Sector Update | 1 October 2020

Automobiles

Sep’20: Inventory replenished across OEMs…

…to prepare for festive season and avoid any COVID-related surprise

"There has been an

outstanding recovery for us

in the international markets

and we have had our

highest ever sales for

exports. Going forward, I

think October will certainly

be better than September,

if supply chains holds out I

think we will have our

highest ever again in

exports. I think we will have

our highest October ever,

hopefully supply chain

support us.”

Rakesh Sharma, Executive

Director of Bajaj Auto

Sep’20 wholesales were in line. While it was a seasonally weak month, OEMs utilized it to

refill their inventory on the expectation of a strong festive season. PV volumes grew ~31%

YoY (in-line) and 2W volumes grew ~14% YoY (in-line) on the back of inventory refilling. CV

declined -10% YoY (in-line), reflecting good recovery as LCV volumes (in-line) were largely

flat and M&HCV (in-line) declined by 21% YoY. 3W disappointed with decline of 41% YoY.



2W – in-line; 14% YoY growth:

Volumes grew by ~14% YoY on account of inventory

refilling by OEMs post supply chain normalization and in preparation of an upcoming

festive season. Inventory increased to 30–45 days. BJAUT 2W volumes grew by ~20%

YoY, TVS by ~4.1%, and HMCL by ~17%. RE volumes also increased 1% YoY (+20% MoM).



PV – in-line; ~31% YoY growth:

Encouraging inquiries and strong demand resulted in

volume growth of 31% YoY. MSIL volumes grew by ~31% YoY (+29% MoM) on a strong

entry-level portfolio; however, MM (UVs incl. pick-ups) volumes were flat YoY (+17%

MoM).



CV – in-line; +34.4% MoM growth:

CV wholesales were in-line. While M&HCV volumes

reflected good recovery, with volume decline restricted to 21% YoY (+54% MoM), LCV

volumes fell by just 2.3% YoY (+25.4% MoM). TTMT’s CV volumes declined (~11.3% in-

line), AL (5% decline) was in-line, and VECV (~7.3% decline) was ahead of our estimates.

Positive surprise (Var %)

BJAUT (+6.1%)

Hero MotoCorp (+6.3%)

EIM-VECV (+13.8%)

In-line (Var %)

M&M (-1%)

TTMT (+1%)

AL (-3.4%)

EIM - RE (+1%)

MSIL (+1.8%)

Negative surprise (Var %)

TVS Motor (-6.2%)

Escorts (-12.7%)

Valuation and view:

While the upcoming festive season is expected to be highly fruitful, the

sustenance of demand post the festive season is the key parameter to monitor. Valuations

are reflecting recovery from 2HFY21, leaving limited margin for safety for any negative

surprises. Hence, we prefer companies with: a) higher visibility in terms of demand recovery,

b) a strong competitive positioning, c) margin drivers, and d) balance sheet strength.

MM

and

HMCL

are our top OEM picks. Among the auto component stocks, we prefer

MSS

and

ENDU.

Exhibit 1:

Snapshot of volumes for Sep’20 (incl. exports) *

YoY

Company Sales

Sep’20

Sep’19

YoY (%)

chg

MoM

Aug’20

MoM

(%) chg

FY21 YTD

FY20 YTD

(%) chg

FY21E

Gr (%)

2W

14,93,942 13,09,343 14.1

12,32,884 21.2

50,40,065 76,77,494 -34.4 1,26,52,054

-10.5

Cars

1,37,169

93,276 47.1

1,03,897 32.0

3,95,604

5,86,220 -32.5

11,13,470

-11.6

UVs + MPVs

77,400

70,597 9.6

66,935 15.6

2,55,557

4,20,072 -39.2

6,99,118

-14.4

Total PVs

2,14,569

1,63,873 30.9

1,70,832 25.6

6,51,161 10,06,292 -35.3

18,12,587

-12.7

3Ws

51,402

87,795 -41.5

45,620 12.7

1,78,068

4,67,486 -61.9

6,96,967

-21.4

M&HCVs

14,060

17,799 -21.0

9,121 54.1

36,117

1,35,116 -73.3

1,83,364

-27.2

LCVs

25,159

25,764 -2.3

20,064 25.4

72,033

1,55,845 -53.8

2,50,191

-15.5

Total CVs

39,219

43,563 -10.0

29,185 34.4

1,08,150

2,90,961 -62.8

4,33,555

-20.8

Tractors

55,237

47,866 15.4

31,726 74.1

2,01,494

1,98,971 1.3

4,18,740

7.9

*

2W:

