IndiaEquityResearch Automobiles

July27,2011

SectorReport
BajajAuto Rating CurrentMarketPrice TargetPrice BloombergCode Reuterscode Avg.Vol.(3m) Avg.Val.(3m)(INRmn) 52wkH/L(INR) MCAP(INRbn/USDbn) HeroHonda Rating CurrentMarketPrice TargetPrice BloombergCode Reuterscode Avg.Vol.(3m) Avg.Val.(3m)(INRmn) 52wkH/L(INR) MCAP(INRbn/USDbn) TVSMotors Rating CurrentMarketPrice TargetPrice BloombergCode Reuterscode Avg.Vol.(3m)(mn) Avg.Val.(3m)(INRmn) 52wkH/L(INR) MCAP(INRbn/USDmn) Valuations BJAUT HH TVSL P/E(x) 03/12f 03/13f 13.8 12.2 16.4 14.5 10.8 9.8 Buy 1,426 1,733 BJAUTIN BAJA.BO 454,707 619 1,665/1,166 412.57/9.34 Reduce 1,821 1,616 HHIN HROH.BO 497,158 889 2,062/1,376 363.63/8.23

Twowheelers
Safehavenwithinautomobileindustry
The Indian twowheeler manufacturers possess superior resilience to prevailingadverseeconomicforcessuchasrisingfuelpricesandrising rates, when compared to other segments within automobiles. Domestic demand for motorcycles is likely to stay strong with rural sales growing twice as fast as urban sales. Exports may continue to grow faster than domestic sales, despite the end to DEPB. Scooters may continue to grow faster than motorcycles stemming from their appeal to niche segments. Competition is intensifying following the emergence of two significant new manufacturers. Yet, the structural storystaysrobustwithsalesvolumeslikelytogrowata12%CAGRtill FY14f. We initiate coverage on, BJAUT (Buy), HH (Reduce) and TVSL (Buy).Riskfactorsarelowerdutydrawbackrates,fuelpriceincreases, higherinterestratesandcommodityinflation. Leastaffectedbytheprevailingheadwindsintheindustry

65 TVSLIN TVSM.BO 2.01 109 87.5/43.6 24.11/546 EV/E(x) 03/12f 03/13f 8.7 9.8 10.4 9.1 4.9 5.9

Consumer affordability is being tested by the increase in fuel prices and interestrates;ouranalysisshowsthattheimpactofthesefactorsisloweron twowheelers than on passenger and commercial vehicles. Rural areas contribute45%oftwowheelersalesasagainst11%ofpassengervehiclesales. Thehighercontributionofsalesfromruralareasleveragesonthegrowingrural Buy income. Sales are partially shielded from the impact of higher interest costs 50.8 duetolimitedpenetrationoffinancingoptions.

MomentuminexportslikelytopersistdespitetheendtoDEPB
Exportscontributed12%oftwowheelersalesinFY11,upfrom7%inFY06.The robust export growth is a result of the growing acceptance of Indian two wheelers in developing countries, where they are available at competitive prices. Export demand is estimated to slow from a CAGR of 25% over FY07 FY11aswithdrawalofDEPBbenefitsislikelytoleadtoanincreaseinvehicle prices. Even after DEPB, we estimate exports to growat a CAGR of 18% over FY12fFY14f;tocontribute13%oftwowheelersalesbyFY14f.

Robustgrowthinscootersaddstotwowheelergrowth
Thegrowingacceptanceofscootersasfamilyvehicles,duetoqualitiessuchas unisex suitability, easy handling and loadbearing capacity, has led to robust salesgrowth(CAGRof18%overFY07FY11)inthedomesticmarket,outpacing mopeds (CAGR of 16%) and motorcycles (CAGR of 9%). Scooters contributed 18%ofdomestictwowheelersalesinFY11,upfrom13%inFY06.Weestimate scooterstocontribute20%ofdomestictwowheelersalesbyFY14f.

InitiatecoverageonBJAUT,HHandTVSL
Thetargetpricesforthethreestocksarebenchmarkedtothehistoricalmean ofHH.WevalueBJAUTatHHsfiveyearhistoricalP/E,whilewevalueTVSLata 15% discount due to lower earnings growth. We value HH at 12.8x P/Eat a 10%discounttoitsfiveyearhistoricalP/Eduetolowerearningsgrowth.We initiatecoverageonBJAUT(Buy),HH(Reduce)andTVSL(Buy).Riskfactorsare lower duty drawback rates, fuel price increases, higher interest rates and commodityinflation.
SriRaghunandhanNL,+9102266842863 raghunandhan.nl@avendus.com
Pleaserefertothedisclaimertowardstheendofthedocument.

