL’s September numbers have surprised us negatively. Total volume growth was at 9.3% to 163,071 units, this was 3% below our expectations. While mini segment volumes declined yoy, compact segment volumes have shown a 45% yoy growth. Overall passenger cars grew by 11% yoy. UV volumes growth has slowed down to 8% yoy compared to double digit growth reported in earlier several months. Total domestic passenger vehicle volumes were up 9.6%. Export volumes were flat yoy but have been maintaining a monthly run rate of about 11,000 units for third month in row. MSIL has recently said that it is adding another shift in Gujarat plant to ease the capacity constraints. The Baleno and Brezza continue to have a strong order book of about 18-20 weeks. While the growth has slowed down a bit, this could be due to the slower economic activity, post GST as well as the cess hike taken earlier in September 2017. We expect growth to pick-up in the month of October-2017 on the occasion of festive season, maintain accumulate with a price target of Rs 8,666.

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