BJAUT, HMCL, TVSL,EIM;

PVs:

MSIL, MM & TTMT;

3Ws:

BJAUT, TVSL & MM;

CVs:

TTMT, AL, MM, EIM;

Tractors:

MM, ESC;

Source: MOSL

Jinesh Gandhi – Research Analyst

(Jinesh@MotilalOswal.com)

Vipul Agrawal – Research Analyst

(Vipul.Agrawal@MotilalOswal.com)

1 Oct 2019

are

Investors

1

advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Rs Automobiles

MARUTI SUZUKI: Wholesales in-line, with est. at 160.4k (v/s est. of ~157.6k) – growth of ~31% YoY



MSIL’s Sep’20 wholesales were in line with estimates at 160.4k (+30.8% YoY; 28.7% MoM).



Domestic volumes increased 32.2% YoY to 152.6k units (est.: 148.9k).



The Compact segment’s volumes increased significantly by 44% YoY to ~86.8k units (v/s est.: 81.2k).



UV volumes increased 11% YoY to ~23.7k units (v/s est.: 26.9k units), despite competition growth.



Export volumes increased 9% YoY to ~7.8k units (v/s est.: 8.6k units).



Our estimates factor ~13.9% decline in volumes for FY21, implying residual growth of 6.6% or a run-rate of

~146k. We see upside risk to our volume estimates.

Snapshot of volumes for Sep’20

YoY

Company Sales

Maruti Suzuki

LCVs

Vans

Mini Segment

Sep’20 Sep’19

FY21

Residual Residual

YTD

Growth Monthly

Monthly

(%) Run rate

Run rate

6.6 1,45,925 78,288

-16.2

1,379

1,307

7.6

10,281

5,709

0.7

24,863 12,778

9.7

77,958 39,462

-2.3

1,767

801

6.6

21,509 12,884

6.9 1,37,758 72,941

1.6

8,167

5,347

MoM

YoY (%)

MoM (%)

Aug’20

chg

chg

30.8

4.0

12.8

35.7

44.3

-10.6

10.1

32.2

9.0

1,24,624

2,292

9,115

19,709

63,335

1,223

21,030

1,16,704

7,920

28.7

-7.2

23.1

38.2

37.0

25.4

12.7

30.8

-1.1

FY21

YTD

4,69,729

7,841

34,256

76,666

2,36,772

4,805

77,306

4,37,646

32,083

FY20

FY21

(%) chg

Gr. (%)

YTD

estimate

7,40,911

11,901

61,080

99,678

3,85,720

14,411

1,14,210

6,87,000

53,911

-36.6

13,45,280

-13.9

-34.1

16,116 -26.0

-43.9

95,942 -19.0

-23.1 2,25,847 -8.9

-38.6 7,04,519 -13.2

-66.7

15,407 -39.0

-32.3 2,06,361 -12.3

-36.3 12,64,193 -13.4

-40.5

81,088 -20.6

1,60,442 1,22,640

2,128 2,046

11,220 9,949

27,246 20,085

Compact (incl Dzire Tour)

86,781 60,131

Mid-sized - CIAZ

1,534 1,715

UVs

23,699 21,526

Total Domestic

1,52,608 1,15,452

Export

7,834 7,188

M&M: In-line at ~79.3k; UV sales flat YoY; Tractor sales grew by ~17.2% YoY



M&M’s overall volumes declined by 1.3% YoY to 79.3k units (est.: 79.9k units).



Tractor volumes grew by ~17.2% YoY (+77.4% MoM) at ~43.4k units (in-line). We factor 6.5% volume growth for

FY21E, implying 13% residual growth or a run-rate of 27.1k units. We see upside risk to our Tractor volume

estimates.



UV volumes declined ~13% YoY to ~43.9k (in-line). Domestic Passenger UV sales grew by 5.8% YoY, and Pick-

ups/SCVs volumes by ~3.2% YoY. We estimate UV volumes to decline 15% in FY21E, implying 17.7% residual

growth or a run-rate of 37k units. We see upside risk to our Pick-up volume estimates.