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InvestmentSummary
TheIndiantwowheelermanufacturerspossesssuperiorresiliencetoprevailingadverseeconomicforces.Weestimate theadditionalburdentotheownerofatwowheelerfromrisingfuelpricesandrisinginterestratestobelessthanhalf thattotheownerofacar,whenmeasuredrelativetoincomes.Theruralmarketabsorbed45%ofFY11salesoftwo wheelersandislikelytogrowtwiceasfastasurbansalestillFY14f.Exportswouldstayasignificantdriverofmotorcycle sales.DespitetheendtotheDEPBschemeweestimateathreeyearCAGRof18%tillFY14f.Scootersaleshadgrown twiceasfastasmotorcyclesinthepastfouryears.Theirstrongappeal innichesegmentsislikelytopreservehigher growth. Competition within the Indian twowheeler market may intensify with the emergence of Honda Motorcycle (not listed) and, Mahindra & Mahindra (not rated). Yet, the structural story stays robust with sales volumes likely to growata12%CAGRtillFY14f.WeinitiatecoverageonBJAUT(Buy),HH(Reduce)andTVSL(Buy).

Leastaffectedbytheprevailingheadwindsintheindustry
Leastaffectedthebyfuel priceincreasesand interestratehikes.

TheIndiantwowheelermanufacturersaretheleastimpactedbyadverseforcessuchasrisingpricesof fuel,risinginterestratesandcommodityinflation.Theadditiontothefuelbillofatypicaltwowheeler owner, following a 10% rise in the price of petrol, is estimated at c0.2% of pretax income. The correspondingimpactforacarownerisestimatedatc0.5%ofpretaxincome.Similarly,theadditional burdenfollowinga1%riseintheinterestrateonavehicleloanwouldcorrespondtoc0.1%andc0.5% of their pretax incomes, respectively. Meanwhile, the adverse effect of an increase in commodity prices such as steel and aluminum is marginally lower for twowheelers in comparison to passenger vehicles.Growthintwowheelersaleshasbeenledbytheruralsegment,whichcomprised45%oftotal sales in FY11. Thus, regardless of the headwinds, we believe the structural story in the twowheeler segmentisstillintactandthesegmentisestimatedtogrowataCAGRof12%overFY12fFY14f.

MomentuminexportslikelytopersistdespitetheendtoDEPB
Stronggrowthinexports isduetopositioningof Indiantwowheelersat competitivepricesinthe globalmarket.

Exportsasapercentageoftotalsaleshavegrownto12%inFY11,from7%inFY06.Thestronggrowth inexports wasdueto positioning of Indiantwowheelersat competitive prices inthe global market, whichisdominatedbyJapaneseandChineseOEMs.Indianvehiclesarepricedatpricepointsbetween Japanese and Chinese vehicles. Countries with low twowheeler penetration or inadequate public transportsystemsarethetargetsforIndiantwowheelerexports.Exportdemandisestimatedtoslow fromaCAGRof25%overFY07FY11aswithdrawaloftheDutyEntitlementPassBook(DEPB)benefits islikelytoleadtoanincreaseinvehicleprices.EvenafterwithdrawalofDEPB,weestimateexportsto growataCAGRof18%overFY12fFY14f;likelytocontribute13%oftwowheelersalesbyFY14f.

Robustgrowthinscootersaddstotwowheelergrowth
Scootershaveoutpaced thegrowthofmopedsand motorcycles,giventhe widercustomerbase.

Scootersarethepreferredfamilyvehicleofmiddleclassfamiliesduetohigherpower,easeofhanding, loadbearingcapacityandunisexsuitability.Scootersarepreferredbyyoungadults(learners),women andbymenbeyondtheageof45.Inthedomesticmarket,scooters,whichgrewataCAGRof18%over FY07FY11,haveoutpacedmopeds(16%CAGR)andmotorcycles(9%CAGR),giventhewidercustomer base. Scooters contributed 18% of domestic twowheeler sales in FY11 as against 13% in FY06. We estimatescooterstocontribute20%ofdomestictwowheelersalesbyFY14f.

Increasingcompetitionin thetwowheelersegment hasledtolossofmarket share,higheradvertising expenditureandlower pricingpowerforexisting players.

Newwaveofcompetitorsleavingtheirmark
The increasing competition in the twowheeler segment has led to loss of market share, higher advertising expenditure and lower pricing power for existing players. In the domestic motorcycle segment,HeroHondas(HHIN)marketsharedeclinedto54.6%inFY11asagainst58.5%inFY10.Inthe domestic scooter segment, Honda Motorcycle and Scooter Indias (HMSI) market share declined to 43.1%inFY11asagainst50.6%inFY10.Ouranalysisofthepricingpowerinthetwowheelersegment revealsthatrawmaterialcostasapercentageoftotalincomeincreasedto72.1%aggregateofHH, BajajAuto(BJAUTIN)andTVSMotorCompany(TVSLIN)intheMar11quarterasagainst68.2%inthe

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Mar10quarter,whereasEBITDAmargindecreasedto14.5%intheMar11quarterasagainst18.1%in theMar10quarter.Thus,allthecompaniesfacedmargincontractionduringFY11.

