Sector Update INDIA AUTOMOBILES

18 March 2016 India Automobiles: Model Watch

UV, motorcycle sales zoom on new launches PV sales for the month of Feb’16 rose 2% YoY as UV volumes jumped 21% YoY on a slew of new launches in the compact UV segment (Creta, KUV100, TUV300). Car sales however fell 4% amid a slowdown in the compact segment (-5% YoY). In 2Ws, REPORT AUTHORS motorcycle sales grew 11% off a low base and new 125-150cc segment launches. Scooters grew 18% YoY as Honda’s new Mihir Jhaveri +91 22 6766 3459 Gujarat plant went on-stream in January. Picks: HMCL, EIM, AL. [email protected] Siddharth Vora  UVs surge 21%; momentum to improve further: PV sales for Feb’16 +91 22 6766 3435 grew 2% YoY aided by a 21% growth in UV volumes, while car volumes [email protected] declined (-4% YoY) for the second month in a row (Jan’16: -1 YoY) after 14 months of growth. The sub-4.4m UV segment grew 39% YoY/4% Model-wise market share change YoY/MoM TTM share Feb-16 YoY MoM Segment MoM during Feb’16 with Hyundai Creta leading the pack at 8.2k units, (%) share (%) (bps) (bps) followed by Mahindra Bolero at 7.4k units (-13% YoY/21% MoM) and Mini Maruti Ertiga at 5.6k units (+3% YoY/-3% MoM). Mahindra’s new Alto 49.6 43.8 -1,044 -322 Wagon R 31.7 29.2 -100 132 compact UVs KUV100/TUV300 sold 4.5k/2.6k units. KWID 5.9 15.5 1,553 241 Compact The mood has swung in favour of UVs amid a slew of new launches, Swift 31.1 32.6 -4 401 Grand i10 19.8 18.8 424 -146 while cars are seeing a lull – a situation paradoxically opposite six Celerio 13.2 10.8 -49 -371 months ago. We expect a continued upward spiral in UV volumes over Super Compact* the near term with the launch of Maruti Vitara Brezza. Dzire 37.4 33.7 -562 62 Elite i20 20.8 19.8 -388 168  Baleno 6.1 13.3 166 -163 Car volumes decline further: In the mini PV segment, production Jazz 6.0 6.5 651 -234 ramp-up in Renault KWID (Feb’16: 7.5k units) hit sales of Maruti UVs Alto/WagonR/Hyundai Eon (-17%/-1%/-23% YoY). In the super Creta 9.7 15.2 1,515 201 Bolero 14.7 13.8 -521 148 compact segment, production-led constraints continued for Maruti, Ertiga 10.4 10.4 -163 -118 making it difficult to decipher the actual demand for its models. During Scorpio 8.6 7.5 -310 -43 the month, Swift sold 15.5k units (-21% YoY/ +10% MoM), Dzire 17.4k Innova 10.1 9.1 -237 245 TUV300 3.7 4.9 487 -274 units (passenger + tour; +2% YoY/-1% MoM) and Baleno 6.9k units, Scooters while Hyundai Elite i20 did 10.2k units (-1% YoY/+6% MoM). Activa 49.3 48.2 26 4 Maestro 10.1 9.8 -175 -117 Jupiter 10.5 10.9 162 113  Motorcycle sales buoyed by new launches: Motorcycle sales grew by Motorcycles 11% YoY (-2% MoM), albeit off a low base. The 75-110cc segment 75-110cc (59% of total sales) grew by 3% YoY/-1% MoM helped by Hero’s trio, Splendor 37.2 37.5 24 -152 Passion 17.3 16.2 -343 46 Splendor, Passion and HF Deluxe which grew by 6% YoY (-2% MoM) to HF Deluxe 16.9 21.1 539 11 378k units. Bajaj’s combined sales for CT100 and Platina grew by 9% CT100 8.5 8.5 713 206 YoY (+15% MoM) to 59k units. 110-125cc CB Shine 45.7 41.4 -1,172 -556 Glamour 37.8 43.2 817 450 The 125-150cc segment has seen a revival (+12% YoY/+13% MoM) with Discover 7.8 7.3 359 -6 the launch of new Avenger 150 (18.2k units) and the re-launch of CB 125cc-150cc Unicorn (7.7k units). The 250cc and above segment grew by 59% YoY Pulsar 49.2 36.2 -378 -445 FZ 22.7 19.9 -346 -346 helped by a 61% growth in volumes. Avenger 150 5.3 19.7 1,969 42 150cc-250cc  Scooters up 18% YoY: Commencement of operations at Honda’s new Apache 32.4 30.0 -109 -55 CB Hornet 160R 0.8 20.2 2,016 92 plant in Gujarat led to a 10% YoY growth in sales, pushing up Avenger 220 9.7 16.6 1,046 -150 overall scooter growth to 18% YoY during February. Honda’s Activa Pulsar (150-200cc) 13.0 9.7 -169 -57 grew 18% YoY to 210k units. Hero’s Maestro (42.8k units)/Duet (31.5k *Baleno, Jazz, Elite i20, Xcent Amaze, Figo Aspire, Zest grouped under Super Compact | Note: Unless otherwise specified, all units) are showing good momentum too. TVS Jupiter did 47.8k units. exhibits in this report have the same source – SIAM, RCML Research. 