3W volumes declined by ~92% YoY to 587 units.



As per Mr Veejay Ram Nakra, Chief of Sales and Marketing, Automotive Division, M&M, “At

Mahindra, we are

happy to witness a growth of 6% in Utility Vehicles. It is also encouraging to see that the enquiry and booking

levels in September were significantly higher compared to the previous months, both for UVs and SCVs. With

market sentiments indicating a robust festive demand across segments, both in rural and urban markets, we are

positive that this festive season will augur well for us as well as the automotive industry.”



Commenting on the performance, Mr Hemant Sikka, President – Farm Equipment Sector, M&M, stated, “Retail

demand continued to be buoyant backed by a very good monsoon, higher kharif acreage and continued

government support, including higher MSPs for key crops. We are looking forward to a very robust demand for

the festive season ahead.”

Snapshot of volumes for Sep’20

YoY

Company Sales

Mahindra &

Mahindra

UV (incl. pick-ups)

LCV & M&HCV

Three-Wheelers

Tractors

Sep’20 Sep’19

MoM

YoY (%)

MoM (%)

Aug’20

chg

chg

-1.3

0.1

-62.1

-92.2

17.2

54,884

29,917

202

307

24,458

44.5

17.0

63.9

91.2

77.4

Residual Residual FY21 YTD

Growth Monthly Monthly

FY21

FY21

FY20 YTD (%) chg

Gr. (%)

(%) Run rate Run rate

YTD

estimate

2,80,578 4,09,429 -31.5

1,19,854 2,13,665 -43.9

792

6,924 -88.6

1,029 30,670 -96.6

1,58,903 1,58,170 0.5

7,05,068

3,42,193

6,511

34,825

3,21,539

-9.4

-15.0

-42.3

-44.0

6.5

15.2

17.7

31.4

7.2

13.1

70,748

37,057

953

5,633

27,106

46,763

19,976

132

172

26,484

79,306 80,354

35,002 34,982

331

874

587 7,487

43,386 37,011

1 October 2020

2

Rs Automobiles

ESCORTS: Wholesale volumes were below est. at 11.85k (v/s est.: 13.6k)



Escorts’ volumes grew ~9% YoY (+63% MoM) as domestic sales increased 8.9% YoY to ~11.4k units.



Exports volumes stood at 398 units (+19% YoY).



We estimate ~13% growth in volumes for FY21E, implying 20.8% residual growth or a monthly run-rate of ~9.1k

units.

Snapshot of volumes for Sep’20

YOY

Sep’20

Escorts

Domestic

Exports

Sep’19

MoM

YoY (%)

MoM (%)

Aug’20

chg

chg

9.2

8.9

19.2

7,268

6,750

518

63.1

69.7

-23.2

Residual Residual FY21 YTD

FY21

FY21 YoY (%) Growth Monthly Monthly

FY20 YTD (%) chg

(%) Run rate Run rate

YTD

estimate chg

42,591

40,846

1,745

40,801 4.4

38,911 5.0

1,890 -8

97,200 13.0

89,825 9.2

7,376 96

20.8

13.0

200.1

9,102

8,163

938

7,099

6,808

291

11,851 10,855

11,453 10,521

398

334

TATA MOTORS: In line with est.; volumes grew by ~27% YoY to 46.2k units (v/s est.: 45.8k unit)



TTMT’s CV volumes declined ~11.3% YoY, led by ~25.4% YoY decline in M&HCV to ~6.9k (est.: ~7.4k units) and

~4.3% YoY decline in LCV to ~18k (est.: 18.2k).



UV volumes grew by ~80% YoY to ~7.5k (est.: 5.6k), and car volumes by ~231% YoY to ~13.8k units (est.: 14.5k

units).



We estimate ~21.3% decline in CV volumes for FY21E, implying 25% residual growth or a monthly run-rate of

~33.7k units. Overall, we project ~13.5% decline in total volumes for FY21E, implying 18.7% residual growth or a

monthly run-rate of ~45.7k units.



According to Mr Girish Wagh, President – CV Business, Tata Motors,

“Tata Motors’ commercial vehicle domestic

sales in Q2FY21 at 52,094 units was ~23% lower than Q2FY20. However, it was significantly higher than the

previous quarter (Q1 FY21) on the back of gradually increasing demand and improving supply situation. In

September’20, the sale at 23,245 units was 38% higher than last month while being 4.3% below September’19.