Relativevaluationsappliedtoarriveatpricetargets
WeusetherelativevaluationmethodtoderivethestandalonevaluationforBJAUTandTVSL.Weuse HHasabenchmark,asitisthelargesttwowheelercompany,tovalueBJAUTandTVSL.BJAUT,TVSL and HH represent the three largest twowheeler players in India. We value BJAUT at HHs fiveyear historicalP/E,whilewevalueTVSLata15%discountduetolowergrowth.IncaseofHH,thevaluations takenarebelowthefiveyearmeanduetolowerearningsgrowth.WevalueHHata10%discountto its fiveyear historical P/E. We initiate coverage on BJAUT (Buy), HH (Reduce) and TVSL (Buy). Risk factors are lower duty drawback rates, fuel price increases, higher interest rates and commodity inflation.

Relativevaluationsused toderivefairvaluesfor BJAUTandTVSL.

Initiatecoverageon3twowheelercompanies
Initiatecoveragewitha BuyratingandJun12 targetofINR1,733.

BajajAuto(BJAUT):BJAUThaslinedupnewmodelssuchasKTMDukeandBoxer,andvariantlaunches fordomesticandexportmarketsinFY12f.Theselaunchesarelikelytostrengthentheproductlineup andaidgrowth.BJAUTsvehiclesarewellacceptedinexportmarketsCAGRof43%and25%intwo and threewheeler exports over FY07FY11, respectively. BJAUT is likely to maintain higher EBITDA margins of 19%20% over FY12fFY14f due to exposure to the highgrowth threewheeler passenger segment.WeestimateBJAUTssalestogrowat12%overFY12fFY14f.OurJun12TPforBJAUTstands atINR1,733,anupsideof22%.InitiatecoveragewithaBuyrating. HeroHonda(HH):TheendoftheJVwithHondaMotorpresentsmanychallenges.Themostpressing oneistostrengthenR&Doperationstochurnoutnewmodelsandupgradevehiclesforthenextlevel of emission norms. Another challenge stems from the rise in competitive intensity posed by Honda Motors solo presence in the country. HH faces margin pressure due to a rise in R&D, royalty and advertising expenditures as a result of the split. In addition to breakup woes, the companys sales growthislimitedbyproductionconstraintsandslowinglaunches.Weestimatesalesgrowthtotaperto aCAGRof11%overFY12fFY14f.OurJun12TPforHHstandsatINR1,616,whichimpliesadownsideof 11%.InitiatecoveragewithaReducerating. TVS Motor Company (TVSL): New launches in FY12f are likely to aid growth and strengthen TVSLs portfolio.ThescootersegmentislikelytogrowataCAGRof17%overFY12fFY14f,ledbythegrowing acceptance of scooters as a family vehicle. The company entered the lucrative threewheeler passengersegmentinFY08andsucceededincapturing6%marketshareinFY11.Weestimatethree wheelersalestogrowataCAGRof 15%overFY12fFY14f. TVSLsuccessfullyrodetheexportgrowth story (CAGR of 25% over FY07FY11), led by the growing acceptance of Indian vehicles in several developing countries. We estimate TVSLs exports to grow at a CAGR of 15% over FY12fFY14f. We estimatesalestogrowataCAGRof12%overFY12fFY14f.OurJun12TPforTVSLstandsatINR65,an upsideof28%.InitiatecoveragewithaBuyrating.

Initiatecoveragewitha Reduceratingwitha Jun12targetofINR1,616.

Initiatecoveragewitha BuyratingandJun12 targetofINR65.

Exhibit1: RelativevaluationsasonJuly26,2011
BJAUT HH TVSL CMP Rating (INR) 1,426 51 Buy Buy Target Price (INR) 1,733 1,616 65 Upside PriceChange(%) (%) 22 11 28 1m 2.7 2.3 2.8 3m 4.0 2.8 16.9 6m 10.2 2.6 15.3 P/E FY12f 13.8 16.4 10.8 FY13f 12.2 14.5 9.8 FY14f 10.7 14.2 8.9 EV/E FY12f 9.8 10.4 5.9 FY13f 8.7 9.1 4.9 FY14f 7.6 8.5 4.0 ROCE (%) FY12f 49.2 73.0 13.1 ROE (%) FY12f 52.1 78.6 20.8