This report has been prepared by Religare Capital Markets Limited or one of its affiliates. For analyst certification and other important disclosures, please refer to the Disclosure and Disclaimer section at the end of this report. Analysts employed by non-US affiliates are not registered with FINRA regulation and may not be subject to FINRA/NYSE restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account. India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

Sales and share trends Passenger cars

Fig 1 - Sales trend in Mini segment Fig 2 - Volume share change in Mini segment (FY16TD)

(units) Wagon R Alto Eon KWID (bps) Mini segment 35,000 900 641 30,000 700 25,000 500 20,000 300 102 15,000 100

10,000 (100) (94) 5,000 (300) (234) 0 (500) (414)

(700) Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jan-15 Jun-15 Jan-16 Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15

May-14 May-15 Others Eon Alto Wagon R KWID

Sales of Alto/Eon declined by 17% /23% YoY (-1%/+2% MoM) with Renault KWID gaining ground and doing 7.5k units in the month. WagonR sales were more resilient, declining by 1% YoY (+12% MoM). Overall, mini segment sales grew 3% YoY due to the entry of Renault KWID.

Fig 3 - Sales trend in Compact segment Fig 4 - Volume share change in Compact segment (FY16TD) Swift i10 Figo (units) (bps) Compact segment Celerio Ritz Grand i10 20,000 600 488 500 400 290 15,000 300 200 100 14 22 10,000 0 (100) (5) (73) (39) 5,000 (200) (129) (91) (300) (202) (276) (400) 0 i10 Ritz Brio Figo Polo Beat Swift Indica Others Celerio Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jan-15 Jun-15 Jan-16 Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 Grand i10 May-14 May-15

Constrained by capacity, Maruti models continue to show a decline post launch of Baleno; Swift/Celerio declined 21%/24% YoY (+10%/-28% MoM). Growth for Hyundai’s Grand i10 also slowed to 8.9k units, +2% YoY/-10% MoM.

Fig 5 - Sales trend in Super Compact* segment Fig 6 - Vol. share change in Super Compact* (FY16TD)

(units) Dzire Amaze (R) Xcent (R) (units) (bps) Super Compact segment 26,000 Elite i20(R) Baleno (R ) Jazz (R ) 15,000 1,000 725 739 751 24,000 13,000 800 22,000 11,000 600 20,000 366 9,000 400 18,000 200 7,000 4 16,000 0 5,000 14,000 (200) (81) 12,000 3,000 (400) 10,000 1,000 (302) (408) (600) (454) Xcent Amaze Dzire Zest Etios Figo Jazz Baleno i20 Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jan-15 Jun-15 Jan-16 Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 May-14 May-15 Sedan Aspire

*Jazz, Elite i20, Amaze, Xcent, Zest, Figo grouped under Super Compact for better comparison Helped by new launches, the super compact segment has grown by 19% YoY. Sales of recently-launched Maruti Baleno have fallen to 6.9k units from 10.6k units in December. Media reports claim 100,000 bookings and up to 8 months of waiting period

18 March 2016 Page 2 of 13

India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

for Baleno, which clearly indicate the capacity constraints currently faced by MSIL. Hyundai’s Elite i20 sold 10.2k units, slightly below its last twelve-month average of 10.8k units.

Honda’s recent facelift of Amaze failed to create excitement with sales at 4.1k units (-43% YoY/ +17% MoM). Dzire sales have also declined 4% YoY to 13.9k units while the tour variant continues to do 3.5k units a month. Honda Jazz and Hyundai Xcent did 3.4k units and 4.2k units for the month.

Utility vehicles

Fig 7 - Sales trend in UV (rural/semi-urban) segment Fig 8 - Volume share change in UV segment (FY16TD)

(units) Bolero Scorpio Innova (bps) UVs segment 1,200 1,066 12,000 Mobilio Ertiga

10,000 800 412 413 8,000 400 173 6,000 8 0 4,000 (91) (77) (163) (72) (400) (84) (380) (136) 2,000 (391) (394) (284) (800) 0 Creta Ertiga Sumo Bolero Duster Others Innova Jul-14 Jul-15 Scorpio Xuv500 Terrano S-Cross Oct-14 Oct-15 Apr-14 Apr-15 TUV300 Jun-14 Jan-15 Jun-15 Jan-16 KUV100 Fortuner Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 Ecosport May-15 May-14

Fig 9 - Sales trend in UV (urban) segment

S-Cross Creta (units) Xuv500 Duster 10,000 Ford Ecosport TUV300 KUV100 8,000

6,000

4,000

2,000

0 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jun-15 Feb-15 Feb-16 Dec-15 Dec-14 Aug-14 Aug-15

Hyundai’s Creta sold the highest UVs in a month at 8.2k units (highest monthly sales as capacity ramps up), higher than Mahindra Bolero’s 7.5k units. The newly-launched Mahindra KUV100 did 4.5k units and has garnered 21,000 bookings. Mahindra TUV300 sold 2.6k units during February.

Maruti S-Cross sold 2.5k units in February, improving slightly post the January-end price revision. Maruti’s Ertiga continues to perform solidly, selling 5.6k units (+3% YoY/-3% MoM). Overall, the sub-4.4m UV segment grew +40% YoY/4% MoM helped by new launches.

