India Equity Research |Automobiles © February 8, 2016 Sector Update Emkay
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Auto Expo 2016
Ashok Leyland HOLD . The 2016 Auto Expo lacked the usual enthusiasm/euphoria for the event of this scale, possibly as most OEMs including Maruti, M&M, Bajaj, TVS, Honda had launched some CMP Target Price of their important products ahead of the Expo (in the past six months) 89 84 . In two-wheeler space, Bajaj, RE & HD were conspicuous by their absence; Hero showcased new 110cc/200cc engines to be mounted on existing product lines; TVS Bajaj Auto HOLD which had already launched Victor/Apache 200cc ahead of the Expo, showcased the CMP Target Price Akula, to be based upon the BMW G310R 2,355 2,650 . In the Car segment, noteworthy amongst small car launches are the Renualt Kwid with a 1.0L/AMT variants and Tata’s Zica which could likely create a stir in the market; the Eicher Motors ACCUMULATE compact sedan market would heat up with VW Ameo and Chevrolet’s Essentia CMP Target Price . In the UV space, Maruti’s compact UV Brezza stole the limelight and the sub-compact 18,385 19,175 UV Ignis to be launched later looks promising as well. Honda’s BRV and Tata’s Nexon could both provide stiff competition to peers in their respective categories Hero Motocorp BUY CMP Target Price Two wheelers: Important launches (much) ahead of the Expo including Bajaj V, TVS Victor & 2,568 2,975 Apache 200, Honda’s Hornet & Livo, Hero’s Maestro Edge and Duet and Royal Enfield’s Himalayan amongst others, already stole some thunder from the event. Premium bike makers Bajaj Auto, Royal Enfield and Harley Davidson chose to stay away from the Expo. Honda’s Mahindra & Mahindra ACCUMULATE Navi, a 110cc ungeared mini-bike, priced at ~Rs 39,500 in our view is an important launch, CMP Target Price trying to create a new category and could redefine the segment if customers take a liking. Hero 1,202 1,360 showcased two long awaited new indigenously developed engines – 110cc/200cc to be mounted on the Splendor/Xtreme. While BMW separately showcased the G310R (only BMW branded) developed by TVS, TVS seems to launching a faired version of the same branded Maruti Suzuki India BUY as TVS Akula. CMP Target Price Passenger Cars: Car segment again with a backdrop of important launches like Maruti’s 3,733 4,900 Baleno, Renault’s Kwid, Ford’s Figo/Aspire and Honda’s Jazz over the past six-odd months was left with a little less thunder. Important launches/showcases which caught our attention Tata Motors BUY were addition to the already successful Kwid franchise with a 1.0L and AMT variants and Tata CMP Target Price Motors Zica, which looks the best in class and should definitely improve footfalls at Tata Motors showrooms. Competition in compact sedan space (Dzire/Amaze/Xcent) will be heating up with 324 505 exciting new launches of the VW Ameo and the Chevrolet Essentia – which means that now almost every car maker has an offering in the segment. TVS Motor REDUCE Utility Vehicles: Competition in the compact SUV space will continue to soar. Most important CMP Target Price launch in the expo in our view was the Maruti’s Vitara Brezza to be launched with a 1.3L diesel 287 275 engine as a sub 4m product (petrol variant likely to come later) – not really competing with the Hyundai’s Creta, Brezza is more comparable to the Ford’s Ecosport, but nonetheless, is an important launch for Maruti Suzuki. Another important product showcased by Maruti Suzuki was the sub-compact SUV - the Ignis. Expected to be launched in FY17, the Ignis should address an important segment of micro-SUVs and definitely aid Maruti’s market share. Tata Motor’s compact SUV Nexon to be launch in end-FY17 too seems to be another good offering from Tata’s stable. Also showcased were the long awaited Honda’s BRV, a 7-seater premium cross over vehicle expected to be launched in FY17. Tata Motor’s is set to replace its Aria with the Hexa which again looks like a very sincere effort from the company to establish themselves in the MPV Kaushal Maroo segment. The new-gen Toyota’s Innova Crysta gives a refreshing new look to the most popular [email protected] large MPV in the country and should help it break out from the ‘commercial vehicle’ mould and +91 22 66121252 find more takers for personal use. Venil Shah [email protected] +91 22 66121334
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Automobiles India Equity Research | Sector Update
Passenger Vehicles
Hatchbacks Renault Kwid 1.0L
Exhibit 1: Looking to expand the range of Kwid!
