PINC Sector Report - Automobile Monthly Sales Update

Market Leaders Scale New Heights

Indian automobile industry continued with their growth momentum during the month of May'10. Most of the manufacturers have been taken by surprise with strong demand growth in the Indian market and major players are running short of the capacity. The problem is getting further aggravated due to shortage of critical components. In the passenger cars segment, Maruti Suzuki reported their highest ever dispatches. Top-10 cities have been the major contributor with growth of 25%. Hero Honda's volumes were higher as the company dispatched products which were held up during the previous month due to company shortage. Other 2-wheelers manufacturers also reported strong volumes. In the commercial vehicles segment, MHCV segment dispatches were robust while LCV segment maintained their momentum. Tractor dispatches were impressive on back of pre-monsoon demand and incremental volumes from infrastructure and construction segment.

Our Viewpoint

The strong dispatches reaffirms our view that underlying demand for automobiles remain very strong and recent price increases have minimal impact on it. We retain our positive outlook on the sector. Our top picks in the sector are Bajaj Auto, Maruti Suzuki and Mahindra & Mahindra.

Source : Equity Bulls

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