According to a SIAM report, total sales of vehicles across categories increased 35% to 11.3 lakh units in February against 8.4 lakh units in the same month last year
The Indian auto industry on Monday said its February sales have been the highest ever for a month breaking the earlier record, which was set only in January this year, as consumers rushed to beat a possible hike in prices following the Budget, reports PTI.
"The highest-ever sales by the auto industry were achieved mainly because people anticipated an excise duty hike in the Budget. Also it was pushed (up a) little by pent-up demand," SIAM director general Dilip Chenoy told reporters in New Delhi.
During the month, all the major manufacturers, including Maruti Suzuki, Hyundai Motor and General Motors reported their individual best sales ever. Domestic passenger car sales jumped by 33.2% to 1.53 lakh units in February. According to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Monday, motorcycle sales in the country during the month were also up 30.7% to 6.42 lakh units from 4.91 lakh units in the corresponding month last year.
Total two-wheeler sales in February grew by 32.8% to 8.4 lakh units from 6.3 lakh units in January 2009.
Sales of commercial vehicles jumped by 87.1% to 58,024 units from 31,011 units in the year-ago period, SIAM said.
Total sales of vehicles across categories increased 35% to 11.3 lakh units in February against 8.4 lakh units in the same month last year, it added.
The industry is expected to continue the robust uphill drive in the current month also as customers would try to avoid another obvious price hike in April on account of shifting to stricter emission norms, Mr Chenoy added.
Passenger cars and commercial vehicles will switch over to Bharat Stage IV emission norms in 13 cities, while the rest of the country will become Bharat Stage III compliant from April.
Mr Chenoy, however, cautioned that growth could receive a jolt if interest rates were hiked in the coming months.
"Recently, private banks have hiked rates, but in the last one year, the financing of vehicles has heavily skewed towards the public sector banks. If interest rate hikes are significant, it can be detrimental to the industry," he added.
In the motorcycle segment, sales rose 30.72% to 6.42 lakh units in February from 4.9 lakh units in the same month in 2009, SIAM said.
"The anticipation of a hike in excise duty helped the motorcycle segment to post highest monthly sales of this fiscal," Mr Chenoy said.
The Budget hiked excise duty on all non-petroleum sectors to 10% from 8%, besides raising duty on big cars, sports utility vehicles (SUVs) and multi-utility vehicles (MUVs) to 22% from 20%.
Carrying forward the upward march that began in July 2009, sales of commercial vehicles soared by 87.1% to 58,024 units against 31,011 units in the same month in 2009.
In the domestic passenger car segment, sales of market leader Maruti Suzuki increased by 18.2% to 73,812 units in February from 62,449 units in the year-ago period.
The country's second largest carmaker Hyundai Motor India also registered 46.1% growth at 31,000 units compared with 21,212 units in February 2009, SIAM said.
Tata Motors' sales rose to 22,980 units from 15,524 units in February 2009, up 48%.
In the motorcycle segment, market leader Hero Honda's sales rose 13.9% to 3.5 lakh units in February 2010 compared to 3.1 lakh units in the year-ago month.
For rival Bajaj Auto, sales soared by 94.2% to 1.8 lakh units in February against 90,473 units last year in the same month. Chennai-based TVS Motor Company posted 34.7% growth at 46,047 units from 34,183 units in the same month a year ago. Honda Motorcycle & Scooter India (HMSI) saw bike sales rise 23.9% to 45,326 units from 36,593 units.
SIAM said total two-wheeler sales in February 2010 surged 32.78% to 8.4 lakh units from 6.3 lakh units in the corresponding month in 2009.
In the scooter segment, sales jumped 44.7% to 1.5 lakh units against 1.0 lakh units in the year-ago period, it added.
HMSI's scooter sales were up 20% at 69,828 units against 58,209 units in the same month in the previous year.
SIAM said TVS Motor's scooter sales also increased by 37% at 25,979 units compared with 18,841 units in the same month in 2009. Hero Honda's scooter sales were up 46.5% at 22,641 units against 15,452 units in the year-ago period.
Three-wheeler sales during February were up 31.9% at 39,558 units compared with 30,002 units, it added. Light commercial vehicle sales rose 65.7% to 29,925 units from 18,058 units.
Medium and heavy commercial vehicle sales surged over two-fold to 28,099 units compared with 12,953 units in the same in the month previous year, SIAM said.
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Despite an incredible operating margin of 31% and RoE of 42%, Birla Corp is cheaper than its peers
Birla Corporation makes cement, jute goods, auto-trim parts (car interiors) and iron & steel castings. Cement, its main business, contributed 85% of the total revenue in the December 2009 quarter. Power is the second-largest contributor to the total revenue; jute and other businesses reported losses in this quarter. Birla Corp is rationalising some of the products for which demand has dropped over the years. It has cement units in Madhya Pradesh, Uttar Pradesh, Rajasthan and West Bengal with a total capacity of seven million tonnes. It has been allotted coal blocks in Madhya Pradesh for captive coal mining in FY08-09. Its subsidiary, Talavadi Cements, has been recommended allotment of 2,130 hectares of land for mining limestone by the Madhya Pradesh government. But this approval has been challenged in court. The company, controlled by Harsh and Aditya Lodha (sons of the late RS Lodha who inherited the MP Birla group companies from Priyamvada Birla), has been quietly expanding. It plans to invest Rs2,350 crore to enhance its annual cement manufacturing capacity to 11.5 million tonnes over the next four years which includes setting up a 1.2-million-tonnes plant along with power generation from waste heat recovery and a 35MW captive power plant at Chanderia, Rajasthan. Additionally, it will increase the grinding capacity by 600,000 tonnes and install a 17.5MW captive power plant at Durgapur; and replace its cement ball mills and set up a coal washery and a 35MW captive power plant at Satna. After a brief lull late last year, cement demand is rising again. In January 2010, cement despatch registered a new high. The company sold 18.19 million tonnes (mt) in January, surpassing its earlier high of 18.1mt in March 2009. Demand is expected to be on the higher side in the January-March 2010 quarter on increasing infrastructure activity. The industry has added around 22mt of new capacities this fiscal which has increased its overall capacity to around 245mt. Buoyed by strong demand, large cement companies have increased prices by Rs3-Rs5 per 50kg bag from 1st February which has pushed up the average national price to Rs235 per bag from Rs210-Rs215 per bag in November 2009. Having a strong presence in central and eastern India, and a fairly good presence in north India, has been advantageous. The recent pick-up in demand has come from those parts of the country. Rising expenditure is another concern but it is expected to decrease once the captive power plants, waste recovery systems and blocks allotted for captive coal mining come on stream. The five-quarter average sales and operating profit growth are 22% and 47%, respectively. For a commodity company, Birla Corporation has an incredible operating margin of 31%. Return on equity in FY09-10 is expected to be 42%. The stock is not expensive. Its market-cap is 1.32 and 4.32 times its sales and operating profit, respectively. The average of these two measures for the cement companies in the Moneylife sample is 1.5 and 5.18, respectively. Buy the stock at the current price.