Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Telco commercial vehicle sales slowdown - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 11, 2000

    Telco commercial vehicle sales slowdown

    Tata Engineering and Locomotive Company Ltd (TELCO)'s aggregate volumes for the month of June'2000, have reported a decline of 11% YoY. The segments which have contributed to this fall are heavy, medium and light commercial vehicles (H & MCVs). On the positive side utility vehicles have gone up by 5% YoY and passenger cars by 12% YoY for the month of June'2000.

    TELCO, is India's largest commercial vehicle manufacturer. It dominates the MCV/HCV segment with a market share of 66%, the LCV segment with a 67% market share, and utility segment with 26% market share. It reported a turnover of Rs 64 bn in FY99. Its plants are located at Pune, Jamshedpur and Lucknow.

    % change
    M & HCV 5,676 3,850 -32.2%
    LCV 2,974 2,700 -9.2%
    Utility 2,100 2,204 5.0%
    CV and utility sales 10,750 8,754 -18.6%
    Cars 3,656 4,096 12.0%
    Total sales 14,406 12,850 -10.8%

    On a year to date basis the decline in H& MCVs has been lower at 4% as in the months of April and May'2000 cumulatively they reported a growth of 12% YoY. Hence the figures of June'2000 do signal a slowdown in sale of commercial vehicles. On a month on month basis for June'2000 over May'2000, H & MCVs have grown by only 2%, while for the corresponding period of the previous year (June'99 over May'99) the growth was 55% MoM.

      April-June (YTD) volumes    
    (% change)
    (% change)
    M & HCV 8,105 12,349 11,327 52.4% -8.3%
    LCV 7,658 7,817 7,008 2.1% -10.3%
    Utility 7,843 5,409 6,158 -31.0% 13.8%
    CV and utility sales 23,606 25,575 24,493 8.3% -4.2%
    Cars 279 7,820 14,450 2702.9% 84.8%
    Total sales 23,885 33,395 38,943 39.8% 16.6%

    The strong growth in FY2000 can be attributed to the pick up in the economic scenario. This resulted in higher demand for commercial vehicles during the year. The growth figures for FY2000 over FY99 are high as these are on a lower base in FY99, when the commercial vehicle segment went through a tough time as it was saddled with low demand and high dealer inventories.

    TELCO's market share in the utility vehicle segment is expected to go up in the current year. The company had lost market share in FY2000, but has become aggressive on product launches. It has successfully launched the Sumo variants to counter the competition for different market niches. The slowdown in commercial vehicle sales can be attributed to imposition of unified sales tax rate in some parts of the country. This has acted as a dampener on sales as price of commercial vehicles has gone up.

    The company’s car division continues to be a drag on profits. The company expects to break even on the Indica by the end of FY2001. FY2001 does not look very attractive as the company would have to continue to bear costs associated with Indica and Cummins engines. As a result the company will start showing improvement in their margins and profitability FY2002 onwards.

    On valuation terms, Telco's stock is trading at a price to earnings multiple of 47x FY2000's earnings.



    Equitymaster requests your view! Post a comment on "Telco commercial vehicle sales slowdown". Click here!


    More Views on News

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    Hero Motocorp Ltd: Riding on the Scooters Growth, Maintains Margins! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Good Recovery in the Scooters market, expects pick up in exports too.

    Bajaj Auto Limited: Recovery in Exports but Domestic Disappoints! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.

    Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead? (Quarterly Results Update - Detailed)

    Jul 6, 2017

    Ends the year on a Flat note. Expects good recovery in the exports market.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 17, 2017 11:46 AM