. The new 1000cc variant of Kwid, the popular small car in the market gets a 1.0 litre DOHC smart control efficiency engine, which offers good drivability on city roads and highway . The Kwid Easy-R AT, the AMT model of the Kwid gets 5-speed Automated Manual Transmission . The Climber variant of Kwid comes with short overhangs, high ground clearance, big bumpers and side protective moldings, giving it the traits of an off-roader . Kwid Racer houses 18-inch alloy wheels, low- profile tyres, honed aerodynamics, bucket seats and roll cage . Likely launch in H2CY16
Source: Autoblogs, Emkay Research
Tata Zica
Exhibit 2: Can it create a stir in the market?
. Tata Zica (soon to be re-branded) follows the ‘IMPACT’ design theme. The Zica measures 3,746 mm, 1,647 mm and 1,535 mm in length, width and height resp., and its wheelbase is 2,400 mm long. . The Tata Zica is powered by two engines; a 1.05-liter Revotorq 3-cylinder diesel engine producing 70 PS and 140 Nm, and a 1.2-liter Revotron 3-cylinder engine generating 85 PS and 114 Nm of peak torque. . Inside the hatchback is a Harman touch- screen infotainment system. . The car will be launched immediately after it is rebranded.
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 2
Automobiles India Equity Research | Sector Update
Volkwagen Polo GTI
Exhibit 3: The most powerful hatchback in the country!
. Powered by its four cylinder, turbocharged 1.8 TSI motor, the Polo GTI will be India's most powerful hatchback with a power of 192 PS and 250 Nm of torque. . The GTI will only be sold as a 3-door version (initially), unlike the regular 5-door Polo. . The car will be priced at a premium, likely in the range of Rs 15-18 lakhs as the 1.8 TSI engine is not manufactured in India and will be imported from Germany . Its performance is even better than executive sedans like the VW Jetta, Skoda Octavia and Toyota Corolla . Likely launch in September
Source: Autoblogs, Emkay Research
Compact Sedans Volkswagen Ameo
Exhibit 4: A bit late to the compact sedan party?
. “Ameo” is the first compact sedan made exclusively for the Indian car market by the German Carmaker Volkswagen . The VW Ameo comes with the same petrol and diesel engine options that are on the Polo. The petrol engine throws power of 74 PS and torque of 110 Nm from a 1.2-litre unit, while the diesel Ameo gets a 1.5-litre unit and makes 90 PS of power and 230 Nm of torque . Both these engines are mated to a 5-speed MT. The diesel trim will also come mated to a 7-speed DSG. . The Ameo will compete against the likes of the Amaze, Swift DZire, Xcent, Zest and Figo Aspire. . Likely launch in the next 6 months
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 3
Automobiles India Equity Research | Sector Update
Chevrolet Beat Essentia
Exhibit 5: Based on the Beat platform, the Essentia does exude style!
. General Motors unveiled a brand new compact sedan, the Chevrolet Essentia . The Beat Essentia sedan features the 1.2-litre STEC II engine that is good for 77bhp and 107Nm, the diesel mill is the 1.0L XSDE unit 56bhp and 142.5Nm. . The Essentia will take the Maruti Suzuki Swift Dzire, the Honda Amaze, the Ford Figo Aspire, the Honda Amaze, the Hyundai Xcent and the Volkswagen Ameo and will be placed in the sub 4-meter compact sedan segment. . Likely launch in FY17
Source: Autoblogs, Emkay Research
Compact SUVs Maruti Vitara Brezza
Exhibit 6: A strong style statement!