18 March 2016 Page 3 of 13

India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

Motorcycles

Fig 10 - Sales trend in Bikes segment: 75-110cc Fig 11 - Volume share change in Bikes: 75-110cc (FY16TD) Passion Splendor HF Deluxe (bps) Motorcycle (75-110cc) (units) CT100 (R) Dream (R) Discover (R) (units) 1,000 868 Star City (R) 250,000 80,000 800 600 200,000 60,000 400 131 141 161 150,000 200 40,000 0 100,000 (200) (79) (201) 20,000 (400) (278) 50,000 (378) (364) (600)

0 0 CT Dream Others Platina SPORT Passion Discover Splendor Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jun-15 HF Deluxe Feb-15 Feb-16 Dec-14 Dec-15 Aug-14 Aug-15

The 75-110cc motorcycle segment increased by 3% YoY (-1% MoM). Hero’s HF Deluxe grew 39% YoY (-1% MoM) to 106.6k units while the updated Splendor grew by 4% YoY (-5% MoM) to 189.3k units. Passion declined by 15% YoY to 81.7k units. Bajaj’s CT100 saw a growth of 31% MoM to 42.9k units, lower than its YTD monthly average of ~48k units. Bajaj’s two offerings in the entry segment – Platina and CT100 – sold 59.2k units, +9% YoY/+15% MoM.

Fig 12 - Sales trend in Bikes segment: 110-125cc Fig 13 - Volume share change in Bikes: 110-125cc (FY16TD)

(units) Glamour CB Shine Discover (bps) Motorcycle (110-125cc) 600 100,000 415 400 80,000 200 51 87 60,000 17 0 40,000 (200)

20,000 (400)

0 (600) (570) (800) Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jun-15 Feb-15 Feb-16 Dec-14 Dec-15 Aug-14 Aug-15 CB Shine Others Phoenix Discover Glamour

In the 110-125cc segment, Glamour continues to do solid sales at 60.9k units, (50% YoY/-3% MoM) and exceeded the segment leader CB Shine for the first time which did 58.4k units (-6% YoY/ -24% MoM). The revised Discover line up did 10.3k units (+137% YoY/-14% MoM)

Fig 14 - Sales trend in Bikes segment: 125-150cc Fig 15 - Volume share change in Bikes: 125-150cc (FY16TD) Pulsar Xtreme (R) (units) (units) (bps) Motorcycle (125-150cc) CB Unicorn (R) FZ (R) 1,500 1,233 60,000 30,000 Avenger 150 1,000 816 50,000 25,000 500 234 20,000 89 103 40,000 68 15,000 0 30,000 10,000 (500) (386) 20,000 5,000 (1,000) (838) 10,000 0 (1,500) (1,319) FZ SZ R15 CB Hunk CB Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jun-15 Feb-15 Feb-16 Dec-14 Dec-15 Aug-14 Aug-15 Pulsar Others Trigger Unicorn Discover

The 125-150cc segment is seeing a revival of sorts with the launch of Bajaj’s Avenger 150, V15 and Honda Unicorn (re-launch) helping the segment grow 12% YoY/13% MoM. Avenger 150 did 18.2k units (+16% MoM) while Honda Unicorn did 7.7k units in its first month of re-launch.

18 March 2016 Page 4 of 13

India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

Fig 16 - Sales trend in Bikes segment: 150-250cc Fig 17 - Volume share change in Bikes: 150-250cc (FY16TD) Pulsar Apache (bps) (units) Motorcycle (150-250cc) Karizma Avenger 1,500 1,179 30,000 Gixxer CB Unicorn 160 1,000 25,000 CB Hornet 160R 405 443 500 20,000 123 9 15,000 0 (7) 10,000 (500) (598) (497) 5,000 (1,000) (1,057) 0 (1,500) KTM Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Pulsar Jun-14 Jan-15 Jun-15 Jan-16 Gixxer Mar-15 Feb-15 Feb-16 Others Nov-15 Dec-15 Nov-14 Dec-14 Aug-14 Sep-14 Aug-15 Sep-15 May-15 May-14 Apache 160 160R Karizma

Avenger CB Hornet CB Unicorn

The 150cc-250cc segment grew 31% YoY/+6% MoM led by the new Avenger 220 (12k units) and Apache (21.6k units). Honda’s newly launched CB Hornet 160R sold 14.5k units and replaced Unicorn 160. Newly launched Avenger cruiser series from Bajaj sold 30.2k units combined for both 150cc and 220cc variants.

Fig 18 - Sales trend for Royal Enfield Fig 19 - Brand-wise breakup of Royal Enfield for the month

(units) Royal Enfield RE Brandwise breakup (%) 50,000 Classic 500 Bullet 500 6% Continental 2% 45,000 Thunderbird GT 500 0% Bullet Electra Bullet 350 Twinspark 40,000 1% Twinspark 13% 14% 35,000

30,000 Thunderbird 25,000 350 8% Classic 350 20,000 56% Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Jan-15 Jun-14 Jun-15 Jan-16 Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 May-14 May-15

RE motorcycle volumes (47.6k units, 61% YoY/ 1% MoM) continue to grow as capacity normalises around the targeted 50k per month. Classic-350 clocked the highest growth at +82% YoY (-2% MoM) to 26.9k units. Sales of all bikes in the >250cc segment grew by 59% YoY (+52% YTD) in Feb’16.

