Bloodbath! Did you invest your money in this segment? Major loss in offing

Investors are suffering in a big way as one investment option after another is suffering a big bloodbath and they are losing massive amounts of money. The benchmark Sensex indices was on hotbed as it tumbled over 325 points so far in today’s trading session. However, the loss can be attributed to the massive selling witnessed in auto stocks. Almost every auto company listed on BSE has announced their sales for September 2018 month, and looks like investors are not really pleased with the performance. The S&P BSE Auto index has plunged by 437.25 points with an intraday low of 21,201.31. However, at around 1333 hours, the index was trading at 21,320.23 below by 318.33 points or 1.47%. 

On the index, Eicher Motors was the worst performer by trading at Rs 23,600 down 4.99%, followed by Mahindra & Mahindra at Rs 807.95 per piece down 4.68%, Balkrishna Industries at Rs 1,060.30 per piece below 2.25%, Bharat Forge at Rs 612 per piece lower by 2.04% and TVS Motors at Rs 547 per piece down 1.55%. 

Not only this, even largest passenger vehicle maker Maruti Suzuki tumbled by 1% trading at Rs 7,390 per piece. Other companies like Apollo Tyre, Motherson Sumi, Hero Motocorp, Bosch and Exide Industries also slipped in the range of 0.10% to 1%. 

It was only Tata Motors that was a good performer on the index trading at Rs 232.60 per piece up 1.46%. Tata Motors was joined by other companies like Bajaj Auto, MRF, Ashok Leyland and Cummins India rising in the range of 0.13% to 0.96%. 

The decline auto stocks can be due to weak sales ahead of festive season. 

As per data of Antique Broking Stock, the passenger vehicle (PV) segment has declined for the third straight month with sales for the top six players declining by 1.7% YoY albeit on a high base with festive season shifting to Oct-Nov. 

Priya Ranjan, Apoorva Patil and Vikrant Gupta analysts at Antique said, “However, as outlined by various management commentaries, consumer sentiment has been weak, owing to rising fuel prices, interest rates, and erratic rainfall in different parts of the country.”

Maruti  saw volume growth of 1.4% to 153.5k units while M&M declined by 15.5% YoY to 21.4k units; however, growth did rebound MoM by 8.5% with the Marazzo receiving good response. Tata Motors saw volumes expand by 6.6% YoY to 18.4k units.

The trio at Antique said, “The CV segment as a whole registered a growth of 24.4% YoY, maintaining its growth momentum. Increased focus on
infrastructure, road building, affordable housing, etc., are driving the demand for M&HCVs while increased rural consumption and growth in e-commerce is pushing LCV volumes.”

The M&HCV volumes for Tata Motors/ Ashok Leyland/ Eicher's VECV/M&M grew by 26.6% YoY. AL posted a volume of 19.3k units, growing by 26% YoY, with the LCV volumes growing at 44% vs. HCV volumes by 20.6% YoY. Tata Motors CV volumes came in at ~46k units, growing by 26% YoY, while VECV witnessed a growth of 9.5% YoY, reporting a volume of 6.6k units.

Bajaj Auto continues to witness strong traction in the export markets with 2W exports volumes coming in at ~158k units, up ~29% YoY, while TVS 2W exports came in at ~49.5k units, up 13.5% YoY.

Meanwhile, M&M posted tractor volumes coming in at 37.5k units, down 17.5% YoY, on account of a high base with festive season sales expected to begin in October this year. Escorts posted volumes of 10.6k units, growing by 2.5% YoY.

As per Antique,  TVS/Hero Motocorp/Bajaj Auto have all significantly outperformed ours and consensus estimates with TVS posting volumes of ~423k units (Antique: 370k units), Bajaj Auto posting volumes of 502k units (Antique: 460k units) and HMCL posting volumes of 769k units (Antique: 710k units). Maruti continued to underperform with volumes coming in at ~162k units (Antique: 165k units).