. Vitara Brezza marks MSIL’s entry in the highly-competitive sub-compact SUV segment, with Ford EcoSport and Mahindra TUV300 for company . The Vitara Brezza will be available only with the 1.3-litre diesel engine as of now and will be offered in a total of six variants - LDi, LDi (O), VDi, VDi (O), ZDi and ZDi+ . A petrol engine is likely be added later in 2016 . Likely launch Mar-Apr 2016
Source: Autoblogs, Emkay Research
Exhibit 7: A quick comparison Maruti Vitara Brezza Hyundai Creta Ford EcoSport Renault Duster Type 1.3 L Diesel 1.4 L Diesel 1.6 L Diesel 1.5 L Diesel 1.5 L Diesel Displacement 1248 cc 1,396 cc 1,582cc 1,498 cc 1,461cc Power 89 bhp 89 bhp 126 bhp 99 bhp 84/108 bhp Torque 200 Nm 224 Nm 259 Nm 205 Nm 200/248 Nm Transmission 5-speed manual 6-speed manual 6-speed MT/ 6-speed AT 5-speed manual 5-speed/6-speed MT Mileage 25.9 kmpl 21.38 kmpl 19.67/17.01 kmpl 22.7 kmpl 19.87/19.64 kmpl
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 4
Automobiles India Equity Research | Sector Update
Maruti Ignis
Exhibit 8: Maruti's premium mini-SUV piques interest! . The Ignis shares the same lightweight compact car platform that the Baleno is based on. . The Ignis gets a ground clearance of 180 mm with a 2,435 mm wheelbase. It measures 3,700mm in length, 1,660mm in width and 1,595 mm in height. . The Maruti Suzuki Ignis is expected to get a 1.2-litre petrol mill that makes 84.3 PS and 115 Nm of torque. . The Ignis may also come with the Fiat sourced 1.3-litre 4-cylinder diesel mill that makes 90PS and 190Nm. Both engines are mated to the 5-speed manual gearbox . The Ignis would be sold through the Nexa channel and will be launched in the festive season later this year . Likely launch: Aug-Oct 2016
Source: Autoblogs, Emkay Research
Tata Nexon
Exhibit 9: Management says near-ready production model…
. This compact SUV has been developed on the X1 platform, and has been positioned between the Zest and the Safari Storme. . The Tata Nexon shares its exterior and interior design elements, and the features with the Zica hatchback. The Nexon is powered by a 1.3-litre Multijet diesel engine, along with a 1.2-litre, three-cylinder turbocharged petrol engine . Transmission options are: five-speed manual and the F-Tronic AMT on the diesel. The Nexon is Tata's entry in the highly competitive compact SUV segment in India . Likley launch: Unknown
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 5
Automobiles India Equity Research | Sector Update
SUVs/Crossover Honda BRV
Exhibit 10: Long awaited launch finally happens!
. Honda showcased the long awaited 7-seater premium crossover vehicle named the BR-V . On the outside, the BR-V has characteristics of a proper urban SUV. The front of the vehicle has large, sharp cut, sweptback headlights and a grille which is decorated with broad chrome fixtures. . Inside, the BR-V will be powered by a 119bhp 1.5 litre I-VTEC petrol engine with churns 145Nm of torque. There is an i-DTEC diesel engine option as well which is a 1.5 litre unit and produces 99bhp and 200Nm of torque. . Likely launch date: Apr’16
Source: Autoblogs, Emkay Research, Cardekho.com
MPVs Tata Hexa
Exhibit 11: Will the updated Aria turnaround the fortunes?
. The Tata Hexa crossover was showcased and will replace the Aria . Although the Hexa still has glimpses of the Aria, the new and updated styling does give the car a much more aggressive look. . The Tata Hexa gets the same 2.2-litre engine that came on the Aria. The engine produces 154 PS of power and 400 Nm of torque. The new Hexa comes mated to a 6-speed manual gearbox which is mated to both a rear wheel drive and an all-wheel-drive drivetrain.
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 6
Automobiles India Equity Research | Sector Update
Toyota Innova Crysta
Exhibit 12: Looks a definite upgrade to the Innova! . The Crysta is the second generation Innova. At 4,735 mm length, 1,830 mm width and 1,795 mm height, the Crysta is significantly larger than the current Innova, implying more space in the cabin . Aesthetically, the Crysta looks quite premium than the current car and is clearly positioned towards the personal usage rather than fleet operators . The Crysta will come with 2 engine options probably the new 2.8-litre GD engine and a 2.0-litre 4-cylinder VVT-i petrol engine. . For the first time, the Innova brand comes with an automatic transmission option. Both petrol and diesel versions come with an option of 6- speed automatic unit. . The new Toyota Innova Crysta Launch Date (Expected) August-September, 2016
Source: Autoblogs, Emkay Research
Chevrolet Spin
Exhibit 13: Could it provide turn Chevy’s fortunes in India?
