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Aman Vij

Auto Analyst

Astute Investment Management Pvt Ltd

Bulls Eye

Abhishek jain, Aman Vij

10 Dec 2015
Abhishek jain, Aman Vij

04 Feb 2016
Abhishek jain, Aman Vij

24 Nov 2015
Abhishek jain, Aman Vij

02 Jan 2016
Abhishek jain, Aman Vij

26 Nov 2015
Abhishek jain, Aman Vij

02 Feb 2016
Abhishek jain, Aman Vij

01 Feb 2016
Abhishek jain, Aman Vij

03 Mar 2016

Aman Vij

Investment Style:

Auto Analyst at IndiaNivesh Securities. Have 15 companies under coverage (12 in depth coverage - Force Motors, Atul Auto, Tata Motors, Bajaj Auto, TVS Motor, Hero Motocorp, Maruti Suzuki, M&M, Exide, Lumax Auto, Swaraj Engines, SKF India)

Organisation Details:

IndiaNivesh Securities Pvt Ltd (INSPL), is an young and growing stock broking company, promoted by a group of Chartered Accountants. It is a wholly owned subsidiary of IndiaNivesh Ltd, which is a listed company in the BSE. INSPL is registered with SEBI. The research team with more than 10 analysts with diverse academic backgrounds.

Within a short span of time, we have built a diversified customer profile consisting of leading financial institutions, high net worth individuals and a large retail clientele. There are about 40 own branches and 250 business associates. The average turnover on a daily basis exceeds INR 3000 million in Equity - Cash and F&O segments (and INR 8000 million combined with Commodities). Our current clientele includes 34 Institutions (26 DIIs and 8 FIIs) - like ICICI Prudential Mutual Fund, SBI Mutual Fund, IDBI Mutual Fund, LIC Nomura MF, LIC pension funds, United India Insurance, Future Generali India, SBI General Insurance, Punjab National Bank, Bank of India, Union Bank, Bank of Baroda, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, Central Bank of India, City Union Bank etc; and FIIs like Somerset, Bank One Mauritius, Kitara Capital etc.

Achievements & Awards:

 MBA from IIM Ranchi (Secured 99.46 percentile (top 1000) in CAT 2013)
 Cleared CFA level I in Dec 2013
 NTSE Scholar and JSTSE Scholar 2005
 Achieved 4th Rank in Students' Talent Promotion Examination 2004
 Obtained 6th Rank in Annual All-India UN Information Test 2004
 Secured 8th Rank in National Mathematical Olympiad 2003
 Stood 16th in NSTSE (National Science Talent Search Examination) 2003

Linkedin:

Research Reports :

Maruti Suzuki Target: Rs 4304.00
29 Jan 16

Numbers below estim...

Maruti Suzuki Q3FY16 numbers were below our estimates. Revenue increased by 19% YoY to Rs. 150.8 bn due to volume growth (up 16% YoY) and 3% YoY increase in realization to Rs. 3,94,366 (realization improved due to better product mix). Domestic volume increased by 16.2% YoY while export volume was up by 8.6% YoY. EBITDA margin expanded 172 bps YoY to 14.4% mainly due to favorable commodity prices and better product mix. During the quarter, RM cost (as % of sales) was down 204 bps YoY due to lower cost of materials consumed. The company believes that most of the benefits of the commodity cycle downturn have already been incurred. Other expenses decreased by 44 bps YoY to 14.1% while Employee expenses increased 36 bps YoY to 3.4% due to retrospective provisions on account of higher minimum wage rule by the government.

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IndiaNivesh Research

TVS Motor Target: Rs 235.00
29 Jan 16

Numbers below estim...