Offtake was higher than retail, as we prepare for sequential improvement in retails in the coming months. Our

BSVI products are receiving very good response from customers, as these deliver on the promise of better

earnings potential across applications, along with enhanced comfort, connectivity and performance.”



According to Mr. Shailesh Chandra, President – Passenger Vehicles Business Unit, Tata Motors Ltd.,

“PV industry

witnessed recovery in Q2FY21, supported by festive sales in some regions and continued benefit from pent-up

demand across the country. In September 2020, wholesales were higher than retail ahead of the festive season.

Despite challenges owing to rising Covid-19 cases across the country, supply-side has been progressively

improving. Tata Motors PV business posted a wholesale of 54,794 units in Q2FY21, which is 112% growth as

compared to Q2FY20. For September 2020, wholesale of 21,199 units was 163% higher than Sep 2019. This steep

growth is attributed to increased demand for all our products in the “New Forever” range. The company also sold

924 EVs in Q2FY21, with an encouraging response received for Nexon EV.”

Snapshot of volumes for Sep’20

YoY

Company Sales

Tata Motors

HCV's

LCV's

CV's

Cars

UV's

Sep’20 Sep’19

MoM

YoY (%)

MoM (%)

Aug’20

chg

chg

36,472

4,055

13,834

17,889

11,710

6,873

26.6

70.5

30.1

39.2

17.6

8.8

Residual Residual FY21 YTD

Growth Monthly Monthly

FY21

FY21

FY20 YTD (%) chg

Gr. (%)

(%) Run rate Run rate

YTD

estimate

1,35,382 2,42,506 -44.2

16,864 66,881 -74.8

49,099 1,12,008 -56.2

65,963 1,78,889 -63.1

45,278 32,500 39.3

24,141 31,117 -22.4

4,09,441

90,920

1,77,291

2,68,211

86,609

54,621

-13.5

-26.9

-18.0

-21.3

19.9

-9.6

18.7

28.6

23.0

25.0

4.0

3.9

45,677

12,343

21,365

33,708

6,888

5,080

22,564

2,811

8,183

10,994

7,546

4,024

46,163 36,376 26.9

6,912 9,271 -25.4

17,998 18,808 -4.3

24,910 28,079 -11.3

13,774 4,157 231.3

7,479 4,140 80.7

1 October 2020

3

Rs Automobiles

Ashok Leyland: In-line; volumes declined by 5% YoY at 8,344 units (v/s est.: 8,638 units)



Wholesale dispatches stood at 8,344 units (v/s est.: 8,638 units), down 5% YoY.



M&HCV volumes declined ~23% YoY to 3,642 units (v/s est.: 3,795 units).



LCV volumes grew by 16.5% YoY to 4,702 units (v/s est.: 4,843 units).



We estimate volumes to decline 17.2% in FY21E, implying residual growth of ~42% or 13.4k units. LCV volumes

would benefit from the launch of Bada Dost.

Snapshot of volumes for Sep’20

YoY

Company Sales

Ashok Leyland

CV (ex LCV)

LCV

Sep’20 Sep’19

8,344

3,642

4,702

8,780

4,744

4,036

MoM

YoY (%)

MoM (%)

Aug’20

chg

chg

-5.0

-23.2

16.5

6,325

2,589

3,736

31.9

40.7

25.9

Residual Residual FY21 YTD

Growth Monthly Monthly

FY21

FY21

FY20 YTD (%) chg

Gr. (%)

(%) Run rate Run rate

YTD

estimate

23,258

8,957

14,301

68,546 -66.1

43,534 -79.4

25,012 -43

1,03,704 -17.2

53,430 -32.0

50,274 7.8

41.9

26.8

66.3

13,408

7,412

5,995

3,876

1,493

2,384

EICHER MOTORS: RE sales in line with est. at 60k units (v/s est.: 59.5k units); VECV declined by 7.3% YoY



Royal Enfield (RE) dispatches were flat YoY at 60k units (in-line with estimate). Domestic retail sales were broadly

similar to wholesales.



We estimate RE volumes to decline 10.4% in FY21E, implying residual growth of 20.3% or a run-rate of 69.3k

units. We are hopeful of a step-up in volumes, driven by the upcoming new platform launch in Oct’20.