. Chevrolet Spin, the 7-seat MPV measures 4,360 mm, 1,730 mm and 1,680 mm in length, width and height respectively, and has a wheelbase of 2,520 mm. . The engine has not been confirmed by GM yet, but it is reported that it will be powered by a Fiat-sourced 1.3-liter diesel unit and this engine will be paired to a 5-speed manual transmission . Spin will compete with Honda Mobilio and Maruti Suzuki Ertiga in the MPV segment . Pricing is likely to start from Rs 7 lakhs . Likely launch in 2017
Source: Autoblogs, Emkay Research
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Automobiles India Equity Research | Sector Update
Two Wheelers
Executive Motorcycles Hero Splendor iSmart 110cc
Exhibit 14: Hero’s first completely in-house developed vehicle
. The Hero Splendor iSmart 110 is the first new motorcycle developed completely in-house by Hero Motocorp. The Splendor iSmart 110 is powered by an air cooled single cylinder 4- stroke 1100cc engine, which can generate 8.9 bhp at 7,500 rpm and 9 Nm at 5,500rpm. The engine comes mated to a four-speed gear box. . The bike is supported by a conventional tubular double cradle frame which employs telescopic front forks and twin rear coil spring shock absorbers. . The bike is expected to be launched shortly.
Source: Autoblogs, Emkay Research
Premium Motorcycles TVS Akula 310
Exhibit 15: The concept product looks amazing !
. TVS has unveiled its Akula 310 concept motorcycle - the first full faired bike offering from TVS Motors . TVS hasn’t revealed any power output details but engine would be a 300cc, single-cylinder motor. The engine has been heavily tuned according to TVS and has a forced air fed air box for high rev peak capability. Power is transmitted via a 6 speed gearbox. . As per the media sources, TVS is likely to start manufacturing the production version of the Akula 310 by the end of the year
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 8
Automobiles India Equity Research | Sector Update
BMW G310R
Exhibit 16: Developed by BMW, manufactured by TVS
. The new G310R has been built from ground up and draws its design inspiration from the BMW Motorrad family such as the S1000 R. . The G 310 R will draw power from the newly developed 313cc liquid-cooled single-cylinder engine with four valves and two overhead camshafts together with electronic fuel injection. The engine generates 34 hp of power at 9,500 rpm and 28Nm of torque at 7,500 rpm. . BMW G 310 R is likely to be priced under Rs 2 lakh in India when launched later this year
Source: Autoblogs, Emkay Research
UM Renegade
Exhibit 17: Will the Renegade give Enfields and Avengers a run for their money?
. US-based UM Motorcycles has launched its Renegade range of cruiser motorcycles, priced up to Rs 1.69 lakh (ex-showroom Delhi). . The Renegade Sport S is priced at Rs 1.49 lakh, Renegade Commando at Rs 1.59 lakh and the Renegade Classic at Rs 1.69 lakh. . The UM Renegade range are powered by a 279cc, single-cylinder, water-cooled engine that develops a maximum power output of 25bhp at 8500rpm and 21.8Nm of peak torque at 7000rpm mated to a 6-speed gearbox.
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 9
Automobiles India Equity Research | Sector Update
Hero Xtreme 200
Exhibit 18: Can it change Hero's positioning in the premium segment
. The Hero Xtreme 200 is powered by an all new liquid cooled 200cc single cylinder engine that pumps out a maximum power output of 18.5 bhp @8500rpm and 17.2 Nm of torque @6000rpm. The new engine sends its power to the rear wheels through a 5-speed gearbox. . The Xtreme 200 S features telescopic forks up front and a mono-shock at the rear. The Xtreme 200 S also features front and rear disc brakes. Other interesting features of the new Hero bike include LED lights, dual tone graphics on the body and the seat. . There is no clarity on the timeline for the launch yet and the bike will compete with the newly launched TVS Apache 200 4V and 200cc Bajaj Pulsars and KTM Duke 200.
Source: Autoblogs, Emkay Research
Hero HX250
Exhibit 19: HX250 moves closer to production after being first shown in Auto Expo’14
. Hero MotoCorp has revealed the pre- production variant of their 250cc motorcycle, HX250 . The bike is powered by a 249cc single- cylinder air-cooled fuel-injected engine which produces an impressive 31 bhp and 26 Nm of torque. Transmission is via a 6-speed unit. With light kerb weight of 136 kg, the HX250 can go 0-60 kmph in 2.7 seconds. . The Hero HX250 is likely to go for sale during the festive season, with a likely pricing of around Rs 1.5 lakhs.
Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 10
Automobiles India Equity Research | Sector Update
Scooters Aprilia SR150
Exhibit 20: A sporty scooter offering!
. Piaggio India has unveiled the sport themed automatic sport scooterbike, the Aprilia SR 150. The model is a blend of motorbikes and scooter and sports a 150cc engine. . Aprilia SR 150 wears 14-inch tyres, skimpy bodywork and a deeply European ethos. . Likely launch - August 2016
Source: Autoblogs, Emkay Research
Yamaha NMAX
Exhibit 21: Response in Auto Expo to aid India production decision!
