Two wheeler sales update for May 2012: Ventura

Hero MotoCorp - Outperforming its peers who posted a de- growth, Hero Moto Corp posted a 11.3% yoy growth in total volumes to 5,566,44 units. The company’s sales surpassed its previous highest of 5,51,557 units achieved in April’12. To maintain the growth trajectory the company is planning to add about 400 outlets to its existing 5,000- strong network in the current fiscal. The management is cautiously optimistic of that the expected normal monsoon and the consequent good harvest should perk up the sentiment in the coming months since it enjoys a strong market share in the rural areas. We recommend a BUY on the stock.

Bajaj Auto volumes dipped for the first time in two years on account of fall in three wheeler sales and no exports to Sri Lanka against a monthly run rate of 10,000 two wheelers and motorcycles. Total volumes were lower by 1.8% yoy to 3,52,219 units. Motorcycle sales grew by a marginal 1.2% yoy to 3,21,922 units whereas three wheeler sales witnesses a steep fall of 25.9% yoy. Despite no exports to Sri Lanka, exports for the month of May were highest ever recorded by Bajaj Auto. Management expects the exports to Sri Lanka to resume from July. Futher, management has kept it guidance of a 15-16% volume growth intact and expects it to be aided by new launches (Pulsar and Discover 100 cc) and materialization of three wheeler permit sales. We recommend a BUY on the stock.

TVS Motor Company Ltd witnessed a dip of 5.3% yoy in total volumes to 1,76,012 units as volumes of motorcycles and three wheelers fell sharply. Motorcycle sales were lower by 15.2% yoy to 64,134 units whereas scooter sales were marginally higher by 1.7% yoy to 38,833 units. Moped sales stood at 70,125 units as against 68,014 units in May’11 recording a growth of 3% yoy. However, three wheeler sales suffered the most and fell 27.7% yoy to 2,920 units. We recommend a HOLD on the stock.