TVS Motors Q3FY16 numbers were below our estimates. Revenue increased by 11% YoY to Rs 29.39 bn (in line our expectation of Rs. 29.50 bn) due to 7% increase in volumes and 4% increase in average realization (on the back of better product mix). Reported PAT stood at Rs. 1077 mn, below our expectation of Rs. 1254 mn due to lower than expected EBITDA margins and exceptional loss of Rs 56.8 mn on account of retrospective enactment of the bonus act for the last fiscal year. The sales of TVS Jupiter and TVS Star City + continued its upward trend. During the quarter, the scooter segment grew by 25% while the motorcycle segment grew by 5%. 3 W sales declined by 7% due to lower exports on account of restricted availability of dollars in African market. During the quarter, the company launched the new moped TVS XL in Uttar Pradesh which was followed by launch in Southern region in January 2016. The company also launched New TVS Victor (in southern region) and TVS Apache RTR 200 in January 2016. The company has planned for capex of Rs 3.5bn in FY16. The company plans to grow faster than industry and achieve a market‐share of 16% in FY16 and 18% in FY17 in 2W segment

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IndiaNivesh Research

Precision Camsh Target: Rs 154.00
27 Jan 16

We recommend invest...

Through the IPO, Precision Camshaft Limited (PCL) proposes to offer 12.9 mn new shares and 9.15 mn shares for sale by promoter & promoter group (PPG).Currently PPG holds 66.7 mn shares (81.51%) and others holds 15.13 mn shares (18.49%). The company plans to utilize Rs. 2 bn raised from fresh issue for establishment of a machine shop for ductile iron camshafts. At the upper end of the price band on a fully diluted equity base, the company is trading at 28.2x FY15 EPS and 18.2x FY18e earnings. Although historically the company has demonstrated strong track record of growth, execution and competitive strength, the initial public offering (IPO) is priced at a premium which doesn’t leave much scope for gains for minority shareholders. According to us such premium is not justified given the ROE is expected to fall and remain close to 15% for next 3 years after 16% equity dilution due to IPO and also capacity expansion from IPO proceeds is not expected to add much to financials before FY18E. We believe buying in secondary market would be better option for investors. Thus we recommend investors to AVOID this issue.

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IndiaNivesh Research

Swaraj Engines Target: Rs 946.00
27 Jan 16

Numbers below estim...

SEL Q3FY16 numbers were below our estimates. The company witnessed 3% YoY increase in Revenue to Rs 1056 mn (way below our expectation of Rs 1493 mn) mainly on account of Company’s engines sales volume increasing by only 5.7% YoY to 12845 units vs our expectation of 18500 units. Average realization declined by 1.8% YoY at Rs. 81830 per unit. On operational front, EBITDA margins expanded 43 bps YoY to 12.1% due to lower employee and lower other expenses. Net profit was up 1% YoY to Rs 84 mn (vs. our expectation of Rs. 149 mn) due to lower than expected volumes. The company’s expansion plan to increase the capacity to 105000 engines per annum (current capacity is 75000 units) is in progress and is expected to be completed in the current calendar year

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IndiaNivesh Research

Force Motors Target: Rs 3780.00
25 Jan 16

Numbers below expec...

Force Motors Q3FY16 numbers were below our expectations in terms of EBITDA and PAT. Revenue was slightly above our expectations due to higher than expected contribution from Auto component segment while EBITDA margins (reported as 6.3% of sales) were below our expectation (which was 7.6% of sales) because of higher than expected raw material cost (reported as 72.6% of sales vs our expectation of 71.6% of sales) and higher other expenses (reported as 11.5% of sales vs our expectation of 10.8% of sales). The company had launched two new vehicles Force Motors Toofan Deluxe and Cruiser Deluxe during the quarter which would have led to higher promotional expense and thus other expense. Revenue increased by 45% YoY to Rs. 7.39 bn vs our expectation of Rs. 7.05 bn. Revenue from Auto component segment increased by 64% YoY to Rs 2.74 bn vs our estimate of Rs 2.39 bn. Volume increased by 29% YoY in Q3FY16 to 8402 units on account of 21% increase in LCV traveller sales and 21% increase in Tractor sales. EBITDA margin expanded 345 bps YoY to 6.3% due to better product mix (higher LCV and Auto component sales) and operating leverage in from Auto component segment. Raw Material cost (as % of sales) was up 242bps YoY to 72.6%. Other expenditure (as % of sales) was down by 263 bps YoY to 11.5% and Employee expense (as % of sales) was down by 342 bps YoY to 10.4%.

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IndiaNivesh Research

Lumax Auto Tech Target: Rs 448.00
23 Jan 16

Below our expectati...

