October 2013 Dashboard The Monthly Auto Update

Data Track: September 2013 volume update of auto majors Speedometer  Sector overview and outlook ...... 2 September 2013 relative performance  Hero MotoCorp ...... 3  ...... 4  HMSI ...... 6  TVS Motor ...... 7  ...... 9  Mahindra & Mahindra ...... 11  ...... 13  ...... 15  ...... 16 12-month relative performance Sector Gauge: August 2013 update  Two-wheelers ...... 17  Three-wheelers ...... 19  Cars and UVs ...... 21  Commercial vehicles...... 23

News and Events ...... 26  Daimler to launch three more models in  TVS Motor launches Jupiter aimed at male buyers  Suzuki plans to expand production capacity by 25%

Aggregate Volumes For September 2013* Segment Sep-13 Sep-12 YoY (%) Aug-13 MoM (%) FY14-YTD FY13-YTD Chg (%) 2-Wheelers 1,328,128 1,138,160 16.7 1,212,040 9.6 7,435,372 7,303,613 1.8 Motorcycle 1,055,826 907,338 16.4 972,581 8.6 6,006,037 5,939,194 1.1 3-Wheelers 58,139 55,891 4.0 38,764 50.0 298,736 269,340 10.9 Cars 113,338 106,082 6.8 92,786 22.1 579,545 602,534 -3.8 UVs 41,319 51,632 -20.0 39,393 4.9 245,115 288,396 -15.0 Commercial Vehicles 47,615 68,102 -30.1 47,849 -0.5 312,140 375,471 -16.9 LCV 30,037 41,024 -26.8 30,406 -1.2 185,497 214,698 -13.6 M&HCV 17,578 27,078 -35.1 17,443 0.8 126,643 160,773 -21.2 Tractors (M&M) 26,637 20,085 32.6 14,158 88.1 133,841 109,418 22.3 Total Volumes 1,615,176 1,439,952 12.2 1,444,990 11.8 9,004,749 8,948,772 0.6 * Aggregate of Bajaj, Hero, TVS Motor, HMSI, Maruti, M&M, Tata Motors , Ashok Leyland & Eicher Motors Source: Company, MOSL

Comparative Valuation CMP * Rating P/E (x) EV/EBITDA (x) RoE (%) RoCE (%) (INR) FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E Bajaj Auto 2,127 Buy 18.2 15.7 12.5 10.3 38.7 37.2 53.3 51.4 Hero MotoCorp 2,037 Buy 18.4 13.3 10.5 9.0 41.2 47.7 52.4 62.6 M&M 863 Buy 12.6 10.9 6.6 5.4 19.8 18.5 21.3 20.7 Maruti Suzuki 1,407 Buy 17.8 13.9 7.8 5.9 11.4 13.2 14.9 16.8 Tata Motors 348 Buy 9.7 8.1 3.9 3.3 23.9 22.4 22.2 22.2 Ashok Leyland 16 Buy -12.8 25.8 23.6 8.4 -7.4 3.6 0.1 6.2 Eicher Motors# 3,761 Buy 25.7 20.9 17.7 12.8 22.3 23.3 22.5 23.6 * Price as on 7th October 2013. # Nos. are on CY basis Source: Company, MOSL Jinesh Gandhi ([email protected]); +91 22 3982 5416 Chirag Jain ([email protected]); + 91 22 3982 5418 1 Investors are advised to refer through disclosures made at the end of the Research Report. Dashboard

Data Track Sector overview and outlook Festive led inventory build-up drives sales; however underlying demand trend remains weak

Demand remains weak; however festive-led buying and good monsoon provide hope: Considering the slowdown in economic activity and consequent weakness in consumer and business sentiments, demand continues to remain weak across auto segments. MHCVs and cars have been the worst impacted. However, tractor volumes continue to remain healthy (though growth moderated in 2Q post strong 1Q) on favorable monsoon and high farm income. Two-wheelers are showing early signs of recovery led by favorable monsoon and consequent strong demand from rural markets.

2QFY14 margins to decline YoY on lower volumes and consequent high discounts: EBITDA margins for our auto coverage universe (excluding JLR) is expected to decline 40bp YoY (-100bp QoQ) on continued demand weakness and consequent high discounting pressure. While two-wheeler players (Bajaj, Hero and ) are expected to report YoY improvement in margins, M&M, Tata Motors (S/A) and Ashok Leyland would report a decline. MSIL would report YoY margin improvement due to a low base (labor issues last year) and SPIL merger benefit, while on a QoQ basis, margins would decline 180bp due to higher discounts and weaker mix (lower diesel share).

Easing of macro headwinds to be key catalyst for demand recovery: With the expectation of an increase in rural incomes due to favorable monsoon coupled with election spending-led improvement in macro-economic factors, we hope for a better 2H for the auto sector. Over the long term, easing macro headwinds such as lower interest rates and higher economic growth would be the key driver for volume growth, profitability and in turn for re-rating.

Valuation and view: Tata Motors, Hero MotoCorp and Eicher Motors are top picks Considering the current weakness in demand environment and slower-than-earlier- anticipated economic recovery, we downgrade the volume growth/earnings estimates across companies.

Demand environment and changing competitive landscape in the auto sector would be key determinants of stocks' performance. We are hopeful of a demand recovery in 2HFY14 driven by festive season and benefit of normal monsoon. Prefer Tata Motors and Hero MotoCorp in large caps, and Eicher Motors in mid caps.

Key Financial Indicators Volume Chg (%) ^ EBITDA Margins (%) EPS (INR) * EPS Growth (%) * F Y14E F Y15E FY14E FY15E FY14E FY15E FY14E FY15E Bajaj Auto -5.6 12.5 20.1 20.3 117.2 135.6 11.4 15.8 He ro Mo toCo rp 5.0 13.4 10. 6 13. 1 110. 4 152. 8 4. 1 38. 3 M&M 10.0 0.9 13.5 13.3 68.3 79.4 12.2 16.2 Ma ruti S uzuk i -1.5 12.8 10. 2 11. 0 79. 1 101. 2 -1. 4 27. 9 Tata Motors * -17.9 10.7 14.9 14.7 35.9 42.8 12.0 19.2 A shok Leyl a nd -11.5 27.4 3. 0 6. 9 -1. 2 0. 6 -297. 8 -149. 5 E i cher Motors # - - 9. 7 9. 9 146. 4 180. 1 21. 8 23. 0 ^ Volume growth for standalone; * Consolidated wherever applicable, ** Royalty adjusted margins, # Nos. are on CY basis.