VECV’s volumes declined ~7.3% YoY to ~3,506 units (v/s est.: ~3,082 units). For VECV, we estimate ~20% decline

in volumes for FY21E, implying ~19.6% residual growth or 4.8k units.

Snapshot of volumes for Sep’20

YOY

Sep’20

Royal Enfield

VECV

Domestic LMD

Domestic HD

Domestic Buses

VTI

Total Domestic

Exports

Sep’19

MoM

YoY (%)

MoM (%)

Aug’20

chg

chg

0.9

-7.3

-3.0

9.0

-45.0

-49.5

-7.8

-4.3

50,144

2,477

1,673

354

163

37

2,227

250

19.7

41.5

28.4

61.6

35.0

51.4

34.5

104.0

Residual Residual FY21 YTD

Growth Monthly Monthly

FY21

FY21 YoY (%)

(%) Run rate Run rate

FY20 YTD (%) chg

YTD

estimate chg

2,07,788 3,50,178 -40.7

10,296 24,701 -58.3

5,984 13,592 -56.0

1,582

3,902 -59.5

782

4,730 -83.5

210

431 -51.3

8,558 22,655 -62.2

1,738

2,046 -15.1

6,23,715

39,014

21,366

5,678

5,708

1,052

33,803

5,211

-10.4

-19.9

-20.0

-22.0

-37.0

-5.0

-23.9

14.1

20.3

19.6

17.3

21.3

13.8

24.5

15.9

37.7

69,321

4,786

2,564

683

821

140

4,207

579

34,631

1,716

997

264

130

35

1,426

290

60,041 59,500

3,506 3,784

2,148 2,215

572

525

220

400

56

111

2,996 3,251

510

533

Bajaj Auto: Above est., at 441k (v/s est.: 416k) – growth of 10% YoY



BJAUT’s wholesales grew by ~10% YoY to ~441k units (our estimate: 416k).



Domestic volumes increased by ~6% YoY to ~228.7k units (our estimate: 212.2k), and exports grew ~14% YoY to

~212.5k units (our estimate: 203.8k).



Motorcycle volumes grew by ~20% YoY to 404.8k units. Domestic motorcycle dispatches grew ~23.8% YoY to

219.5k units, and exports by ~16.3% YoY to ~185.3k units. We estimate motorcycle volumes to decline ~12% in

FY21, implying residual growth of 12.6% or a run-rate of 353k units/month.



3W volumes decreased ~44.2% YoY to ~36.5k units, with domestic volumes down ~76% to ~9.2k units and

exports flat at 27.2k units. We estimate 3W volumes to decline 22% in FY21, implying residual growth of ~23.6%

or a run-rate of 64.6k/month. We see downside risk to our domestic 3W volumes.

1 October 2020

4

Rs Automobiles

Snapshot of volumes for Sep’20

YoY

Company Sales

Sep’20 Sep’19

MoM

YoY (%)

Aug’20

chg

9.8

20.2

20.2

-44.2

6.1

14.0

3,56,199

3,21,058

3,21,058

35,141

1,85,879

1,70,320

Bajaj Auto

4,41,306 4,02,035

Motorcycles

4,04,851 3,36,730

Total Two-Wheelers 4,04,851 3,36,730

Three-Wheelers

36,455 65,305

Domestic

2,28,731 2,15,501

Exports

2,12,575 1,86,534

FY21

Residual Residual

YTD

Growth Monthly

MoM (%)

FY21

Monthly

FY21 YTD FY20 YTD (%) chg

Gr. (%)

(%) Run rate

chg

estimate

Run rate

23.9

14.2 4,17,582 2,49,407

14,96,440 24,20,765

-38.2

40,01,934

-13.3

26.1

12.6 3,52,961 2,27,399

13,64,394 20,66,867

-34.0

34,82,160

-11.8

26.1

12.6 3,52,961 2,27,399

13,64,394 20,66,867

-34.0

34,82,160

-11.8

3.7

23.6

64,621 22,008

1,32,046 3,53,898

-62.7

5,19,774

-22.1

23.1

16.2 2,16,461 1,27,475

7,64,849 13,26,233

-42.3

20,63,613

-15.6

24.8

12.1 2,01,122 1,21,932

7,31,591 10,94,532

-33.2

19,38,321

-10.7

HERO MOTOCORP: Above est.; volumes grew by ~17% YoY to 715.7k units (v/s est.: 673.4k units)



HMCL’s volumes grew by ~17% YoY to 715.7k units (v/s est.: 673.4k units).



