Monthly sales figures spur automobile stocks

Automobile companies’ stocks were the major gainers today on high vehicles sales in February. Tata Motors led the pack due to better-than-expected quarterly operating profit at its British arm, JLR, and its highest monthly sales in nearly three years.

“Automobile stocks’ rise was mainly due to February sales figures and nothing to do with the Budget,” said Jigar Shah, senior vice-president and head of research at KIM ENG Securities. He said the Budget proposals for an increase in excise duty and petrol and diesel prices were negative for the sector.

Low interest rates, coupled with government support in the form of a stimulus package, fuelled a record surge in sales of most auto majors. February saw Maruti Suzuki clocking its highest-ever monthly sales.

The Bombay Stock Exchange’s Auto index, which comprises 14 companies, was the best performer among sectoral indices, surging 4.3 per cent, or 308 points, to end the day at 7,478.8. Sector heavyweights such as Tata Motors, Maruti Suzuki, Bajaj Auto and Mahindra & Mahindra (M&M) rose. In comparison, the 30-share Sensex gained 2.1 per cent, or 343 points, to 16,772.56.

Tata Motors, which has the highest weight in the auto index, remained the top gainer in the ‘A’ group of stocks for most of the trading session. It ended the day at 797.10, up 12.1 per cent, the biggest single-day gain registered by any Sensex stock in the past seven months. Ashok Leyland, Escorts, Hero Honda and M&M rose 3-7 per cent each.

Analysts said Tata Motors was propelled by two key factors, the highest monthly sales in nearly three years and JLR’s higher-than-expected operating profit of Rs 1,530 crore for the third quarter of the current financial year. “Improvement in volumes, better product mix, coupled with various cost-cutting measures, led to JLR’s better-than-expected performance,” said Surjit Arora of Prabhudas Lilladher in a report released today.

Tata Motors was the centre of attention. It posted an 81.8 per cent year-on-year growth in automotive segment revenues, whereas JLR reported a 31.8 per cent YoY growth in revenue. “This led to an overall 47.1 per cent YoY growth in the company’s consolidated top line to Rs 26,000 crore,” said Arora.

Tata Motors’ total sales in February are pegged at 69,427 vehicles, 58 per cent growth over 43,811 vehicles sold in February 2009.

Meanwhile, Maruti Suzuki surged 1.8 per cent to Rs 1,489.65. The auto maker sold 96,650 vehicles in February 2010 to surpass its previous high of 96,649 recorded in January 2010. In February, the company sold 84,765 units in the domestic market, up 20 per cent over the corresponding month last year. This are the highest-ever domestic sales in a single month.

Bajaj Auto was another major gainer. It rose 1.7 per cent to Rs 1,848.85 after reporting a 75 per cent growth in sales. While two-wheeler sales rose by 77 per cent, the three-wheeler division registered 59 per cent growth.