Scooters

Fig 20 - Sales trend in Scooter segment Fig 21 - Volume share change in Scooters (FY16TD) Activa Maestro (R) (bps) (units) Pleasure (R) Dio (R) (units) Scooters segment 300 269 Access (R) Jupiter (R) 222 227 260,000 72,000 Fascino (R) Duet (R) 200 230,000 62,000 102 100 52,000 24 200,000 42,000 0 170,000 (5) 32,000 (100) (43) (96) (86) (77) 140,000 (122) (107) 22,000 (200) 110,000 12,000 (300) (236) 80,000 2,000 Dio Ray Alpha Wego Pep + Activa Others Jupiter Access Fascino Maestro Pleasure Jul-14 Jul-15 Jan-15 Jan-16 Mar-15 Nov-14 Nov-15 Sep-14 Sep-15 Hero Duet May-14 May-15

Scooter volumes grew by 18% YoY with Honda showing a growth of 10% YoY in its combined scooter portfolio after the Gujarat plant came on stream in January, with growing by 18% YoY to 210k units. /Aviator was down 51%/13%

18 March 2016 Page 5 of 13

India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

YoY. The second spot in scooters is being closely competed by (42.9k units, flat YoY) and TVS Jupiter (47.7k units, 38.2% YoY). Hero Duet managed 31.5k units (+30% MoM) and should improve further as it becomes available pan India.

Segment-wise market share

Passenger vehicles

Fig 22 - Brand-wise market share in Mini cars Fig 23 - Brand-wise market share in Compact cars

FY16TD FY16TD

KWID Others Beat Others Brio Eon 6% 0% Polo 2% 13% Swift Wagon R 4% 1% 13% 32% 31% Ritz 3% Indica 5% Figo 3% i10 Celerio 4% Grand i10 14% Alto 20% 49%

Fig 24 - Brand-wise market share in Super Compact cars Fig 25 - Brand-wise market share in UVs

FY16TD FY16TD Fortuner Terrano 2% Others Etios Sedan Jazz Baleno 2% 14% Bolero 5% 6% Dzire Sumo 7% 2% 14% Zest 38% KUV100 Scorpio 4% 2% 8% S-Cross i20 4% Innova 20% Creta 10% 11% TUV300 Figo Aspire Ecosport 4% Amaze 3% 7% Duster Xuv500 Ertiga Xcent 9% 3% 6% 11% 8%

18 March 2016 Page 6 of 13

India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

Two-wheelers

Fig 26 - Brand-wise market share in Bikes: 75-110cc Fig 27 - Brand-wise market share in Bikes: 110-125cc

FY16TD FY16TD SPORT 2% Others CT Passion Phoenix Others Platina 7% 9% 17% 3% 6% 4% Discover Glamour Discover 8% 38% 1%

Dream 5%

HF Deluxe Splendor 17% 38% CB Shine 45%

Source: SIAM, RCML research Source: SIAM, RCML research

Fig 28 - Brand-wise market share in Bikes: 125-150cc Fig 29 - Brand-wise market share in Bikes: 150-250cc

FY16TD FY16TD CB Unicorn 1% CB Hornet Hunk Others CB Trigger Gixxer KTM Others 160R 2% 0% 4% Discover 16% 11% 3% 0% Pulsar 2% FZ 22% 23% CB Unicorn 160 Avenger 17% SZ 10% 2% R15 Karizma 4% Pulsar 1% 50% Apache 32%

Source: SIAM, RCML research Source: SIAM, RCML research

Fig 30 - Brand-wise market share in Scooters

Fascino FY16TD Access Ray 3% 2% 4% Dio Hero Duet Others Pep + 4% 2% 6% 2% Activa Wego 49% 1%

Alpha 2% Pleasure Jupiter Maestro 4% 11% 10%

Source: SIAM, RCML research

18 March 2016 Page 7 of 13

India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

Recent and upcoming launches

Fig 31 - Tata Tiago prices to be unveiled on 28 Mar’16 Fig 32 - Maruti Vitara Brezza prices (starting Rs 699,000*) were announced on 8 Mar’16

Source: Company Source: Company, RCML Research

Fig 33 - Suzuki unveiled new Access 125 scooter on 15 Fig 34 - prices were announced on Mar’16; prices start at Rs 53,887* 16 Mar’16; priced at Rs 155,545 (Ex-showroom Mumbai)

Source: Company Source: Company

Fig 35 - Bajaj V15 prices were announced in March; prices Fig 36 - Honda launched refreshed Amaze on 3 Mar’16; starts at Rs 62,000* prices start at Rs 529,000*

Source: Company Source: Company

Note: These photographs have been sourced from various websites; actual products may vary.

