Automobile Sector Result Analysis

Mahindra & Mahindra: The results of Mahindra and Mahindra in the quarter to June will come as a booster shot for the automobile industry whose performance has been subdued so far this quarter. A strong demand for its sporty utility vehicles helped M&M report a spectacular 39% growth in turnover year-on-year. On a consolidated basis (including the financials of Mahindra Vehicle Manufacturers), the year-on-year growth in turnover was close to 32%. M&M's April-June quarter net profit rose 20% year-on-year to Rs 726 crore, while net sales accelerated 40% to Rs 9,248 crore. Analysts had expected the company to report a net profit of Rs 621.5 crore on revenue of Rs 9,100 crore.Also at 7.5 times FY14 expected core earnings per share, the valuation is attractive. Mahindra & Mahindra shares rose over 3% for the second straight session after the street cheered the utility vehicle maker's much better-than-expected first quarter results and several analysts maintained their "buy" or equivalent rating on the stock

Tata Motors: Tata Motors results for June 2012 quarter turned out to be a highly disappointing affair, especially on the standalone front. The company reported a year on year decline of about 9% in its revenues while its net profits halved as compared to the June 2011 quarter. Tata Motors' stocks that have been gaining momentum since the beginning of this week in anticipation of better financial performance by this company ended with a decline of about 1% to Rs 239 at the end of the day's trade of Thursday. Lower sales volumes, especially in the commercial vehicle segment on account of the ongoing economic slump, have impacted the revenues for the quarter. Even as the standalone turnover dipped by 9% year on year, most of its expenses like raw material, employee cost, interest as well as other expenditure increased sharply with respect to sales in the current quarter as compared to the corresponding quarter of the previous year. The company's profitability has also taken a hit on account of foreign exchange loss to the tune of Rs 161 crore in standalone accounts and Rs 441 crore in consolidated accounts.

TVS Motors: Two-wheeler maker TVS Motor Co beat street expectations with a lower-than-expected 13% year-on-year decline in first quarter net profit at Rs 51 crore. The India's fourth largest two-

wheeler maker's revenue for the quarter rose 4% to Rs 1,820 crore. Analysts on average had expected TVS Motor to report a net profit of Rs 46 crore on revenue of Rs 1,614 crore in April-June, according to CNBC-TV18 estimates. Profits are lower due to significant increase in brand investments across key brands including TVS Wego, TVS StaR City and TVS Sport along with the recently introduced Apache RTR and Scooty Pep according to the company. TVS Motor rose to a high of Rs 39.20 post the results. But by late afternoon, the stock had given up its gains and was down 1.5% at Rs 37.50 on NSE. I suggest a BUY as the current valuations are factoring in the worst given its decent product portfolio, new launches, exposure to growing export markets, in-house research & development support and larte distributorship.

Bajaj Auto: The Company has posted a net profit of Rs 7183.90 million for the quarter ended June 30, 2012 as compared to Rs 7110.60 million for the quarter ended June 30, 2011. Total Income has increased from Rs 48503.80 million for the quarter ended June 30, 2011 to Rs 50476.30 million for the quarter ended June 30, 2012. Bajaj Auto's total sales in July slipped 5% yearon-year to 3,44,150 units amid sluggish demand for motorcycles, especially the premium segment, where the Pune-based company is a dominant player with its Pulsar range. Threewheeler sales also continued to be slow. Bajaj Auto's exports were hit after a sharp hike in import duties by Sri Lanka in April. The company typically used to export 10,000 units each of two-wheelers and three-wheelers. But shipments to the island nation dropped to virtually zero after the distributor there focused on clearing out existing inventory following the duty hike. The company last month cut prices of its two-wheelers and three-wheelers in Srilanka by around 10%. Apart from Sri Lanka, Bajaj Auto's exports to Egypt had also been impacted due to political unrest there. Over the April-July period, Bajaj Auto's total sales declined 2% to 14,23,121 units. Bajaj Auto shares were down 0.7% at Rs 1,603.15 on NSE in morning trade