Movement in BSE Auto vis-à-vis BSE-500 (Q4 FY09)
Fourth quarter of FY09 brought some revival in the automotive industry with volumes improving for most sub-segments, though, Q3 FY09 was one of the worst quarters for the Indian automotive industry. Higher volumes translated into benefits of operating leverage with fixed costs getting distributed over increased volumes. Credit availability improved especially by PSU banks as they resorted to aggressive lending and rate cuts. Consumer sentiments improved during the quarter owing to cut in excise duties, lower fuel prices and VIth pay commission payouts to government employees. Lower aluminum and steel prices also was in favour of the Industry. However, INR depreciated by over 4% during the quarter, resultantly, companies having dollar denominated loans have to report forex losses like Tata Motors and M&M.
Auto in Q4 FY09
Inter-Company Comparison for Q4 FY 2009
Out of 14 companies in BSE Auto only 9 companies have declared their quarterly result by May 20, 2009. The sales growth of these companies have shown mixed trend. Out of these 9 companies only 5 have shown growth in sales where as 4 witnessed de-growth. Maruti Suzuki came out as star performers with the net sale of Rs 6,432.90 crore and growth rate of 30.14% in Q4 FY09 Vs Q4 FY08. However, Ashok Leyland witnessed maximum fall of 52.52% in the net sales of Rs 1,218.12 crore. Despite witnessing maximum growth in net sales, Maruti Suzuki’s operating profit decreased to Rs 554.74, a fall of 27.26% from last year’s corresponding quarter. Hero Honda, however, achieved maximum growth in the operating profit of Rs 593.32 crore from last year, an increment of 27.05%. Ashok Leyland witnessed maximum fall of 59.09% in the operating profit to the tune of Rs 124.38 crore. Hero Honda registered highest growth of 34.64% in net profit to Rs 402.17 crore while Ashok Leyland, again, fall into the category of laggard after witnessing 70.48% fall in the net profit of Rs 53.31 crore.
Maruti Suzuki India Limited
Hero Honda Motors Limited
Volume-wise Performance (FY09 Vs FY08)
Inter-Company Volume Comparison
Volume Growth in Domestic and Overseas market
Auto on Bourses
During Q4 FY09 BSE Auto gave an excellent return of 25.24% which is highest among all BSE sectoral indices. On the other hand, BSE500 index delivered negative return 2.04%. The reason behind the huge jump is not just the great sales being managed by most of the car-makers but also effect of excise duty cuts by the government and the feel-good factor that seems to have taken control of both investors as well as fund managers that have been driving stocks higher. The market capital of BSE Auto augmented by Rs 19,531.55 crore during Q4 FY09 to Rs 97,108.70 crore.
Return posted by BSE sectoral indices vis-à-vis BSE 500 in Q4 FY09 (Q-o-Q)
During Q4 FY09, Bajaj Auto topped with (58.09%) return followed by Maruti Suzuki (49.03%), M&M (39.42%), Hero Honda (32.92%) while major losers were Cummins India (-16.20%), Exide ( -13.91%).
Performance of Auto stocks on BSE in Q4 FY09
Tata Motors launches world's cheapest car NANO making India proud
Great things do not happen by chance but by brilliant minds. The Indian auto designers have proved their mettle across the globe when Tata launched Rs 1 lakh car though initially the whole world guffawed at this claim and thought it to be impossibility. Tata proved it possible by launching Nano in Mumbai on March 23, 2009. Other than being a bridge between the two-wheeler market and the four-wheeler segment, Nano also created a plethora of opportunities for automotive designers in India. Nano’s design has been respected by a global audience. Indian car designers accomplished the task by designing the world’s cheapest small car within a record time of 18 months. Overnight, a young breed of designers shot India into the limelight through their marvelous skills and technical know-how. India, in the near future, may well become one of the hottest hubs for automotive research and design with young budding designers leading automotive innovations.
A cloud of gloom hovers over the global automotive market with plummeting vehicle sales and tightening credit conditions, one of the most difficult times for the automotive Industry. Pressures from plunging sales, frozen credit markets, global competition, higher raw material and, until recently, gasoline prices, and growing consumer demand for more fuel-efficient vehicles are driving a transformation of the industry across its entire value chain. With an extraordinary drop in third and fourth quarter sales, the entire industry globally has been put into crisis mode.
General Motors posted a USD 6 billion loss in the first quarter of 2009, about double what it lost in the same quarter a year ago. Toyota lost 437 billion yen, or USD 4.3 billion, for the full year ended on March 31, 2009 and forecast a larger loss of 550 billion yen, or USD 5.8 billion, for this year because of persistent weakness in global demand for vehicles. As the industry copes with job and production cuts to trim over capacity, business planners within each automaker are working hard to tap growth opportunities in green cars, low-cost vehicles and emerging market growth. A recovery of the sector remains contingent upon improved credit availability as well as recovery of key demand drivers, including GDP growth and the freight markets. Different government, globally, has set out various stimulus packages for the sector, which includes better credit availability for CV financiers, increased deprecation benefits for CV purchases, and reduction in excise duties.
India automobile market is likely to be in good shape in the year 2009 despite of global recession as there are certain factors working in its favor. India is blessed with middle class, which is getting economically stronger with every passing day. This class is being touted as potential consumers for India automotive industry in years to come. Further, Indian economy has been, more or less, able to withstand tremors of global financial meltdown. Even though its rate of growth has slowed down considerably, there are hopes of an economic revival. Work force of automotive industry of India is relatively well trained. All these factors indicate that there could be a decent future for the automotive industry in India in days to come. Much of this optimism results from renewed interest being shown in the India automotive industry by reputed overseas car makers. Nissan Motors, which is a well known Japanese car making company, regards India automobile market as a global car manufacturing hub for future. Hyundai, a major automobile establishment of South Korea, has put in large sums of money in India automotive market. As per its estimates, India automotive industry could become a major center for small car manufacturing organizations in future.
Tuesday, June 2, 2009
Automobile Sector review
Posted by Morgan at 8:19 AM