*All prices Ex- showroom Delhi unless mentioned

18 March 2016 Page 8 of 13

India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES

Fig 37 - Monthly sales and share (Domestic) Monthly Data (units) YTD Data Market share % Feb-16 Feb -15 YoY% Jan-16 MoM% FY15 FY16 YoY% FY15TD FY16TD PV 234,154 230,281 1.7 232,016 0.9 2,355,991 2,532,736 7.5 Cars 164,469 171,703 (4.2) 168,303 (2.3) 1,701,278 1,849,749 8.7 72.2 73.0 Maruti 87,149 90,728 (3.9) 87,757 (0.7) 887,798 975,359 9.9 52.2 52.7 Hyundai 32,442 37,163 (12.7) 31,398 3.3 379,466 386,542 1.9 22.3 20.9 Honda Cars 12,713 15,065 (15.6) 16,613 (23.5) 138,070 166,398 20.5 8.1 9.0 Tata Motors 9,284 11,637 (20.2) 9,350 (0.7) 96,394 100,932 4.7 5.7 5.5 UVs 54,089 44,808 20.7 50,122 7.9 498,614 522,412 4.8 21.2 20.6 MM 22,612 17,805 27.0 21,034 7.5 186,163 196,888 5.8 37.3 37.7 TTMT 1,626 1,357 19.8 1,321 23.1 21,311 16,628 (22.0) 4.3 3.2 Hyundai 8,274 142 5,726.8 6,618 25.0 1,677 56,581 3,273.9 0.3 10.8 Honda Cars 307 1,837 (83.3) 522 (41.2) 28,296 8,231 (70.9) 5.7 1.6 Toyota 5,867 6,680 (12.2) 4,179 40.4 72,960 65,517 (10.2) 14.6 12.5 MSIL 8,484 5,863 44.7 8,114 4.6 61,980 80,522 29.9 12.4 15.4 Renault 994 2,997 (66.8) 1,777 (44.1) 35,149 25,359 (27.9) 7.0 4.9 GM 982 1,618 (39.3) 1,272 (22.8) 19,773 13,772 (30.3) 4.0 2.6 Ford 3,048 4,270 (28.6) 3,527 (13.6) 48,535 36,588 (24.6) 9.7 7.0 Vans 15,596 13,770 13.3 13,591 14.8 156,099 160,575 2.9 6.6 6.3 2-Wheeler 1,362,219 1,208,084 12.8 1,362,881 (0.0) 14,652,377 14,988,197 2.3 Motorcycles 859,624 774,122 11.0 872,325 (1.5) 9,866,492 9,753,708 (1.1) HMCL 448,772 407,809 10.0 460,066 (2.5) 5,217,931 5,106,753 (2.1) 52.9 52.4 BJAUT 151,141 115,840 30.5 140,853 7.3 1,636,118 1,722,169 5.3 16.6 17.7 TVS 51,952 46,418 11.9 58,150 (10.7) 613,088 648,433 5.8 6.2 6.6 HMSI 122,108 139,233 (12.3) 125,772 (2.9) 1,605,622 1,373,089 (14.5) 16.3 14.1 Scooter 436,163 370,527 17.7 436,707 (0.1) 4,105,019 4,581,640 11.6 HMCL 88,156 67,442 30.7 86,649 1.7 693,332 731,967 5.6 16.9 16.0 TVS 64,815 54,655 18.6 60,163 7.7 627,602 707,884 12.8 15.3 15.5 HMSI 229,316 208,573 9.9 235,967 (2.8) 2,263,397 2,544,872 12.4 55.1 55.5 Mopeds 66,432 63,435 4.7 53,849 23.4 680,866 652,849 (4.1) 3-Wheeler 44,956 34,032 32.1 43,677 2.9 489,398 486,950 (0.5) Passenger 35,554 25,762 38.0 35,213 1.0 398,858 399,803 0.2 BJAUT 22,011 14,570 51.1 20,973 4.9 217,104 226,850 4.5 54.4 56.7 M&M 2,178 2,303 (5.4) 2,531 (13.9) 31,357 32,847 4.8 7.9 8.2 Piaggio 8,194 5,487 49.3 8,021 2.2 108,497 100,423 (7.4) 27.2 25.1 Goods 9,402 8,270 13.7 8,464 11.1 90,540 87,147 (3.7) LCVs 33,324 30,382 9.7 33,150 0.5 345,619 340,603 (1.5) Passenger 3,832 3,429 11.8 3,193 20.0 38,611 42,011 8.8 Goods 29,492 26,953 9.4 29,957 (1.6) 307,008 298,592 (2.7) MM 13,178 11,417 15.4 13,541 (2.7) 133,678 141,246 5.7 43.5 47.3 Piaggio 424 540 (21.5) 428 (0.9) 5,694 4,278 (24.9) 1.9 1.4 AL 2,503 2,434 2.8 2,405 4.1 22,664 24,766 9.3 7.4 8.3 TTMT 12,461 11,707 6.4 12,705 (1.9) 136,287 117,011 (14.1) 44.4 39.2 MHCVs 29,035 21,616 34.3 28,533 1.8 203,039 265,236 30.6 Bus 4,312 3,401 26.8 3,414 26.3 31,086 38,012 22.3 Trucks 24,723 18,215 35.7 25,119 (1.6) 171,953 227,224 32.1 TTMT 13,664 9,889 38.2 13,609 0.4 98,626 125,586 27.3 57.4 55.3 AL 7,487 5,720 30.9 8,348 (10.3) 46,047 69,394 50.7 26.8 30.5 Eicher 2,708 1,789 51.4 2,243 20.7 18,831 23,094 22.6 11.0 10.2 Source: SIAM, RCML Research

18 March 2016 Page 9 of 13

India Automobiles: Model Watch Sector Update INDIA UV, motorcycle sales zoom on new launches AUTOMOBILES