We estimate volumes to decline 9.4% in FY21E, implying residual growth of 19.2% or a run-rate of 571.5k units.



The company operates at nearly 100% production capacity, with almost all customer touchpoints open.

Snapshot of volumes for Sep’20

YoY

Company Sales

Hero MotoCorp

Sep’20

Residual Residual FY20 YTD

Growth Monthly Monthly

YoY (%)

MoM

FY21

Sep’19

Aug’20

FY21 YTD FY20 YTD (%) chg

Gr. (%)

(%) Run rate Run rate

chg

(%) chg

estimate

584,456 22.5 2,378,109 3,534,340 -32.7 5,806,066 -9.4

19.2

571,326 396,352

MoM

715,718 612,204 16.9

TVS Motor: Below est.; volumes grew by 3.7% YoY to 327.7k units (v/s est.: 349.2k units); exports grew by 19%



TVSL’s wholesales grew by 3.7% to 327.7k units(v/s est.: 349.2k units).



2W volumes grew by 4.1% YoY to 313.3k units. Domestic 2W was also flat YoY, whereas 2W exports grew 24%

YoY. For 2W, we estimate FY21 volumes to decline 11.3%, implying residual growth of 21% or a run-rate of ~275k

units.



3W volumes declined ~4.3% YoY to ~14.4k units (v/s est.: 13.5k units). We estimate total 3W volumes to decline

9% in FY21, implying residual growth of 32.5% or a run-rate of ~16.3k units.



Overall volumes are estimated to decline ~11.7% in FY21E, implying residual growth of 20.2% or a run-rate of

291.3k units.

Snapshot of volumes for Sep’20

YoY

Company Sales

Sep’20

Sep’19

MoM

YoY (%)

MoM (%)

FY21

Aug’20

FY21 YTD FY20 YTD (%) chg

chg

chg

estimate

3.7

12.7

-12.5

19.6

-4.3

-0.7

19.0

2,87,398

1,19,878

87,044

70,304

10,172

2,19,051

68,347

14.0

16.5

19.3

-0.8

41.2

10.7

24.6

11,34,76 18,09,02

7

7

4,84,945 7,58,705

3,51,290 6,27,690

2,53,539 3,39,714

44,993 82,918

8,38,39813,88,978

2,96,369 4,20,049

FY21

Residual Residual

YTD

Gr. Growth Monthly

Monthly

(%) Run rate

(%)

Run rate

20.2

11.1

45.5

5.4

32.5

-26.6

32.7

2,91,289 1,89,128

1,12,626 80,824

1,08,132 58,548

54,299 42,257

16,229

7,499

2,15,709 1,39,733

75,580 49,395

TVS Motor

Motorcycles

Scooters

Mopeds

Three-Wheelers

Total Domestic

Total Exports

3,27,692 3,15,912

1,39,698 1,23,921

1,03,877 1,18,687

69,757 58,301

14,360 15,003

2,42,529 2,44,343

85,163 71,569

-37.3 28,82,500 -11.7

-36.1 11,60,700 -15.1

-44.0 10,00,080 -6.8

-25.4

5,79,332 -10.7

-45.7

1,42,368 -9.0

-39.6 21,32,654 -32.3

-29.4

7,49,846 -1.6

1 October 2020

5

Rs Automobiles

Exhibit 2: Comparative valuation

Rating

Auto OEM's

Bajaj Auto

Hero MotoCorp

TVS Motor

Eicher Motors

Maruti Suzuki

M&M

Tata Motors

Ashok Leyland

Escorts

Auto Ancillaries

Bharat Forge

Exide Industries

Amara Raja

BOSCH

Endurance Tech

Motherson Sumi

Mahindra CIE

CEAT

Mcap

(INR b)

864

631

228

600

2,052

727

480

224

157

209

139

129

399

160

367

52

40

CMP

(INR)

2,986

3,152

480

2,197

6,794

610

134

76

1,284

448

163

756

13,517

1,135

116

138

1,001

TP

(INR)

2,960

3,900

392

2,475

7,600

723

227

72

1,175

500

203

744

14,567

1,154

135

141

1,038

P/E (x)