LATL reported Q3 FY16 numbers below our expectation impacted by the floods in Chennai and one off of Rs. 15 mn due to change in Bonus act. The floods caused by the rain have impacted logistics and supply‐chain, resulting in disruption of OEM’s production, thereby hit the sales of LATL. Further the company’s dedicated manufacturing facility at Hobli, Karnataka, for supply of plastic moulded parts to Honda, also impacted by Rain. The company witnessed 3% YoY in revenue to Rs 2.18 bn, below our expectation of Rs 2.3 bn. As per management Q4FY16 would be a normal quarter and expecting double digit growth in top line.

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IndiaNivesh Research

Exide Ind Target: Rs 165.00
22 Jan 16

Mix set of numbers,...

Exide Industries Q3FY16 numbers were as per our expectations on EBITDA and PAT front while below our expectations in terms of revenue. Revenue stood at Rs. 15.21 bn (below our estimates of Rs. 16.51bn) due to lower than expected volume from OEM and inverter segment along with price cut. The demand from both Automotive OEM and Industrial battery remained subdued while growth in 2W automotive replacement sales (grew by 10% YoY) was better during the quarter. Revenue was lower than our expectation, fell by 2% YoY due to pass through of fall in lead prices to OEM’s and continued weakness in inverter sales. The key highlight of the quarter was strong expansion in operating margin due to efficient procurement of raw material and cost cutting measures. EBITDA margin expanded 380 bps YoY to 15.4% due to lower commodity prices and cost cutting measures. Raw material cost (including stock adjustment) contracted by 469 bps YoY and 224 bps QoQ to 62.4% in Q3FY16 (as a percentage of sales) due to fall in lead prices. Employee expenses (as a percentage of sales) increased by 134 bps YoY to 7.79% due to change in bonus policy whereas other expenses (as % of sales) down by 30 bps YoY. Average lead price for the quarter was Rs 135,000/Ton vs Rs 139,000/Ton QoQ,

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IndiaNivesh Research

06 Jan 16

Highlights of the month < Auto companies showed mixed performance in the month of Dec 2015. Passenger vehicle and CV recorded good growth while 3 Wheeler and 2 Wheeler remained under stress. Tractor sales showed muted performance. < In Passenger car segment, Maruti Suzuki sales remained strong led by growth in Compact segment. M&M showed muted performance with sales increasing by 1% YoY while Tata Motors PV sales declined by 33% YoY. Force Motors UV&SUV segment reported 13% YoY growth. < In two wheelers segment, Bajaj Auto and TVS Motor each showed 1% YoY and 5% growth respectively while Hero Motocorp showed 5% de-growth. Good scooter sales were able to somehow arrest overall decline in 2 wheeler sales while demand of motorcycles remained lackluster. < In 3 Wheeler segment TVS Motor de-grew by 20% YoY while Bajaj Auto de-grew by 4% YoY. Atul Auto sales grew by 8% YoY. < In the commercial vehicle segment, LCV showed early signs of revival while M&HCV segment continued to post good numbers. Tata Motors, Ashok Leyland, Eicher Motors reported good growth in M&HCV segment. In LCV segment Tata Motors and Ashok Leyland posted good growth of 11% and 18% respectively while Force Motors showed 23% YoY growth. Force Motors has been performing exceedingly well in this segment due to strong demand for Traveller class of vehicles from four segments namely Ambulances, Bus aggregators, School bus segment and Diversified segment (Firefighting and Rescue vehicles, Defense vehicles). < Tractor sales showed muted performance as Mahindra & Mahindra reported 3% growth while Escorts reported 9% de-growth in YoY sales. Force Motors Tractor segment reported 22% YoY growth (although on a very low base). Outlook The recent Supreme Court order to ban Diesel Vehicles over 2000cc in NCR region on trial basis will result in challenging times in the near term for the overall industry. But 7th pay commission should help increase sales as in the past whenever there was a hike in the salaries of government employees as per the recommendations of pay commissions, purchase of two-wheelers and passenger vehicles had witnessed a sharp pick up. Urban demand is likely to remain strong driven by lower fuel prices, moderation in interest rate and improving GDP. We believe faster reforms and clearance of various long pending projects could lead to higher employment and provide additional boost to auto demand outlook. The key impact of economic recovery could be more visible in CVs followed by passenger vehicles, three-wheelers and two-wheeler. In commercial vehicle (CV) segment volume would be driven by medium and heavy commercial vehicle segment in FY16 and FY17. PVs are likely to be driven by executive & midsize cars segment on the back of new launches in FY16 and FY17. Top Picks Bajaj Auto, Exide Industries, Force Motors, Lumax Auto Technologies, Swaraj Engines & Tata Motors.