Fig 38 - Financial snapshot CMP Target MCap Sales (Rs mn) Sales Growth (%) EBITDA (Rs mn) PAT (Rs mn) FDEPS (Rs) EPS Growth (%) Company Reco (Rs) (Rs) (Rs mn) FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E Ashok Leyland 95 100 253,430 Buy 192,837 239,550 269,687 42.2 24.2 12.6 20,117 26,248 29,912 9,744 14,645 17,542 3.4 5.1 6.2 316.7 50.3 19.8 2,270 2,750 656,834 Buy 218,860 253,405 299,012 1.3 15.8 18.0 45,720 52,241 61,315 35,759 41,079 47,650 123.6 142.0 164.7 15.8 14.9 16.0 Eicher Motor Ltd* 18,036 22,300 488,781 Buy 147,352 168,684 205,563 68.6 14.5 21.9 22,233 27,796 35,630 12,595 16,157 21,362 464.8 596.2 788.3 104.7 28.3 32.2 Hero Motocorp 2,821 3,300 563,374 Buy 281,321 311,259 352,194 2.0 10.6 13.2 43,371 46,862 54,122 31,357 35,306 41,589 157.0 176.8 208.3 23.4 12.6 17.8 TVS Motors 284 270 134,829 Hold 111,479 129,395 147,477 10.4 16.1 14.0 7,915 10,999 13,568 4,576 6,813 8,663 9.6 14.3 18.2 31.6 48.9 27.2 M&M 1,198 1,300 707,086 Hold 413,924 478,617 542,308 6.3 15.6 13.3 49,848 59,073 66,777 36,307 43,045 48,371 59.1 70.1 78.8 21.6 18.6 12.4 Maruti Suzuki 3,635 4,700 1,050,318 Buy 590,953 689,951 800,377 18.3 16.8 16.0 93,046 108,119 124,080 49,102 61,485 75,238 162.5 203.5 249.1 32.3 25.2 22.4 Tata Motors 361 470 1,199,325 Buy 2,682,666 3,304,360 3,845,594 2.1 23.2 16.4 371,139 478,468 576,378 123,546 173,990 221,797 36.4 51.2 65.3 (17.4) 40.8 27.5

Source: Company, RCML Research

Fig 39 - Key ratios & Valuations EBITDA Margin (%) PAT Margin (%) ROE (%) ROCE (%) P/E (x) EV/EBITDA (x) P/BV (x) Company FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E Ashok Leyland 10.4 11.0 11.1 5.1 6.1 6.5 17.7 22.4 22.1 12.5 16.8 17.8 27.8 18.5 15.5 13.2 10.1 8.9 4.6 3.8 3.1 Bajaj Auto 20.9 20.6 20.5 16.3 16.2 15.9 30.8 30.0 29.4 30.5 29.8 29.2 17.3 15.1 13.0 11.9 10.4 8.8 4.8 4.1 3.5 Eicher Motor Ltd* 15.1 16.5 17.3 8.5 9.6 10.4 41.5 38.2 36.6 42.0 40.0 37.7 38.8 30.3 22.9 21.2 17.0 13.2 13.8 9.9 7.2 Hero Motocorp 15.4 15.1 15.4 11.1 11.3 11.8 42.9 39.6 38.5 38.8 35.4 34.0 18.0 16.0 13.5 11.8 10.9 9.5 7.0 5.8 4.7 TVS Motors 7.1 8.5 9.2 4.1 5.3 5.9 24.9 29.1 28.4 16.9 21.2 22.0 30.2 20.3 15.9 18.3 13.2 10.7 6.6 5.1 3.9 M&M 12.0 12.3 12.3 8.8 9.0 8.9 17.7 18.2 17.7 12.9 13.8 13.5 14.6 12.3 10.9 11.0 9.3 8.2 2.3 2.0 1.7 Maruti Suzuki 15.7 15.7 15.5 8.3 8.9 9.4 19.1 20.2 20.7 19.2 20.3 20.8 22.4 17.9 14.6 10.5 9.0 7.9 3.9 3.3 2.8 Tata Motors 13.8 14.5 15.0 4.6 5.3 5.8 18.7 20.8 21.7 15.3 19.4 20.9 9.9 7.0 5.5 4.1 3.1 2.6 1.6 1.3 1.1

Source: Company, RCML Research; CMP as of 17 Mar’16; *FY16 is a 15-month year for Eicher Motors

Page of 18 March 2016 10 13

RESEARCH TEAM

ANALYST SECTOR EMAIL TELEPHONE

Varun Lohchab Consumer, Strategy [email protected] +91 22 6766 3470 (Head – India Research)

Mihir Jhaveri Auto, Auto Ancillaries, Cement [email protected] +91 22 6766 3459

Siddharth Vora Auto, Auto Ancillaries, Cement [email protected] +91 22 6766 3435

Misal Singh Capital Goods, Infrastructure, Utilities [email protected] +91 22 6766 3466

Prashant Tiwari Capital Goods, Infrastructure, Utilities [email protected] +91 22 6766 3485