October 2013 2 Dashboard

Data Track Hero MotoCorp Below est at 468,670 units (v/s est 490,000 units) due to Haridwar labour issues; strong YoY growth though on low base

Snapshot of volumes for September 2013 Residual FY14 YTD YoY MoM Residual Sep-13 Sep-12 Aug-13 FY14-YTD Chg (%) FY14E YoY (%) Monthly Monthly (%) (%) Gr. (%) Run rate Run rate Total volume 468,670 404,787 15.8 459,996 1.9 2,975,214 0.0 6,379,777 5.0 9.9 567,427 495,869 Source: Company, MOSL Highlights Hero Moto has  Hero Moto's Sept-13 sales stood at 468,670 units (+16% YoY, +2% MoM), below our witnessed 7% growth in estimate of 490,000 units. retail sales in FY14-YTD  Our industry interaction indicates that Hero's dispatches were impacted due to labour issues at its Haridwar plant (which seems to have been resolved now). Strong YoY growth is due to lower base (sharp inventory correction last year).  Hero MotoCorp Senior Vice-President (Marketing and Sales), Anil Dua, said: "Our performance in September is a result of the strong retail growth we have reported throughout the first half of this financial year. Our 16% growth in despatch sales in September has come on the back of a consistent 7% growth in our retail sales this year."  Hero MotoCorp is expected to be the biggest beneficiary of good monsoon and expected demand recovery during festive season, given its strong presence in rural markets. By Mar-14, Hero plans to launch several refreshes/variants of its existing products.  We estimate a growth of 5% in FY14, implying a residual growth of 10%.  Hero Moto trades at 18.4x/13.3x FY14E/FY15E EPS of INR110.4/INR152.8 respectively. Maintain Buy. Hero MotoCorp: two-wheelers

FY11 FY12 FY13 FY14 625,000

560,000

495,000

430,000

365,000

300,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Hero MotoCorp: Financial & Valuation Summary Bloomberg HMCL IN Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE Equity Shares (m) 200 End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%) CMP (I NR) 2,037 3/12A 233,681 23,781 119.1 18.4 17.1 15.4 9.5 11.3 65.6 49.9 52-Wk Range (INR) 2,150/1,434 3/13A 235,827 21,182 106.1 -10.9 19.2 17.0 8.1 12.0 45.6 43.6 1,6,12 Rel. Perf. (%) 9/2/-20 3/14E 253,025 22,054 110.4 4.1 18.4 16.1 7.2 10.5 41.2 52.4 M.Ca p. (USD b) 6.6 3/15E 292,910 30,507 152.8 38.3 13.3 11.2 5.7 9.0 47.7 62.6

October 2013 3 Dashboard

Data Track Bajaj Auto Above est at 367,815 units (v/s est 320,000); exports stabilizing; domestic vols benefit from pre-festive stocking

Snapshot of volumes for September 2013 Residual FY14 YTD YoY MoM Residual Sep-13 Sep-12 Aug-13 FY14-YTD Chg (%) FY14E YoY (%) Monthly Monthly (%) (%) Gr. (%) Run rate Run rate Total volume 367,815 360,152 2.1 312,188 17.8 1,940,605 -8.8 3,999,167 -5.6 -2.4 343,094 323,434 323,879 315,314 2.7 278,583 16.3 1,709,441 -10.6 3,538,312 -5.8 -0.9 304,812 284,907 Three-Wheelers 43,936 44,838 -2.0 33,605 30.7 231,164 6.5 460,855 -4.0 -12.7 38,282 38,527 Domestic 220,968 226,930 -2.6 168,028 31.5 1,177,012 -11.0 2,429,836 -9.7 -8.4 208,804 196,169 Exports 146,847 133,222 10.2 144,160 1.9 763,593 -5.3 1,569,331 1.4 8.7 134,290 127,266 Source: Company, MOSL

Highlights Bajaj Auto expects to  Bajaj Auto's Sep-13 total vol grew 2% (+18% MoM) to 367,815 units (v/s est of sustain monthly volume 320,000). Our estimate of -5.6% growth in FY14, implies residual de-growth of run-rate of 200k in 2.4% or residual run-rate of 343,094 unit. domestic motorcycles  Domestic volumes declined just 2.6% YoY (+31.5% MoM) to 220,968 units (v/s est 175,000 units), benefitting from pre-festive season stocking.  Exports grew 10% YoY (+2% MoM) to 146,847 units (+10% YoY, +2% MoM), in-line with our estimates. Export volumes are witnessing stability since Aug-13, benefitting from price correction in key markets of SriLanka and Africa.  Overall motorcycle volumes grew 3% YoY (+16% MoM) to 323,879 units (v/s est 285,000). Pulsar volumes were at ~100,000 units (+25% YoY/MoM). The mgmt is Bajaj plans to launch 6 hopeful of further recovery in volumes driven by multiple launches under Discover new Dicover motorcycles brand. Our estimate of -6% growth implies 1% residual de-growth or ~304,800 in FY14 monthly run-rate.  Three-wheeler sales de-grew 2% YoY (+31% MoM) to 43,936 (v/s est 35,000), benefitting from recovery in exports. Our de-growth estimate of 4% implies residual growth of -13% or monthly run-rate of ~38,300 units. Our 3W volume estimates could see upgrades if volume recovery is sustained, especially in export markets.  The stock trades at 18.2x/15.7x FY14E/FY15E EPS of INR117.2/135.6 respectively. Maintain Buy.

Bajaj Auto: Financial & Valuation Summary Bloomberg BJAUT IN Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE Equity Shares (m) 289.4 End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%) CMP (INR) 2,127 3/12A 195,290 31,069 107.4 18.8 19.8 18.9 10.2 14.8 56.7 73.0 52-Wk Range (INR) 2,229/1,590 3/13A 199,973 30,436 105.2 -2.0 20.2 19.2 7.8 15.0 43.7 59.8 1,6,12 Rel.Perf.(%) 2/-4/8 3/14E 207,584 33,903 117.2 11.4 18.2 17.2 6.4 12.5 38.7 53.3 M.Cap. (USD b) 10.0 3/15E 237,588 39,252 135.6 15.8 15.7 14.8 5.3 10.3 37.2 51.4

October 2013 4 Dashboard

Two-wheeler volumes (units)

FY11 FY12 FY1 3 FY14 440,000 Volumes improved MoM 375,000 but remains weakk on a YoY basis 310,000

245,000

180,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Three-wheeler volumes (units)

FY11 FY12 FY1 3 FY14 52,000

45,000 Three-wheeler volumes recovers MoM 38,000

31,000

24,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Export volumes (units)

FY11 FY12 FY1 3 FY14 200,000

160,000 Export registers positive growth for second 120,000 consecutive month 80,000

40,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Market mix

Domestic Exports 100%

75%

Share of domestic sales 50% have remained largely 25% stable MoM 0% Jul-13 Jul-12 Jul-11 Jul-10 Oct- 1 2 Oct- 1 1 Oct- 1 0 Jan-13 Apr-13 Jun-13 Jan-12 Apr-12 Jun-12 Jan-11 Apr-11 Jun-11 Apr-10 Jun-10 Aug-13 Sep-13 Aug-12 Sep-12 Nov-12 Dec-12 Feb-13 Mar-13 Aug-11 Sep-11 Nov-11 Dec-11 Feb-12 Mar-12 Aug-10 Sep-10 Nov-10 Dec-10 Feb-11 Mar-11 Ma y-13 Ma y-12 Ma y-11 Ma y-10