. The Nmax is a full sized scooter that features a 155cc single cylinder engine that uses Yamaha’s Blue Core technology. . The engine throws a power output that is rivalling 150cc motorcycle 15.5 PS and 14.4 Nm. Power is transmitted to the rear-wheel via a CVT transmission . The styling of the Yamaha NMAX is similar to a maxi scooter and features a European style step thru design. . In its current form, the NMAX is sold in Indonesia at price equivalent to ~Rs 1.3 lakhs . The company has not shared any plans about bringing this maxi scooter to India yet.
Source: Autoblogs, Emkay Research
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Automobiles India Equity Research | Sector Update
New Category – Mini-Bikes Honda Navi
Exhibit 22: A completely different product – A cross between the scooter and the bike!
. Honda has launched its all-new Navi at the Auto Expo at Rs 39,500 (ex-showroom, Delhi). . A product designed and developed completely in India, the Navi is a mini-bike, targeted at young, urban buyers looking for a fun ride. . The Navi is powered by a110cc, liquid-cooled single cylinder engine that produces a peak power output of 8 PS and peak torque produced is 8.96Nm. Power is sent to the rear wheel via a CVT transmission, and the top speed is 81 kmph
Source: Autoblogs, Emkay Research
Exhibit 23: Valuation Summary Target EPS (Rs) PE (x) PB (x) EV-EBITDA (x) ROCE (%) ROE (%) Price Mkt Cap Price FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 Company Name (Rs) (Rs bn) Reco (Rs) Automobiles 15.7 12.4 4.0 3.3 8.7 7.1 31.7 33.7 25.9 26.9 Ashok Leyland 89 254 Hold 84 4.7 6.3 18.9 14.2 4.7 4.0 10.9 8.5 28.7 36.6 26.9 30.7 Bajaj Auto 2,355 681 Hold 2,650 146.6 196.6 16.1 12.0 4.5 3.7 9.5 7.9 44.2 49.1 30.6 33.9 Eicher Motors 18,385 499 Accumulate 19,175 583.5 736.1 31.5 25.0 11.1 8.4 17.3 13.5 45.4 45.6 40.1 38.4 Hero Motocorp 2,568 513 Buy 2,975 171.8 198.0 14.9 13.0 5.8 4.9 9.5 8.1 58.6 57.5 41.7 41.0 M&M 1,202 746 Accumulate 1,360 61.9 71.8 12.3 10.6 1.9 1.7 8.4 7.1 19.5 20.3 16.6 17.1 Maruti Suzuki 3,733 1,128 Buy 4,900 204.8 268.3 18.2 13.9 3.5 2.9 8.4 6.9 27.9 30.9 20.7 23.0 Tata Motors 324 1,057 Buy 505 47.6 59.3 6.8 5.5 1.2 1.0 3.2 2.6 17.7 18.1 19.6 20.0 TVS Motor 287 136 Reduce 275 14.6 18.1 19.7 15.8 5.6 4.4 12.2 9.9 30.8 34.3 31.3 31.2
Auto Ancillaries 19.7 15.7 5.7 4.6 9.9 8.2 29.5 31.7 28.6 29.4 Amara Raja 870 149 Accumulate 950 35.1 43.4 24.8 20.1 5.8 4.7 15.1 12.7 35.6 36.4 25.6 26.0 Apollo Tyres 137 70 Hold 160 18.6 20.6 7.4 6.6 1.0 0.9 5.0 4.4 16.2 15.7 14.9 14.5 Exide Industries 127 108 Hold 145 7.8 9.1 14.4 12.3 3.6 3.2 9.1 7.7 20.9 22.7 14.5 15.7 Motherson Sumi 272 359 Buy 315 12.6 16.2 21.5 16.7 7.1 5.7 8.9 7.2 32.1 35.6 36.7 37.8 Source: Autoblogs, Emkay Research
Emkay Research | February 8, 2016 12
Automobiles India Equity Research | Sector Update
Emkay Rating Distribution BUY Expected total return (%) (Stock price appreciation and dividend yield) of over 25% within the next 12-18 months. ACCUMULATE Expected total return (%) (Stock price appreciation and dividend yield) of over 10% within the next 12-18 months. HOLD Expected total return (%) (Stock price appreciation and dividend yield) of upto 10% within the next 12-18 months. REDUCE Expected total return (%) (Stock price depreciation) of upto (-) 10% within the next 12-18 months. SELL The stock is believed to underperform the broad market indices or its related universe within the next 12-18 months.
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