Manish Poddar Consumer [email protected] +91 22 6766 3468

Premal Kamdar Consumer [email protected] +91 22 6766 3469

Rohit Ahuja Energy [email protected] +91 22 6766 3437

Akshay Mane Energy [email protected] +91 22 6766 3438

Parag Jariwala, CFA Financials [email protected] +91 22 6766 3442

Vikesh Mehta Financials [email protected] +91 22 6766 3474

Rumit Dugar IT, Telecom, Media [email protected] +91 22 6766 3444

Saumya Shrivastava IT, Telecom, Media [email protected] +91 22 6766 3445

Pritesh Jani Metals [email protected] +91 22 6766 3467

Arun Baid Mid-caps [email protected] +91 22 6766 3446

Praful Bohra Pharmaceuticals [email protected] +91 22 6766 3463

Aarti Rao Pharmaceuticals [email protected] +91 22 6766 3436

Arun Aggarwal Real Estate [email protected] +91 22 6766 3440

Jay Shankar Economics & Strategy [email protected] +91 11 3912 5109

Rahul Agrawal Economics & Strategy [email protected] +91 22 6766 3433

18 March 2016 Page 11 of 13

RESEARCH DISCLAIMER

Important Disclosures

This report was prepared, approved, published and distributed by a Religare Capital Markets (“RCM”) Information and opinions presented in this report were obtained or derived from sources that RCM group company located outside of the United States (a “non-US Group Company”). This report is believes to be reliable, but RCM makes no representations or warranty, express or implied, as to their distributed in the U.S. by Enclave Capital LLC (“Enclave Capital”), a U.S. registered broker dealer, on accuracy or completeness or correctness. RCM accepts no liability for loss arising from the use of the behalf of RCM only to major U.S. institutional investors (as defined in Rule 15a-6 under the U.S. material presented in this report, except that this exclusion of liability does not apply to the extent that Securities Exchange Act of 1934 (the “Exchange Act”)) pursuant to the exemption in Rule 15a-6 and liability arises under specific statutes or regulations applicable to RCM. This report is not to be relied any transaction effected by a U.S. customer in the securities described in this report must be effected upon in substitution for the exercise of independent judgment. RCM may have issued, and may in the through Enclave Capital. Neither the report nor any analyst who prepared or approved the report is future issue, a trading call regarding this security. Trading calls are short term trading opportunities subject to U.S. legal requirements or the Financial Industry Regulatory Authority, Inc. (“FINRA”) or based on market events and catalysts, while stock ratings reflect investment recommendations based other regulatory requirements pertaining to research reports or research analysts. No non-US Group on expected absolute return over a 12-month period as defined in the disclosure section. Because Company is registered as a broker-dealer under the Exchange Act or is a member of the Financial trading calls and stock ratings reflect different assumptions and analytical methods, trading calls may Industry Regulatory Authority, Inc. or any other U.S. self-regulatory organization. differ directionally from the stock rating.

Subject to any applicable laws and regulations at any given time, non-US Group Companies, their Past performance should not be taken as an indication or guarantee of future performance, and no affiliates or companies or individuals connected with RCM (together, “Connected Companies”) may representation or warranty, express or implied, is made regarding future performance. Information, make investment decisions that are inconsistent with the recommendations or views expressed in this opinions and estimates contained in this report reflect a judgment of its original date of publication by report and may have long or short positions in, may from time to time purchase or sell (as principal or RCM and are subject to change without notice. The price, value of and income from any of the agent) or have a material interest in any of the securities mentioned or related securities or may have securities or financial instruments mentioned in this report can fall as well as rise. The value of or have had a business or financial relationship with, or may provide or have provided investment securities and financial instruments is subject to exchange rate fluctuation that may have a positive or banking, capital markets and/or other services to, the entities referred to herein, their advisors and/or adverse effect on the price or income of such securities or financial instruments. Investors in any other connected parties. As a result, recipients of this report should be aware that Connected securities such as ADR’s, the values of which are influenced by currency volatility, effectively assume Companies may have a conflict of interest that could affect the objectivity of this report. this risk.

This report is only for distribution to investment professionals and institutional investors. This report is distributed in India by Religare Capital Markets Limited, which is a registered intermediary regulated by the Securities and Exchange Board of India. In Singapore, it is being Analyst Certification distributed (i) by Religare Capital Markets (Singapore) Pte. Limited (“RCMS”) (Co. Reg. No. 200902065N) which is a holder of a capital markets services licence and an exempt financial adviser Each of the analysts identified in this report certifies, with respect to the companies or securities that in Singapore and (ii) solely to persons who qualify as ““institutional investors” or “accredited investors” the individual analyses, that (1) the views expressed in this report reflect his or her personal views as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”). about all of the subject companies and securities and (2) no part of his or her compensation was, is Pursuant to regulations 33, 34, 35 and 36 of the Financial Advisers Regulations (the “FAR”), sections or will be directly or indirectly dependent on the specific recommendations or views expressed in this 25, 27 and 36 of the Financial Advisers Act, Chapter 110 of Singapore shall not apply to RCMS when report. providing any financial advisory service to an accredited investor, or “overseas investor” (as defined in regulation 36 of the FAR). Persons in Singapore should contact RCMS in respect of any matters Analysts and strategists are paid in part by reference to the profitability of RCM. arising from, or in connection with this publication/communication. In Hong Kong, it is being distributed by Religare Capital Markets (Hong Kong) Limited (“RCM HK”), which is licensed and Stock Ratings are defined as follows regulated by the Securities and Futures Commission, Hong Kong. In Australia, it is being distributed by RCMHK which is approved under ASIC Class Orders. In Sri Lanka, it is being distributed by Recommendation Interpretation (Recommendation structure changed with effect from March 1, 2009) Bartleet Religare Securities, which is licensed under Securities and Exchange Commission of Sri Lanka. If you wish to enter into a transaction please contact the RCM entity in your home jurisdiction Recommendation Expected absolute returns (%) over 12 months unless governing law provides otherwise. In jurisdictions where RCM is not registered or licensed to Buy More than 15% trade in securities, transactions will only be effected in accordance with applicable securities Hold Between 15% and –5% legislation which may vary from one jurisdiction to another and may require that the trade be made in Sell Less than –5% accordance with applicable exemptions from registration or licensing requirements.