Source: Company, MOSL October 2013 5 Dashboard

Data Track HMSI Records over 0.3m units of domestic sales; motorcycle grows 44% while grows 28%

Snapshot of volumes for September 2013 YoY (%) MoM YTD (%) HMSI Sep-13 Sep-12 Aug-13 FY14-YTD FY13-YTD chg (%) chg chg Total volume 328,965 242,941 35.4 308,932 6.5 1,665,754 1,352,038 23.2 Scooters 165,736 129,562 27.9 152,303 8.8 863,099 744,786 15.9 Motorcycles 163,229 113,379 44.0 156,629 4.2 802,655 607,252 32.2 Source: Company, MOSL

Highlights HMSI sales have grown by  HMSI sales grew by 35% YoY to 328,965 units (highest ever), with domestic sales 23% FY14-YTD crossing 0.3m units (first time ever).  Motorcycle sales grew by 44% led by higher supplies of Dream series, while scooters grew by 28% YoY.  Speaking on this release of monthly sales performance, Mr. Yadvinder Singh Guleria, Vice President - Sales & Marketing, HMSI, said, "Despite subdued demand in 2W industry, Honda Motorcycle and Scooter India has achieved record breaking sales of 328,965 for the month of September 2013. This success majorly led by the overwhelming response for our Dream series motorcycles across India."

HMSI: Monthly volume trend

FY11 FY12 FY13 FY14

330,000 275,000 220,000 165,000 110,000 55,000 - Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

October 2013 6 Dashboard

Data Track TVS Motor Sales grew by 16%; motorcycles register 30% growth; exports growth remains strong; 3Ws sales highest ever

Snapshot of volumes for September 2013 YoY MoM Chg Sep‐13 S ep‐12 Aug‐13 FY14‐YTD FY13‐YTD (%) (%) (%)

Total v olume 197, 409 170,097 16.1 155,532 26.9 1,001,111 1,005, 159 ‐0.4 Moto rcycl es 83, 043 63,832 30.1 61,313 35.4 395,712 364, 234 30. 1 Scooters 43,201 40,055 7.9 36,478 18.4 218,702 231,975 7.9 Mop eds 63, 365 61,205 3.5 50,678 25.0 347,534 387, 658 3. 5 Thre e-Whe el ers 7, 800 5,005 55.8 7,063 10.4 39,163 21, 292 55. 8 So urce: Comp any, MOSL Highlights TVS Motor plans to  TVS Motor reported sales of 197,409 units, a growth of 16% YoY and 27% MoM. launch a new Scooty and  While the motorcycle portfolio grew by 30% YoY (+35% MoM) to 83,043 units, an executive motorcycle scooters sales grew by 8% YoY (+18.4% MoM) to 43,201 units. in FY14  Sales of mopeds also increased 3.5% YoY (+25% MoM) to 63,365 units.  High margin three wheeler sales grew by 56% YoY to 7,800 units (highest ever).  The stock trades at 8.5x/7.3x FY14E/FY15E Bloomberg Consensus S/A EPS respectively, while at 11.6x/9.3x Consolidated EPS. Not Rated.

Motorcyle volumes (units)

FY11 FY12 FY13 FY1 4 98, 000

Motorcycle volumes grew 86, 000 by 30% YoY in Aug-13 74, 000

62, 000

50, 000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Source: Company, MOSL

October 2013 7 Dashboard

Scooters and mopeds (units)

FY11 FY12 FY13 FY1 4 132,000

114,000

Scooter volume 96,000 rises on Jupiter launch and festive led inventory 78,000 build-up 60,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Sales mix

Mo t or c y c l es Scooters & Mopeds 100%

75% Product mix have been largely stable 50%

25%

0% Jul-13 Jul-12 Jul-11 Jul-10 Oct-12 Oct-11 Oct-10 Apr-13 Jun-13 Apr-12 Jun-12 Apr-11 Jun-11 Apr-10 Jun-10 Jan-13 Jan-12 Jan-11 Aug-13 Sep-13 Aug-12 Sep-12 Nov-12 Dec-12 Feb-13 Aug-11 Sep-11 Nov-11 Dec-11 Feb-12 Aug-10 Sep-10 Nov-10 Dec-10 Feb-11 Mar-13 Mar-12 Mar-11 May-13 May-12 May-11 May-10

Source: Company, MOSL

October 2013 8 Dashboard

Data Track Maruti Suzuki Above est at ~105k (v/s est 95k); growth of 12% YoY; exports up 181%

Snapshot of volumes for September 2013 Residual FY14 YTD YoY MoM Residual Sep‐13 Sep‐12 Aug‐13 FY14‐YTD Chg (%) FY14E YoY (%) Monthly Monthly (%) (%) Gr. (%) Run rate Run rate Total volume 104,964 93,988 11.7 87,323 20.2 542,020 3.0 1,154,414 ‐1.5 ‐5.1 102,066 90,337 Domestic 90,399 88,801 1.8 76,018 18.9 486,908 2.9 1,037,166 -1.3 -4.8 91,710 81,151 A1 1,600 1,414 13.2 1,522 5.1 9,426 9.6 C 8,767 12,620 -30.5 7,956 10.2 46,967 -20.6 A2 60,289 55,549 8.5 47,906 25.8 306,706 6.1 A3 17,086 11,982 42.6 14,071 21.4 97,405 28.1 A4 0 12 NA 0 NA 0 NA UV 2,657 7,224 -63.2 4,563 -41.8 26,404 -34.6 Export 14,565 5,187 180.8 11,305 28.8 55,112 3.9 117,248 -2.6 -7.7 10,356 9,185 Source: Company, MOSL

Highlights Management indicated  Maruti Suzuki (MSIL) reported above estimate volumes of 104,964 units (+12% that channel inventory is YoY, +20% MoM), driven by festive led inventory build-up and export ramp-up. high at ~6 weeks  Mini segment (Alto, Wagon-R, A-Star) grew 4.9% YoY, while Compact segment (Swift, Ritz) grew 16.9% YoY. Dzire grew strongly at 42.9% YoY. However, the UV segment (both Ertiga and Omni/Eeco) declined by 63% and 31% respectively.  Exports grew strongly at 14,565 units (growth of 181%) led by ramp-up in export volumes. The company expects to maintain flat export volumes in FY14 post incorporating few modifications in the vehicles as per the new regulations. We estimate exports volumes de-growth of ~2.6%, implying residual run-rate of 10,356 units (-7.7% growth).  Overall, we model volume de-growth of 1.5% for FY14, implying a residual run- rate of 102,066 units and a 5.1% YoY residual de-growth.  MSIL trades at 17.8x/13.9x FY14E/15E consol EPS of INR79.1/INR101.2 and 9.1x/7.5x FY14E/15E Cash EPS of INR149.6/INR182.3. Maintain Buy.  While MSIL registered growth in domestic sales, Hyundai's domestic sales declined by 1% YoY to 30,601 units. Exports also declined by 8.3% YoY to 20,817 units. Overall, Hyundai's sales declined by 4% due to lower export volumes.  Commenting on the sales, HMIL Senior Vice-President, Sales and Marketing, Rakesh Srivastava, said: "In the current market scenario, volume growth is a big challenge. Last month, we launched our new model Grand in the midst of slowdown and have received phenomenal response from our customers. We expect the market challenges to continue and have a cautious optimism for upcoming festive season".

