Laced by discounts and launch of new models boosted sales in December, car sales figures showed a good come back. Except for Maruti Suzuki which has its own plant issues, most of the car manufacturers have reasons to cheer.
However analysts are more worried about sales of two-wheeler segment. In an interview to CNBC-TV18, Hitesh Goel, Analyst, Kotak Institutional Equities gave his top picks in the sector.
He prefers Bajaj Auto over Hero MotoCorp . Goel’s top picks in the sector is Mahindra and Mahindra .
Maruti too may get back its sales figures right in January. He feels that new launches may trigger Maruti’s market share. Maruti, which has been narrowing the sales contraction month-on-month, sold 77,475 units in India, a decline of 14%, from a year earlier.
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: What you have made of Bajaj Auto's numbers? How much you are marking down expectations now both in terms of a price target and sales?
A: Two-wheeler sales were quite disappointing because we were expecting a high single digit growth on two-wheelers in domestic market. But retail sales are more or less flat for this month.
There is definitely a slowing down in the rural discretionary spending. That is impacting the two-wheeler and to some extent tractors as well. This is likely to continue for the next three-four months. So, our assumptions for volumes for two-wheeler will go down by 4-5% for FY12.
Q: What seems to be the problem? Is it product specific because there is some disparity in performance between the different two-wheeler companies?
A: If you look at Hero Motocorp’s numbers, these are dispatches through dealers. They have shown a growth of 8%, but our channel check suggests that retail numbers are quite weak. So, basically it's just that inventory had come down quite dramatically which they are filling up. But in the next three months, you could see a very low single digit growth for Hero Motocorp as well.
Q: Are you marking down your expectations from Bajaj, Hero Motocorp and even TVS Motors ? What kind of recommendations do you have on the stocks?
A: We cover Hero Motorcorp and Bajaj Auto. We prefer Bajaj Auto and Hero Motorcorp. We have a sell rating on Hero Motorcorp largely because we expect competition to increase in the 100 CC segment for the company.
We prefer Bajaj because exports growth remains very strong. On domestic valuation, definitely there will be a 4-5% downward revision in FY12. But I think you still could see 10-12% growth on the two-wheeler side in FY13 because the crop output has been pretty good this year.
Q: What about TVS?
A: On the motorcycle front, they don’t have much product profile to basically challenge the Hondas and Heros of the world. I think they were doing well because of scooter portfolio and their popularity within the women segment.
Honda is looking t launch more scooters next year. That could impact TVS motors more in my view. On the motorcycle side, they will be the first ones to lose markets side to Honda.
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