Expected absolute returns are based on the share price at market close unless otherwise stated. Religare Capital Markets does and seeks to do business with companies covered in our research Stock recommendations are based on absolute upside (downside) and have a 12-month horizon. Our report. As a result, investors should be aware that the firm may have a conflict of interest that could target price represents the fair value of the stock based upon the analyst’s discretion. We note that affect the objectivity of research produced by Religare Capital Markets. Investors should consider our future price fluctuations could lead to a temporary mismatch between upside/downside for a stock research as only a single factor in making their investment decision. and our recommendation. Any reference to a third party research material or any other report contained in this report represents Stock Ratings Distribution the respective research organization's estimates and views and does not represent the views of RCM and RCM, its officers, employees do not accept any liability or responsibility whatsoever with respect As of 1 March 2016, out of 185 rated stocks in the RCM coverage universe, 108 have BUY ratings to its accuracy or correctness and RCM has included such reports or made reference to such reports (including 5 that have been investment banking clients in the last 12 months), 55 are rated HOLD and in good faith. This report may provide the addresses of, or contain hyperlinks to websites. Except to 22 are rated SELL. the extent to which the report refers to material on RCM’s own website, RCM takes no responsibility whatsoever for the contents therein. Such addresses or hyperlinks (including addresses or hyperlinks Research Conflict Management Policy to RCM’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or RCM research has been published in accordance with our conflict management policy, which is following such link through this report or RCM’s website shall be at your own risk. available here. Other Disclosures by Religare Capital Markets Limited under SEBI (Research Analysts) Disclaimers Regulations, 2014 with reference to the subject companies(s) covered in this report:

This report is not directed to, or intended for distribution to or use by, any person or entity who is a Religare Capital Markets Limited (“RCML”) is engaged in the business of Institutional Stock Broking citizen or resident of or located in any locality, state, country or other jurisdiction where such and Investment Banking. RCML is a member of the National Stock Exchange of India Limited and distribution, publication, availability or use would be contrary to law or regulation or which would BSE Limited and is also a SEBI-registered Merchant Banker. RCML is a subsidiary of Religare subject RCM to any registration or licensing requirement within such jurisdiction(s). This report is Enterprises Limited which has its various subsidiaries engaged in the businesses of commodity strictly confidential and is being furnished to you solely for your information. All material presented in broking, stock broking, lending, asset management, life insurance, health insurance, wealth this report, unless specifically indicated otherwise, is under copyright to RCM. None of the material, management, portfolio management, etc. RCML has set up subsidiaries in Singapore, Hong Kong its content, or any copy of such material or content, may be altered in any way, transmitted, copied or and Sri Lanka to render stock broking and investment banking services in respective jurisdictions. reproduced (in whole or in part) or redistributed in any form to any other party, without the prior express written permission of RCM. All trademarks, service marks and logos used in this report are RCML’s activities were neither suspended nor has it defaulted with any stock exchange authority with trademarks or service marks or registered trademarks or service marks of RCM or its affiliates, unless whom it has been registered in the last five years. RCML has not been debarred from doing business specifically mentioned otherwise. by any Stock Exchange / SEBI or any other authority. No disciplinary action has been taken by any regulatory authority against RCML impacting its equity research analysis activities. The information, tools and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or RCML or its research analyst or his/her relatives do not have any financial interest in the subject to buy or subscribe for securities or other financial instruments. RCM has not taken any steps to company. ensure that the securities referred to in this report are suitable for any particular investor. RCM will not treat recipients as its customers by virtue of their receiving the report. The investments or RCML or its research analyst or his/her relatives do not have actual/beneficial ownership of one per services contained or referred to in this report may not be suitable for you and it is recommended that cent or more securities in the subject company at the end of the month immediately preceding the you consult an independent investment advisor if you are in doubt about such investments or date of publication of this research report. investment services. In addition, nothing in this report constitutes investment, legal, accounting or tax advice or a representation that any investment or strategy is suitable or appropriate to your individual circumstances or otherwise constitutes a personal recommendation to you.

18 March 2016 Page 12 of 13

RESEARCH DISCLAIMER

Research analyst or his/her relatives do not have any material conflict of interest at the time of RCML may from time to time solicit or perform investment banking services for the company(ies) publication of this report. mentioned in this report.

Research analyst has not received any compensation from the subject company in the past 12 RCML or its associates may have material conflict of interest at the time of publication of this months. research report.

RCML may have managed or co-managed a public offering of securities for the subject company in RCML’s associates may have financial interest in the subject company. RCML’s associates may have the past 12 months. received compensation from the subject company in the past 12 months. RCML’s associates may hold actual / beneficial ownership of one per cent or more securities in the subject company at the RCML may have received compensation from the subject company in the past 12 months. end of the month immediately preceding the date of publication of this research report.

Research analyst has not served as an officer, director or employee of the subject company. RCM has obtained registration as Research Entity under SEBI (Research Analysts) Regulations, 2014. RCML or its research analyst is not engaged in any market making activities for the subject company.

18 March 2016 Page 13 of 13