Maruti Suzuki: Financial & Valuation Summary Bloomberg MSIL IN Year Total Inc. PAT Con. EPS EPS Con. P/E P/CE P/BV EV/ RoE RoCE Equity Shares (m) 302.1 End (INR m) (INR m) (INR) Gr. (%) (x) (x) (X) EBITDA (%) (%) CMP (I NR) 1,407 3/12A 355,872 16,353 58.2 ‐29.4 ‐‐‐‐10.8 13.2 52‐Wk Range (INR 1,773/1,075 3/13A 435,879 23,921 80.2 37.8 17.5 9.9 2.3 8.5 12.9 15.5 1,6,12 Rel.Perf.(%) ‐14/‐14/7 3/14E 441,375 23,489 79.1 ‐1.4 17.8 9.4 2.1 7.8 11.4 14.9 M.Cap. (USD b) 6.9 3/15E 508,357 30,565 101.2 27.9 13.9 7.7 1.8 5.9 13.2 16.8

October 2013 9 Dashboard

Monthly volumes (units)

FY1 1 FY12 FY13 FY14 140,000

115,000

90,000

65,000

40,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Export volumes (units)

FY11 FY12 FY13 FY14 20,000

15,000 Exports monthly volume run-rate to normalize at 10,000 10-11k units 5,000

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Segment mix (domestic)

A1 A2 A3 + A4 MPVs + UVs 100%

75% A2 & A3 segments dominate the 50%

segment mix 25%

0% Jul-10 Jul-11 Jul-12 Jul-13 Oct-10 Oct-11 Oct-12 Jan-11 Jan-12 Jan-13 Apr-10 Jun-10 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Sep-10 Nov-10 Dec-10 Feb-11 Aug-11 Sep-11 Nov-11 Dec-11 Feb-12 Aug-12 Sep-12 Nov-12 Dec-12 Feb-13 Aug-13 Sep-13 Mar-11 Mar-12 Mar-13 May-10 May-11 May-12 May-13

Market mix

Domestic Sales Exports 100%

75% Share of exports on an improving trend 50% 25%

0% Jul-13 Jul-12 Jul-11 Jul-10 Oct-12 Oct-11 Oct-10 Apr-13 Jun-13 Apr-12 Jun-12 Jan-13 Apr-11 Jun-11 Jan-12 Apr-10 Jun-10 Jan-11 Aug-13 Sep-13 Aug-12 Sep-12 Nov-12 Dec-12 Feb-13 Aug-11 Sep-11 Nov-11 Dec-11 Feb-12 Aug-10 Sep-10 Nov-10 Dec-10 Feb-11 Mar-13 Mar-12 Mar-11 May-13 May-12 May-11 May-10 Source: Company, MOSL October 2013 10 Dashboard

Data Track Mahindra & Mahindra Tractor vols above est at 26,637 (v/s est 22,100); Autos in-line; UVs recover post inventory correction

Snapshot of volumes for September 2013 Residual FY14 YTD YoY MoM Residual Sep-13 Sep-12 Aug-13 FY14-YTD Chg (%) FY14E YoY (%) Monthly Monthly (%) (%) Gr. (%) Run rate Run rate Total volume 69,926 68,427 2.2 52,055 34.3 375,107 -0.4 793,326 0.8 1.9 69,703 62,518 UV (incl. pick-ups 35,440 39,768 -10.9 31,812 11.4 202,903 -8.7 446,786 -5.0 -1.6 40,647 33,817 LCV (MNAL) 546 990 -44.8 471 15.9 4,346 -29.0 11,247 -5.5 19.4 1,150 724 Verito 900 1,536 -41.4 465 93.5 5,608 -28.0 17,228 10.0 47.6 1,937 935 Three-Wheelers 6,403 6,048 5.9 5,149 24.4 28,409 -8.4 60,597 -7.5 -6.7 5,365 4,735 Tractors 26,637 20,085 32.6 14,158 88.1 133,841 22.3 257,468 15.0 8.0 20,604 22,307 Source: Company, MOSL Highlights On release of monthly  M&M's UV volumes continues to decline sharply (-21% YoY) to 18,916 units (v/s sales performance, est 18,000 units). However, the monthly run-rate and YoY decline in UVs have Rajesh Jejurikar, Chief moderated compared to last couple of months (average 29% de-growth and 15,500 Executive, Tractor and units run-rate) with rationalization of channel inventory. Farm Mechanization,  Pick-up volumes improved by 2% YoY to 14,709 units (v/s est 17,000 units). M&M Ltd. said, "On the  We estimate UV volumes (incl. pick-ups) to decline 5% YoY in FY14, implying 2% back of good monsoon, residual de-growth or ~40,647 residual run-rate. we are delighted with a  LCV segment de-grew by 45% YoY (+16% MoM) to 546 units (v/s est 940 units). 37% growth in tractor  3-wheeler volumes grew 6% YoY (+24% MoM) to 6,403 units (v/s est 5,500 units). sales despite traditionally  Speaking on monthly performance, Pravin Shah, Chief Executive, Automotive low buying period in Division, M&M Ltd. said, "While there has been a growth over August 2013, it is not September. We see to the extent that makes us comfortable especially as we approach the festive healthy growth season. Factors such as increase in input and raw material costs and the depreciating continuing over the next rupee have not helped. To compensate to some extent we have taken a price increase few months." effective today."  M&M's tractor volumes grew by 33% YoY to 26,637 units (v/s est 22,100 units) led by inventory build-up ahead of the festive season. On release of monthly sales performance, Rajesh Jejurikar, Chief Executive, Tractor and Farm Mechanization, M&M Ltd. said, "On the back of good monsoon, we are delighted with a 37% growth in tractor sales despite traditionally low buying period in September. We see healthy growth continuing over the next few months."  We have built-in 15% volume growth for tractors in FY14, implying a residual growth of 8% and residual run-rate of 20,604 units.  The stock trades at 12.8x/11 consol. FY14E/FY15E EPS of INR 68.3/79.4 respectively. Maintain Buy.