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IndiaNivesh Research

04 Dec 15

The festival season provided good boost to the demand. Going forward 7th pay commission should help increase sales as in the past whenever there was a hike in the salaries of government employees as per the recommendations of pay commissions, purchase of two‐wheelers and passenger vehicles had witnessed a sharp pick up. Urban demand is likely to remain strong driven by lower fuel prices, moderation in interest rate and improving GDP. We believe faster reforms and clearance of various long pending projects could lead to higher employment and provide additional boost to auto demand outlook. The key impact of economic recovery could be more visible in CVs followed by passenger vehicles, three‐ wheelers and two‐wheeler. In commercial vehicle (CV) segment volume would be driven by medium and heavy commercial vehicle segment in FY16 and FY17. PVs are likely to be driven by executive & midsize cars segment on the back of new launches in FY16 and FY17.

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IndiaNivesh Research

TML-D Target: Rs 496.00
09 Nov 15

Numbers below estim...

Tata Motors reported Q2FY16 consolidated numbers below our estimates. Net revenue remain flat YoY and QoQ to Rs. 613 bn, below our estimate of 637bn dragged by fall in average realization because of sharp fall in china volume and unfavorable currency movement. Consolidated EBITDA margin contracted by 457 bps YoY and 371 bps QoQ due to lower than expected EBITDA margin of JLR. JLR margin stood at 12.2% vs our expectation of 14.1% due to lower China sales, poor geographical mix, unfavorable FX revaluation (primarily EUR payables) and expenses related to new launches/manufacturing ramp‐up. The company reported consolidated net loss of Rs. 4.1 bn due to lower than expected EBITDA margin and exceptional item of Rs. 24.9 bn on account of the vehicles damaged at Tianjin Port explosion in Jaguar Land Rover business. Adjusted PAT (excluding one off for Tianjin Port explosion and tax benefit stood at Rs. 10.46 bn, below our expectation of Rs 18.88 bn).

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IndiaNivesh Research

Lumax Auto Tech Target: Rs 448.00
09 Nov 15

PAT In line with ex...

LATL reported Q2 FY16 PAT number in line with our expectation. The company witnessed 4% YoY and 5% QoQ growth in revenue to Rs 2.30 bn, below our expectation of Rs 2.50 bn due to flat sales of Automotive lighting business, offset by strong sales of value added products like plastic moulded parts and Gear shifter lever. However EBITDA margin expanded by 75 bps YoY and 112 bps QoQ to 9.1 %( vs our expectation of 8.3%) due to lower raw material prices and better product mix. Net profit jumped by 21% YoY and 26% QoQ to Rs 104 mn (in line our expectation of Rs. 107 mn). We expect revenue to grow at a CAGR of 16% from FY15 ‐ FY17E on the back of growth in value added products like Plastic moulded part, LED lighting; Automatic gears shifter and Air intake systems. EBITDA margin is also expected to improve on the back of higher operating leverage and better product mix. We project the EBITDA margins at 8.8%/9.8% in FY16E/17E. EPS is expected to grow at a CAGR of 38% from FY15 ‐ FY17E. At CMP of Rs 304, LATL is trading at 9.4x FY16e and 6.8x FY17e EPS. We find current valuation attractive and maintain BUY rating on LATL with target price of Rs. 448 (10x FY17E EPS).

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IndiaNivesh Research

M&M Target: Rs 1280.00
09 Nov 15

In line our expect...

