October sales figures released by Tata Engineering & Locomotive Co. (TELCO) confirm the revival in HCV demand, with even LCVs showing glimpses of sales growth.
TELCO is India's largest medium/heavy commercial vehicles (M/HCV) (65% market share in September 1999) and light commercial vehicles (LCV) (63% market share) manufacturer. It also manufactures utility vehicles - UVs (28% market share) and passenger cars (7% market share).
Sales figures released by the company for the month of October
TELCO's October 1999 M/HCV sales have zoomed 81% to 7,076 units, although on a lower base. LCV sales are showing signs of appreciation with 13% rise to 3,003 units. UV sales improved slightly to 2,593 units (2,285 units in October 1998). However, cumulative UV sales over the period April-October 1999 witnessed 13% decline
The company can take heart from its October CV sales, which are impressive by any standards. As indicators signaling an economic revival are still very strong, M/HCV sales will continue to be robust. It will be a matter of time before even LCV sales growth will replicate M/HCV sales growth.
As far as UVs are concerned, TELCO recouped some share from Mahindra & Mahindra (M&M) in September 1999. In that month, TELCO's UV market share rose to 29% from 18% In August 1999. As far as Indica is concerned, sales continue to be strong. However, the Indica is putting pressure on the company's margins, which will continue until it breaks even post-FY2000.
Analysts have flagged a 'LONG TERM BUY' on the company due to its disappointing 2QFY2000 results. They are bullish on the company's improved M/HCV performance and expect it to pull the company into the black in FY2000. Rise in UV and LCV sales are also positive signals of a turnaround in the company's fortunes.
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