Mahindra and Mahindra: Financial & Valuation Summary Bloomberg MM IN Year Net Sales S/A PAT * S/A EPS *Cons.Con. EPS P/E Cons. RoE RoCE EV/ EV/ Equity Shares (m) 587.2 End (INR m) (INR m) (INR) EPS (INR) Gr (%) (x) P/E (x) (%) (%) Sales (x) EBITDA CMP (INR) 863 3/12A 318,535 28,888 48.3 51.2 6.6 18.1 17.1 23.0 23.1 0.0 0.0 52‐Wk Range (INR) 1,026/681 3/13A 404,412 36,344 60.7 60.9 18.9 14.4 14.3 22.4 23.2 0.9 7.2 1,6,12 Rel.Perf.(%) ‐10/1/13 3/14E 401,709 34,311 57.3 68.3 12.2 15.2 12.8 19.8 21.3 0.8 6.8 M.Cap. (USD b) 8.3 3/15E 444,546 36,723 61.4 79.4 16.2 14.2 11.0 18.5 20.7 0.7 5.5 * S/A including MVML October 2013 11 Dashboard

Utility vehicle volumes (units)

FY11 FY12 FY1 3 FY14 48,000

UV volumes remains 39,000 weak YoY but improves 30,000 MoM post inventory rationalization 21,000

12,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Tractor volume (units)

FY11 FY12 FY13 FY1 4 36,000

28,000 Strong tractor volumes ahead of the festive 20,000 season

12,000

4,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Product mix

UVs Tr a c to r s LCVs, 3‐wheelers Cars 100%

Tractors and UVs 75% dominate the segment 50% mix

25%

0% 10 10 13 13 13 10 10 10 13 11 11 11 11 11 11 12 12 12 12 12 12 13 10 13 10 13 10 13 10 13 11 11 11 11 11 11 12 12 12 12 12 12 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Jul Jul Jul Jul Oct Oct Oct Apr Jun Apr Jun Jan Jun Apr Jan Jun Apr Jan Feb Ma r Aug Sep Nov Dec Aug Sep Feb Ma r Aug Sep Nov Dec Feb Ma r Aug Sep Nov Dec Ma y Ma y Ma y Ma y

Source: Company, MOSL

October 2013 12 Dashboard

Data Track Tata Motors Disappointment continues; CV volumes decline MoM despite Sept being seasonally strong

Snapshot of volumes for September 2013 Residual FY14 YTD YoY MoM Residual Sep‐13 Sep‐12 Aug‐13 FY14‐YTD Chg (%) FY14E YoY (%) Monthly Monthly (%) (%) Gr. (%) Run rate Run rate Total volume 50,387 75,773 ‐33.5 49,611 1.6 304,638 ‐25.7 664,632 ‐17.9 ‐9.9 59,999 50,773 HCV's 10,060 16,332 -38.4 9,297 8.2 63,379 -23.3 131,668 -12.7 0.2 11,381 10,563 LCV's 26,974 37,007 -27.1 27,735 -2.7 167,130 -13.3 374,142 -12.5 -11.9 34,502 27,855 Cars 10,131 17,794 -43.1 9,561 6.0 58,321 -46.4 124,616 -31.7 -9.9 11,049 9,720 UV's 3,222 4,640 -30.6 3,018 6.8 15,808 -38.5 34,206 -29.7 -19.9 3,066 2,635 of which exports 4,429 5,441 -18.6 4,894 -9.5 0 -100.0 Source: Company, MOSL

Highlights Discounts have been on a  Tata Motors (TTMT) reported total sales of 50,427 units (est 53,250 units) for Sept- rising trend on weak 13. Our volume estimates of 18% decline in FY14 implies 10% residual de-growth demand scenario and or ~59,992 units run-rate. higher competitive  While MHCV volumes declined by 41% YoY to 9,715 units (est 11,000 units), LCV pressures volumes de-grew 28% to 26,804 units (est 29,000 units). Despite Sept being a seasonally better month (owning to half year depreciation related tax incentives), CV volumes have fallen MoM.  Discounts have been on a rising trend on weak demand scenario and higher competitive pressures. We model de-growth of 13% for both MHCVs and LCVs for FY14, implying a residual growth of 1% for MHCVs (run-rate 11,439 units) and -12% for LCVs (run-rate of 34,530 units)  PV volumes continued to remain weak at 13,908 units (though were in-line). Cars de-grew 40% YoY, while UVs declined by 30% YoY.  We model de-growth of 32% and 30% for Cars and UV segment respectively for FY14.  Based on our current estimates, the stock trades at 9.7x/8.1x FY14/FY15 Consol EPS of INR35.9/INR42.8. Maintain Buy.

Tata Motors: Financial & Valuation Summary Bloomberg TTMT IN Year Sales Adj. PAT Adj. EPS Norm. P/E Norm. RoE RoCE EV/ EV/ Actual Eq. Sh (m) 3,218.9 End * (INR m) (INR m) (INR) EPS (INR) ^ Ratio P/E (x) (%) (%) Sales (x) EBITDA (x) CMP (INR) 348 3/12A 1,656,545 125,568 39.0 22.9 8.9 15.2 38.4 24.1 0.8 5.5 52-Wk Range (INR) 321/138 3/13A 1,888,176 103,286 32.1 12.4 10.8 27.9 27.4 21.7 0.7 5.1 1,6,12 Rel. Perf. (%) 2/4/15 3/14E 2,250,982 115,663 35.9 11.8 9.7 29.6 23.9 22.2 0.6 3.9 M.Cap. (USD b) 18.1 3/15E 2,587,759 137,924 42.8 14.5 8.1 24.0 22.4 22.2 0.5 3.3 * Consolidated; ^ Normalized for capitalized expenses

October 2013 13 Dashboard

M&HCV volumes (units)

FY11 FY12 FY13 FY14 28,000

M&HCV volumes 22,000 continue to remain under pressure 16,000

10,000

4,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

LCV volumes (units)

FY11 FY12 FY13 FY1 4 48,000

40,000

Decline in LCVs 32,000 accentuated reflecting weakness in 24,000 consumption spend 16,000

8,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Car volumes (units)

FY11 FY12 FY13 FY14 35,000

29,000 Domestic car volumes continues to decline 23,000 sharply 17,000

11,000

5,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Product mix in the CV segment

M&HCVs LCVs 100%

75% LCVs account for over 70% 50% of the CV product portfolio 25%

0% 10 11 12 13 10 10 13 13 10 13 13 10 13 10 13 10 13 10 13 10 11 11 11 11 11 11 11 11 11 11 11 12 12 12 12 12 12 12 12 12 12 12 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Jul Jul Jul Jul Apr Jun Apr Jun Oct Jan Apr Jun Oct Jan Apr Jun Oct Jan Feb Aug Sep Aug Nov Sep Dec Feb Aug Sep Nov Dec Feb Aug Sep Nov Dec Ma y Mar Ma y Mar Ma y Mar Ma y

Source: Company, MOSL

October 2013 14 Dashboard

Data Track Ashok Leyland Sept-13 volumes - Below est; MHCV declines 38% YoY; SCV-Dost volumes declines 17% YoY