Mahindra & Mahindra’s reported Q2FY16 numbers were in line our expectation. Revenue decreased by 3% YoY to Rs. 91.2 bn (in line with our expectations of Rs. 90.7 bn) due to 10.4% fall in revenue, slightly offset by 8% increase in average realization. EBITDA margin stood at 11.3 %, below our expectation of 11.5% due to higher than expected RM cost despite inventory gain of 4.8 bn. Automotive sector EBIT Margin stood at 9.8% (+172 bps YoY, ‐51 bps QoQ), while Farm Sector EBIT Margin stood at 16.4% (+ 79 bps YoY, +131 bps QoQ. ). RM cost increased by 2 bps YoY (up 52 bps QoQ) to 72.3% (as a percentage of sales.) The employee cost increased by 40 bps YoY while other expenses decreased 93 bps YoY. Company’s reported net profit was down by 2.4% YoY Rs 9.236 bn. PAT was above our expectation because of higher than expected other income(Rs 4.85 bn vs our expectation of Rs 3.47 bn).

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IndiaNivesh Research

Atul Auto Target: Rs 486.00
03 Nov 15

Margins above expec...

Atul Auto Q2FY16 numbers were above our expectation due to strong expansion in operating margin. Revenue increased by 8% YoY to Rs. 1.42 bn in line with our expectation of Rs. 1.43 bn. Average realization increased by 1% YoY to Rs. 118,910. Volume increased by 8% YoY in Q2FY16 to 11925 units. However positive surpise came on EBITDA front, margin expanded 344 bps YoY (up 421bps QoQ) to 15.3% due to operational efficiencies and lower input cost. Raw Material cost (as % of sales) was down 244bps YoY to 73.6%. During Q2FY16, the company got ~150 bps benefit due to lower commodity price. Other expenditure (as % of sales) was down 95 bps YoY to 5% and Employee expense (as % of sales) was up by 34 bps YoY to 6.6%. The company expects oveall 100 bps margin expansion in FY16 over FY15

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IndiaNivesh Research

Exide Ind Target: Rs 200.00
29 Oct 15

Above our expectati...

Exide Industries reported Q2FY16 numbers above our expectations. Revenue stood at Rs. 17.36 bn (above our estimates of Rs. 15.85bn) due to higher than expected revenue from 2W replacement market. The demand from both Automotive OEM and Industrial battery remained subdued while growth in automotive replacement sales (especially in 2W) was slightly better during the quarter. Though revenue was higher than our expectation, it fell by 1% YoY due to pass through of fall in lead prices to OEM’s and Industrial segment and continued weakens in home inverter sales. The key highlight of the quarter was strong expansion in operating margin due to efficient procurement of raw material and cost cutting measures. EBITDA margin expanded by 302 bps YoY to 14.8% and management expect, these margins to sutain at this level in near to medium term. Raw material cost (including stock adjustment) contracted by 256 bps YoY and 138 bps QoQ to 64.6% in Q2FY16 (as a percentage of sales) due to fall in raw lead prices. Reported PAT jumped by 24% YoY to Rs. 1.56 bn (above our expectation of Rs. 1.41 bn) due to better than expected sales and margin expansion.

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IndiaNivesh Research

Maruti Suzuki Target: Rs 4304.00
28 Oct 15

Numbers in line wit...

Maruti Suzuki Q2FY16 numbers were in line with our estimates. Net revenue increased by 13% YoY to Rs. 135.7bn due to volume growth (up 10% YoY) and 3% YoY increase in realization to Rs. 3,84,191 (realization improved due to better product mix). Domestic volume increased by 12% YoY while export volume was down by 12% YoY. According to the company the volumes would have been higher if not for the missed shipments in September. EBITDA margin expanded 393 bps YoY to 16.3% mainly due to favorable commodity prices and better product mix. During the quarter, RM cost (as % of sales) was down 455 bps YoY and 56 bps QoQ due to lower than expected cost of materials consumed and better product mix. The company believes that most of the benefits of the commodity cycle downturn have already been incurred and there might be slight increase in Raw material prices in next quarter with anti‐ dumping duty being imposed on Steel. Other expenses increased by 59 bps YoY and 103 bps QoQ to 15.9% due to higher promotional expenses (up by Rs 1.46 bn) while Employee expenses remained flat YoY at 3.1%. PAT was in line with our estimates at Rs 12.256 bn

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IndiaNivesh Research