Automobiles & Auto Components share price target

Hero Motocorp (HMCL) volume improved 11% MoM (up 10% YoY) to 394k units, its highest since festive month sales in October 2022. With exports remaining subdued and HMCL being a relatively weak player in the scooter space, we believe this performance was commendable.

Indian automotive tyre companies, on an average, witnessed 10% increase in gross profit/kg (GP) QoQ in Q3FY23 to long term mean plus one standard deviation levels of ~Rs84/kg. This was the first quarter post a gap of four quarters in which there was a combination of blended price hikes and reduction in raw material basket (RMB) costing.

Retail sales in the automobile industry saw a 11.2% YoY rise to 18,26,669 units in January 2023. Retail sales of two-wheelers and cars were up 11.6% YoY to 12,65,069 units and 13.1% YoY to 3,40,220 units respectively.

Automobile domestic wholesales of listed companies rose 13.2% YoY to 11,69,573 in January. Auto exports overall dipped 42.7% YoY to 1,79,566 units. Domestic wholesales of two-wheelers went up 8.8% YoY to 7,74,038 units and passenger vehicles rose 20.4% YoY to 2,28,375 units in January.

Auto Monthly Volume Update - Jan 23

Hero Motocorp (HMCL) reported another month of subdued volume going against the peer set trend of improved volume MoM, reporting a volume decline of 6%/10% YoY/MoM at 357k units. Motorcycle sales declined 6% YoY vs scooters being up 2%.

Maruti Suzuki’s total volumes for the month of January increased by 11.8% YoY/ 23.8% MoM to 1,72,535 units. Total Domestic sales grew by 13.7% YoY while they grew by 32.0% MoM. Total Exports declined by 3.0% YoY/ 20.2% MoM. Within Domestic PVs, strong growth has continued for the SUV segment, and it grew by 32.8% YoY/ 7.1% MoM.