Snapshot of volumes for Septem ber 20 13 Residual FY14 YTD YoY MoM Residual Sep-13 Sep-12 Aug-13 FY14-YTD Chg (%) FY14E YoY (%) Monthly Monthly (%) (%) Gr. (%) Run rate Run rate Total v olume 7, 232 10,623 -31.9 7,139 1.3 44,831 -21.8 101,439 -11.5 -1.2 9,435 7, 472 CV (e x DOS T SCV) 4, 715 7,596 -37.9 4,939 -4.5 30,810 -25.6 69,439 -12.9 0. 9 6,438 5, 135 DOS T 2, 517 3,027 -16.8 2,200 14.4 14,021 -11.9 32,000 -8.4 2,997 2, 337 Sou rce : Comp any, MOSL

Highlights MHCV volumes continue  Ashok Leyland's total Sept-13 sales declined by 32% YoY (+1.3% MoM) to 7,232 to remain weak on slow units (est 8,677 units). economic growth  MHCV volumes declined by 38% YoY (-4.5% MoM) to 4,715 (v/s est 6,077 units).  We estimate Ashok Leyland's MHCV volumes to decline by 13% in FY14, implying flat residual growth and run-rate of 6,438 units.  Dost (LCV) sales at 2,517 units (v/s est 2,600 units) declined by 17% YoY. We estimate DOST volumes (incl. couple of new launches under Nissan JV) of 32,000 units in FY14, implying residual de-growth of 5% or run-rate of 2,337 units.  The stock trades at 25.8x FY15E earnings of INR0.6.

A shok Ley land: Fi na ncia l & V aluati on Summ ary Bloombe rg AL IN Year Net Sales PAT EPS EPS P/E P/BV RoE RoCE EV/ EV/ Equity Shares (m) 2660.68 End (INR m) (INR m) (INR) Gr. (%) (x) (x) (%) (%) Sales (x) EBITDA (x) 52-Week Range 29/20 3/11A 111, 771 6, 313 2.4 48. 1 6.7 2.1 16.5 14.8 0.5 5.0 1,6, 12 Rel . Perf. (%) 36/-46/-54 3/12A 129,034 6,274 2.4 -0.8 6.7 1.0 15.3 13.4 0.5 5.2 M.Cap. (INR b) 42 3/13A 124, 812 4, 337 0.6 -73.3 25.3 0.9 3.9 6. 5 0.6 9.0 M.Cap. (USD b) 0.7 3/14E 113, 502 -3,357 -1.2 - - 0.9 -7.4 0. 1 0.7 23.6 3/15E 137, 668 1, 634 0.6 - 25.8 0.9 3.6 6. 2 0.6 8.4

October 2013 15 Dashboard

Data Track Eicher Motors Volumes in-line for both CVs and RE

Snapshot of volumes for September 2013 Residual Residual CY13 YTD Sep-13 Sep-12 YoY (%) chg Aug-13 MoM (%) CY13-YTD YTD (%) chg Growth Monthly Monthly (%) Run rate Run rate Royal Enfield 17,005 10,026 69.6 16,060 5.9 180,078 51.0 78.5 19,021 13,668 VECV 2,919 3,211 -9.1 3,335 -12.5 32,984 -11.6 -8.5 3,519 3,606 LMD 1,618 2,054 -21.2 1,759 -8.0 19,105 16.5 HD 633 454 39.4 614 3.1 5,528 11.2 Buses 596 642 -7.2 894 -33.3 7,865 2.5 Volvo 72 61 18.0 68 5.9 486 31.4 Domestic 2,361 3,026 -22.0 2,757 -14.4 39,586 -13.2 -14.5 3,091 3,368 Exports 442 124 256.5 450 -1.8 3,426 18.6 84.6 428 238 Source: Company, MOSL

Highlights Royal Enfield is targeting  Eicher Motor's Sept-13 CV volumes declined by 11% YoY (-12.6% MoM) to 2,803 sales of 175,000/250,000 units (v/s est 2,900 units). units in CY13/CY14  Domestic CV volumes have declined by 22% YoY (-14% MoM) to 2,361 units (est respectively (v/s 113k 2,500 units), while exports have more than trebled to 442 units (est 400 units) units in CY12)  CY13 would witness the benefit in volumes from the start of bus body plant, commencement of medium duty engine project (3QCY13) and launch of the new HD range in 4QCY13 (jointly developed by Eicher-Volvo).  Royal Enfield sales grew by 70% YoY to 17,005 units. Demand continues to remain strong with average waiting of over 6 months.  Royal Enfield is targeting sales of 175,000/250,000 units in CY13/CY14 respectively (v/s 113k units in CY12).  Eicher Motors trades at 20.9x/15.5x CY14E/CY15E EPS of INR180.1/242.8. Maintain Buy.

Eicher Motors: Financial & Valuation Summary Bloomberg EIM IN Year Net Sales PAT EPS EPS P/E P/BV RoE RoCE EV/EBITDA Div. Yld Equity Shares (m) 27.0 End (INR b) (INR b) (INR) Gr (%) (x) (x) (%) (%) (x) (%) 52-Week Range (INR) 3,980/2,205 12/12A 63.9 3.2 120.1 5.0 31.3 6.2 20.8 23.0 26.0 0.5 1,6,12 Rel. Perf. (%) 15/29/58 12/13A 69.9 4.0 146.4 21.8 25.7 5.3 22.3 22.5 17.7 0.6 M.Cap. (INR b) 101.5 12/14E 88.4 4.9 180.1 23.0 20.9 4.5 23.3 23.6 12.8 0.7 M.Cap. (USD b) 1.6 12/15E 109.4 6.6 242.8 34.8 15.5 3.7 26.1 28.5 8.9 0.9

October 2013 16 Dashboard

Sector Gauge Two-wheelers Growth recovers in Aug-13, scooters continue to outperform

Two-wheelers: Volume snapshot Aug-13 Aug-12 YoY (%) Jul-13 MoM (%) FY14-YTD FY13-YTD Chg (%) Total Domestic 2W 1,128,571 1,057,864 6.7 1,131,835 -0.3 5,750,661 5,710,114 0.7 % of Total 2W 85 87 88 88 87 Total Motorcycle 795,351 766,066 3.8 809,155 -1.7 4,128,400 4,216,861 -2.1 % of Domestic 2W 70 72 71 72 74 <125cc 645,023 646,225 -0.2 667,585 -3.4 3,457,692 3,543,716 -2.4 % of Motorcycle 81 84 83 84 84 >125cc 150,328 119,841 25.4 141,570 6.2 670,708 673,145 -0.4 % of Motorcycle 19 16 17 16 16 Scooters & Mopeds 333,220 291,798 14.2 322,680 3.3 1,622,261 1,493,253 8.6 % of Domestic 2W 30 28 29 28 26 Exports 196,282 161,061 21.9 156,187 25.7 808,756 842,250 -4.0 % of Total 2W 15 13 12 12 13 Total 2W 1,324,853 1,218,925 8.7 1,288,022 2.9 6,559,417 6,552,364 0.1

Two-wheelers: Domestic volume trend (units)