FY21E

17.7

20.2

46.7

43.1

0.0

21.6

0.0

NA

20.6

96.6

18.4

22.3

36.4

32.9

99.6

74.1

15.8

FY22E

16.3

15.5

27.4

26.7

0.0

17.3

0.0

33.2

17.9

29.6

14.8

19.2

29.4

24.6

20.7

14.3

13.2

EV/EBITDA (x)

FY21E

13.1

12.7

19.5

31.7

27.6

13.1

5.0

37.1

16.1

28.1

9.5

11.9

32.5

14.8

10.6

13.4

7.7

FY22E

11.4

9.5

13.7

21.7

16.9

10.9

2.6

13.8

13.8

15.7

7.9

10.4

23.0

11.6

5.4

7.1

7.0

PB (x)

FY21E

3.9

4.2

5.8

5.5

4.0

1.0

0.9

3.1

2.7

3.8

2.1

3.2

4.0

4.8

3.2

1.1

1.3

FY22 Yield (%) EPS CAGR

(%)

FY22E Div

FCF FY20-22E

3.6

2.8

6.0

-1.1

3.9

3.5

6.4

15.3

5.1

0.8

3.8

16.1

4.7

0.6

3.6

10.8

3.6

0.9

2.7

18.0

0.9

1.2

6.4

56.0

0.9

0.0

22.1

NA

3.0

1.3

4.8

40.3

2.4

0.3

3.5

8.2

3.5

1.9

2.9

3.6

4.2

2.9

1.0

1.2

0.6

2.0

1.5

0.7

1.0

1.3

0.0

1.2

3.9

5.4

1.9

2.5

3.7

9.2

5.4

-0.1

28.1

5.5

0.9

4.7

10.1

23.1

1.2

15.1

Neutral

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Neutral

Neutral

Buy

Buy

Buy

Buy

Source: Company, MOFSL

1 October 2020

6

Rs Automobiles

NOTES

1 October 2020

7

Rs Automobiles

Explanation of Investment Rating

Investment Rating

BUY

SELL

NEUTRAL

UNDER REVIEW

NOT RATED

Expected return (over 12-month)

>=15%

< - 10%

> - 10 % to 15%

Rating may undergo a change

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In

case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30 days take appropriate measures to make the recommendation

consistent with the investment rating legend.

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services,

Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which

are available on

www.motilaloswal.com.

MOFSL (erstwhile Motilal Oswal Securities Limited - MOSFL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and

Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited

(CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate

Agent for insurance products. Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf

Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at

https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

MOFSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOFSL and/or its associates and/or Research Analyst may have actual/beneficial ownership of 1% or more securities in the subject company in the

past 12 months.

MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies

mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to

such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the

analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

Research

Analyst may have served as director/officer, etc. in the subject company in the past 12 months. MOFSL and/or its associates may have received any compensation from the subject company in the past 12 months.

In the past 12 months , MOFSL or any of its associates may have:

a)

managed or co-managed public offering of securities from subject company of this research report,

b)

received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,

c)

received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.

d)

Subject Company may have been a client of MOFSL or its associates in the past 12 months.

MOFSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOFSL has incorporated a Disclosure of Interest Statement in this

document. This should, however, not be treated as endorsement of the views expressed in the report. MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients

of this report should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service

transactions. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for

other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened

for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from

clients which are not considered in above disclosures.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part or in

whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not

recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its

accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for

securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific

recommendations and views expressed by research analyst(s) in this report.

Disclosures:

Disclosure of Interest Statement

Analyst ownership of the stock

Companies where there is interest

No

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its

associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their

views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL & its

group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and

Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Financial Services Limited(SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong)

Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available

to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian

Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S:

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOFSL is not a registered

investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts,

any brokerage and investment services provided by MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule

15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment

activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934,

as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S.

registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD

rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore:

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore,

as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in

Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of

"accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must

immediately discontinue any use of this Report and inform MOCMSPL.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or

reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report

may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by

any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and

should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products

as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this

document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior

notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have

effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any

company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is

already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely

for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity

who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within

such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the

information.

The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees

responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website

www.motilaloswal.com.

CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance

Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth

Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance

Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group

company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in

securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.

* MOSFL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.

1 October 2020

8