>AUTOMOBILE SECTOR (ANGEL BROKING)

Auto Sales touched record highs in FY2010 on the back of positive consumer sentiment and partially due to advanced buying at the dealers' end in anticipation of a price hike due to the change in Emission norms (effective from April 1, 2010). The impressive performance by the Indian Auto companies continued with Maruti Suzuki and Hero Honda recording the highest-ever monthly sales in May 2010. Strong growth across segments continues with demand surpassing supply in a few segments with vendors' capacity being stretched. This is despite the fact that, most auto majors hiked prices passing on the cost impact to the consumers owing to high commodity prices, change in Emission norms and Excise Duty hike. Pickup in economic activities has kept demand strong, albeit more normalised across segments, considering demand may have peaked in the past few months prior to the expected price hikes post the Excise Duty hike and spurt in Raw Material prices.

■ Tata Motors (TML) reported a robust 41.3% yoy growth in total volumes, with the medium and heavy commercial vehicles (M&HCV) Segment leading the growth at 57.6% yoy, followed by the LCV Segment, which grew 32.9% yoy. Exports also boosted the company's performance as it reported a 120.5% yoy growth partially on a low base. Passenger cars also showed healthy growth of 45.3% yoy with new launches such as Manza clocking good volumes for the company.

■ Maruti Suzuki (Maruti) recorded a strong 27.9% yoy growth in volumes at 102,175 vehicles (79,872) in May 2010. This included 12,134 units of exports, up 33.5% yoy. In May 2010, the company sold 90,041 units in the domestic market, up 27.2% yoy - the highest-ever domestic sales in a month. The company registered the highest-ever domestic sales in the A2, A3 and C Segments, up 16.6%, 60.5% and 70% yoy, respectively. Management is positive about it's new launch Eeco, which gave a boost to its C Segment.

■ Mahindra & Mahindra (M&M) reported a healthy 50.6% yoy growth in total sales to 45,744 units (30,366) in May 2010 aided by the 68.9% yoy growth in Auto volumes and 27.8% yoy growth in Tractor sales. The Utility Vehicle Segment recorded strong 50% yoy growth in May 2010 to 18,940 units (12,620). Three-wheelers, including the newly launched GIO and Maximmo, posted robust 146% yoy growth in volumes to 6,641 units (2,703) in May 2010. The company performed exceptionally on the Exports front, growing at around 129.3% yoy on an overall basis. In April, the company had suffered a major component shortage in engine parts, dies and castings. This negatively impacted dispatches, which normaliesd to a certain extent in May.

■ Two- and Three-Wheelers: Hero Honda (HH) reported a healthy growth on a high base in the two-wheeler pack, with a 13.9% yoy increase in volumes in May 2010 to 4,35,933 units (3,82,678). Bajaj Auto (BAL) led the pack with a striking 61.6% growth on a low base and its key brands, Pulsar and Discover, performing well during the month. TVS Motor (TVS) clocked 31.6% yoy growth following the strong growth registered by all the Segments. The recently launched TVS Jive (launched in Tamil Nadu) and the TVS Wego supported high volumes in Motorbike
and Scooter Segments respectively.

To read the full report: AUTOMOBILE SECTOR