FY11 FY12 FY13 FY14 1,400,000

1,200,000 2W domestic industry sales grew by 6.7% 1,000,000 in Aug-13 800,000

600,000 Jul Oct Apr Jun Jan Aug Sep Nov Dec Feb Mar May

Domestic market share in 2-wheelers

Hero MotoCorp Bajaj Auto HMSI Yamaha TVS Motor 100%

75% Increasing competition in 2-wheeler segment, 50%

with HMSI consistently 25% gaining market share 0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

October 2013 17 Dashboard

Motorcycles: domestic volume trend

FY11 FY12 FY13 FY14 1,000,000

Motorcycles volumes 800,000 grew by 4% in Aug-13

600,000

400,000 Jul Oct Apr Jun Jan Aug Sep Nov Dec Feb Mar May

Motorcycles: domestic market share

Hero MotoCorp Bajaj Auto HMSI Yamaha TVS Motor

100% Hero MotoCrop continues to dominate 75%

motorcycle segment, 50% although HMSI's increasing its 25% market share 0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

Two-wheelers: Product mix

Motorcycle Scooters & Mopeds 100%

75%

Motorcycles dominate 50% 2W segment, though share of scooters rising 25% rapidly 0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13 Two-wheelers: export volumes (units)

FY11 FY12 FY13 FY14 225,000

200,000 Export volumes 175,000 improves 22% YoY 150,000

125,000

100,000 Jul Oct Apr Jun Jan Aug Sep Nov Dec Feb Mar May

October 2013 18 Dashboard

Sector Gauge Three-wheelers Demand improves on low base driven by exports

Three-wheelers: Volume snapshot Aug-13 Aug-12 YoY (%) Jul-13 MoM (%) FY14-YTD FY13-YTD Chg (%) Total Domestic 3W 42,527 45,412 -6.4 41,570 2.3 192,700 200,952 -4.1 % of Total 3W 50 63 0 50 0 50 65 0 Passenger 35,340 37,569 -5.9 35,078 0.7 157,722 163,529 -3.6 % of Domestic eW 83 83 0 84 0 82 81 0 Total Goods 7,187 7,843 -8.4 6,492 10.7 34,978 37,423 -6.5 % of Domestic 3W 17 17 0 16 0 18 19 0 <1T 6,994 7,593 -7.9 6,257 11.8 33,988 36,343 -6.5 % of Goods Vehicle 97 97 0 96 0 97 97 0 >1T 193 250 -22.8 235 -17.9 990 1,080 -8.3 % of Goods Vehicle33040330 Exports 42,527 26,710 59.2 41,570 2.3 192,700 107,752 78.8 % of Total 3W 50 37 0 50 0 50 35 0 Total 3W 85,054 72,122 17.9 83,140 2.3 385,400 308,704 24.8 Source: SIAM/MOSL

Three-wheelers: volume trend (including exports)

FY11 FY12 FY13 FY14 92,000

80,000 3W volumes grew stronly in Aug-13 led by exports, 68,000 while domestic segment 56,000 declined

44,000

32,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Three-wheelers: domestic segment mix

Passenger Goods 100%

75% Passenger segment dominates three- 50% wheelers with over 80% contribution 25%

0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

October 2013 19 Dashboard

Three wheelers: passenger segment market share

Bajaj Auto Piaggio M&M TVS Others 100%

Bajaj Auto continues to 75% dominate passenger segment… 50%

25%

0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

Three wheelers: goods segment market share

Bajaj Auto Piaggio M&M TVS Others 100%

75% ... Piaggio continues to

lead in the goods 50% segment 25%

0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

October 2013 20 Dashboard

Sector Gauge Cars and UVs Growth recovers on low base (labour issues at MSIL last year)

Passenger vehicles: Volume snapshot Aug‐13 Aug‐12 YoY (%) Jul‐13 MoM (%) FY14‐YTD FY13‐YTD Chg (%) Total Domestic PVs 180,738 181,921 ‐0.7 178,212 1.4 961,648 1,021,983 ‐5.9 % of Total PVs 7683077080830 Total Cars 132,656 115,705 14.7 130,209 1.9 693,252 732,778 ‐5.4 % of Domestic PVs 7364073072720 A1 & A2 97,020 84,936 14.2 92,911 4.4 490,900 535,711 ‐8.4 % of Cars 73 73 0 71 0 71 73 0 A3 32,638 26,548 22.9 34,102 ‐4.3 185,614 173,668 6.9 % of Cars 25 23 0 26 0 27 24 0 A4 & above 2,998 4,221 ‐29.0 3,196 ‐6.2 16,738 23,399 ‐28.5 % of Cars 24020230 UVs 30,894 45,062 ‐31.4 29,937 3.2 184,133 195,872 ‐6.0 % of Domestic PVs1725017019190 MPVs 17,188 21,154 ‐18.7 18,066 ‐4.9 84,263 93,333 ‐9.7 % of Domestic PVs10120100990 Exports 57,085 36,749 55.3 53,716 6.3 244,926 213,990 14.5 % of Total PVs 2417023020170 Total PVs 237,823 218,670 8.8 231,928 2.5 1,206,574 1,235,973 ‐2.4 Source: SIAM/MOSL

Cars: domestic volume (units)

FY11 FY12 FY13 FY14 240,000

200,000 Car volumes recovers on 160,000 low base

120,000

80,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

UVs & MPVs: domestic volume (units)

FY11 FY12 FY13 FY14 106,000

UV & MPV volumes declined YoY 76,000

46,000

16,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

October 2013 21 Dashboard

Passenger vehicles: export volume (units)

FY11 FY12 FY13 FY14 65,000

56,000

Export volumes 47,000 improves sharply YoY 38,000 29,000

20,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Cars: domestic market share

Maruti TataMotor Hyundai GM Honda 100%

75% MSIL market share largely stable in Aug-13 (MoM) 50%

25%

0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

UVs: domestic market share

M&M TataMotor Toyota Maruti GM 100%

In UVs, Maruti's market 75% share dropped 50%

25%

0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

Passenger vehicles: segment mix

A1 A2 A3 A4 & above MPV UV 100%

75%

A2 dominates the 50% passenger vehicles segment 25%

0% Oct-10 Oct-11 Oct-12 Apr-11 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Aug-10 Dec-10 Feb-11 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13

October 2013 22 Dashboard

Sector Gauge Commercial vehicles M&HCV continues to decline, LCV decline accentuates

Commercial vehicles: Volume snapshot Aug-13 Aug-12 YoY (%) Jul-13 MoM (%) FY14-YTD FY13-YTD Chg (%) Total Domestic CVs 57,118 66,747 -14.4 60,361 -5.4 285,651 314,766 -9.2 % of Total CVs 9791097094900 Total M&HCV 15,355 25,028 -38.6 18,524 -17.1 89,663 114,271 -21.5 % of Domestic CVs 2737031031360 Goods 11,742 21,084 -44.3 14,486 -18.9 69,439 92,334 -24.8 % of M&HCVs 76 84 0 78 0 77 81 0 Passenger 3,613 3,944 -8.4 4,038 -10.5 20,224 21,937 -7.8 % of M&HCVs 24 16 0 22 0 23 19 0 Total LCVs 41,763 41,719 0.1 41,837 -0.2 195,988 200,495 -2.2 % of Domestic CVs7363069069640 Goods 37,970 37,970 0.0 36,778 3.2 173,081 177,407 -2.4 % of LCVs 66 57 0 61 0 61 56 0 Passenger 3,793 3,749 1.2 5,059 -25.0 22,907 23,088 -0.8 % of LCVs 76080870 Exports 1,925 6,772 -71.6 2,073 -7.1 19,522 35,746 -45.4 % of Total CVs 390306100 Total CVs 59,043 73,519 -19.7 62,434 -5.4 305,173 350,512 -12.9 Source: SIAM/MOSL M&HCVs: Domestic volume - goods (units)

FY11 FY12 FY13 FY14 40,000

32,000 M&HCV volumes remains under pressure 24,000

16,000

8,000

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

M&HCVs: domestic volume - buses (units)

FY11 FY12 FY13 FY14 7,500

6,000

4,500

3,000

1,500

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

October 2013 23 Dashboard

M&HCVs: domestic market share, goods (%)

TataMotor AshokLeyla nd Ei cher 100%

75%

Tata Motors continue 50% to dominate M&HCV goods segment 25%

0% 10 11 12 10 10 11 11 11 11 11 12 12 12 12 12 13 13 13 13 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Oct Oct Oct Apr Jun Apr Jun Apr Jun Aug Dec Feb Aug Dec Feb Aug Dec Feb Aug

M&HCVs: domestic market share, buses (%)

Ta taMotor AshokLeyland Ei ch er Swa raj 100%

75%

50%

25%

0% 12 11 10 13 12 11 10 13 12 11 13 13 12 12 12 11 11 11 10 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Oct Oct Oct Jun Apr Jun Apr Jun Apr Aug Feb Dec Aug Feb Dec Aug Feb Dec Aug

LCVs: domestic volumes (units)

FY11 FY12 FY13 FY1 4 60,000

50,000 Weakness spreading to LCV segment as well 40,000

30,000

20,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

October 2013 24 Dashboard

LCVs: domestic market share (%)

TataMotor Piaggio M&M Oth e rs 100% Tata Motors dominates 75% the domestic LCV segment 50%

25%

0% 12 11 10 13 13 12 12 11 11 10 13 13 12 12 12 11 11 11 10 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Oct Oct Oct Apr Jun Apr Jun Apr Jun Aug Feb Aug Dec Feb Aug Dec Feb Aug Dec

Goods: segment-wise break-up (%)

LCVs <12T <16T <35T 100%

LCVs contribution 75% to CVs increased 50%

25%

0% 12 11 10 13 12 11 13 12 11 10 12 13 13 11 12 12 10 11 11 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Apr Ju n Apr Ju n Apr Ju n Oct Oct Oct Dec Feb Aug Dec Feb Aug Dec Feb Aug Aug

October 2013 25 Dashboard

News and Events Major developments in the auto sector September 2013

Bharat Benz Truck Daimler to launch three more models in India Daimler will launch three new models in the country, taking its total product portfolio to 12 by this year-end, as per a leading business daily.

The rollout of three new models is as per Daimler India's plan to have 18 models in a 15 month period since its launch in 2012.

At present, the company has about nine models across various tonnages, said V R V Sriprasad, Vice-President, Marketing, Sales and After Sales, Daimler India Commercial Vehicle.

"When we launched our vehicles in September 2012, we had said that we will come out with 18 platforms in a period of 14-15 months. We still stick to that", he told to media.

"We already have nine platforms. Next three platforms are in the pilot stage. These are for heavy duty trucks and tractor-trailers," he said.

During the last one year, the company has produced 5,000 models from its Chennai plant, he added. Besides, the company also plans to expand its dealership network in the current year.

According to Sriprasad, Daimler currently has presence in 16 states through its network of 52 dealerships. "By year-end, these 52 dealerships would go up to 70 plus. We have already issued Letters of Intent for 124 locations, which we expect to be ready by end of 2014", he said.

TVS Jupiter (110cc Scooter) TVS Motor launches Jupiter aimed at male buyers TVS's new scooter called as Jupiter is aimed at male buyers. It will be priced at INR44,200 (Ex-showroom Delhi).

TVS Motor already has Scooty Pep Plus for female drivers. Wego is for both men and women. The launch of Jupiter will help TVSM get into the 'exclusively men' segment of the scooter market.

"This (TVS Jupiter) will be the best in class product," asserted Venu Srinivasan, Chairman to the media at the time of launch. "Every quarter, you can expect a new product from TVS Motor going forward," he said even while admitting that "we have been slower in coming out with new products". He attributed the slowness to the company expending much of its time and energy in improving quality.

At present, the total scooter sale of the company is around 35,000 units. With the launch of Jupiter, Mr. Srinivsasn was hopeful that this number would go up to 50,000 units by the end of December.

October 2013 26 Dashboard

Suzuki Hayate Suzuki Motorcycle plans to expand production capacity by 25% Suzuki Motorcycle India Ltd (SMIL) is planning to expand its production capacity at its Gurgaon plant in Haryana by 25-30% from the current 500,000 units per annum.

Atul Gupta, Executive Vice-President, SMIL said, "We aim to sell around 500,000 units during this fiscal, growing by around 20% over last year. Currently, the production capacity at the Gurgaon plant is around 500,000 two-wheelers working in two shifts. We are planning to expand that by 25-30%." He, however, did not wish to comment on the investment planned for expansion. SMIL has also announced a plan of setting up a 500,000 units per annum plant in Rohtak in Haryana.

The company has a current product portfolio of five two-wheelers; two scooters (Access and Swish) and three bikes (GS 150R, Hayate, Slingshot Plus) apart from its superbikes. Mr Gupta informed that the company plans to launch two more models during next fiscal, both in the scooters and motorbike segments.

Mahindra Centuro Mahindra Two Wheelers enters Latin America, sets up assembly base in Guatemala After setting up assembly units in Sri Lanka and Bangladesh, Mahindra Two Wheelers announced its foray into Latin America by setting up a local assembly facility and 3S facility in Guatemala CIty and Managua, Nicaragua. The company rolled out its scooter Duro DZ, and its mass market motorcycles Pantero and Centuro last month.

Viren Popli, executive VP, Mahindra Two Wheelers said, "International business is a key component of our growth strategy and we are pleased to venture into the Latin American market which is amongst the fastest growing markets in the world. Mahindra is a recognised name in Latin America where it sells its range of vehicles and we have strong local partners who are committed to ensure customer satisfaction and volume growth in these markets."

With these launches Mahindra Two Wheelers have operations in 11 markets spread across South Asia, Africa, Middle East and Latin America, stated Sandeep Singh, Sr GM & head - Exports, Mahindra Two Wheelers.

October 2013 27 Disclosures This report is for personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form.

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