1,821 Reduce

Source:Bloomberg,AvendusResearch

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TableofContents

InvestmentSummary ........................................................................................................................ 2
Leastaffectedbytheprevailingheadwindsintheindustry..................................................................2 MomentuminexportslikelytopersistdespitetheendtoDEPB..........................................................2 Robustgrowthinscootersaddstotwowheelergrowth......................................................................2 Newwaveofcompetitorsleavingtheirmark .......................................................................................2 Relativevaluationsappliedtoarriveatpricetargets............................................................................3 Initiatecoverageon3twowheelercompanies ....................................................................................3

Leastaffectedbytheprevailingheadwindsintheindustry.............................................................. 5
Lowerimpactoffuelpricesontwowheelerowners............................................................................5 Lowerimpactofinterestratehikesontwowheelerowners ...............................................................6 Marginallylowerimpactofcommodityinflationontwowheelers......................................................7 Increasingshareofruralsales ...............................................................................................................9 Structuralgrowthstorystillintact.......................................................................................................10

MomentuminexportslikelytopersistdespitetheendtoDEPB.................................................... 12
ExportslikelytogrowataCAGRof18%overFY12fFY14f .................................................................12 Indiantwowheelerspositionedatcompetitiveprices .......................................................................12 LowpenetrationinAfrica,LatinAmericaandAsiancountries ...........................................................13 WithdrawalofDEPBlikelytoerodeFY12fEPSbyupto6%................................................................14

Robustgrowthinscootersaddstotwowheelergrowth ................................................................ 16
Widercustomerprofileforscooters ...................................................................................................16 Majorplayersinscooter,motorcycleandmopedsegments ..............................................................17 Indiantwowheelerscontribute22%24%ofglobaltwowheelers ....................................................18

Newwaveofcompetitorsisleavingitsmark .................................................................................. 19
Lossofmarketshareforleaders .........................................................................................................19 Marketingexpenditureremainsatsimilarlevelsinrelativeterms.....................................................19 Reducedabilitytopassthroughcosts.................................................................................................20

Relativevaluationsappliedtoarriveatpricetargets ...................................................................... 22
ValuationsderivedforBJAUTandTVSLusingHHasabenchmark .....................................................22 Forecastslowerthanconsensusestimates .........................................................................................23 Initiatecoverageon3twowheelercompanies ..................................................................................23 Riskfactors ..........................................................................................................................................24

Annexure ......................................................................................................................................... 25

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Leastaffectedbytheprevailingheadwindsintheindustry
The Indian twowheeler manufacturers are the least impacted by adverse forces such as rising prices of fuel, rising interestratesandcommodityinflation.Theadditiontothefuelbillofatypicaltwowheelerowner,followinga10% rise in the price of petrol, is estimated at c0.2% of pretax income. The corresponding impact for a car owner is estimated at c0.5% of pretax income. Similarly, the additional burden following a 1% rise in the interest rate on a vehicleloanwouldcorrespondtoc0.1%andc0.5%oftheirpretaxincomes,respectively.Meanwhile,theadverseeffect ofanincreaseincommoditypricessuchassteelandaluminumismarginallylowerfortwowheelersincomparisonto passengervehicles.Growthintwowheelersaleshasbeenledbytheruralsegment,whichcomprised45%oftotalsales inFY11.Thus,regardlessoftheheadwinds,webelievethestructuralstoryinthetwowheelersegmentisstillintactand thesegmentisestimatedtogrowataCAGRof12%overFY12fFY14f.

Lowerimpactoffuelpricesontwowheelerowners
Petrol prices increased exponentially over the past 15 months, leading to an increase inthe running cost of vehicles. Petrol prices currently stand at INR68.3 (Mumbai), a 31% increase from INR52.2 in Apr10,whereasdieselpriceshaveonlyincreasedbyc15%. Exhibit2: Trendinfuelprices(INR)
Hikeinmonthof: Apr10 Jun10 Sep10 Sep10 Nov10 Nov10 Dec10 Jan11 May11 Jun11 Jul11 Source:Bloomberg Petrolprice(INR) 52.2 55.88 55.97 56.25 57.01 57.35 60.46 63.08 68.33 7 7.2 7.8 9.2 9.9 15.8 20.8 30.9 Cumulativerise(%) Dieselprice(INR) 39.88 41.98 42.06 45.84 45.99 Cumulativerise(%)

5.3
5.5 14.9 15.3

Petrolpricesonan uptrend.

A10%increaseinfuelpricesleadstoa0.2%increaseinexpenditureasapercentageofannualpretax incomeforatwowheelerowner,whiletheincreaseis0.5%forapassengervehicleowner. Exhibit3: Sensitivityanalysisimpactofhigherpetrolprices

Fuelcostperkmcurrent(INR) Annualfuelcost(INR)* Annualpretaxincomeofvehicleowner(INRmn) Fuelcostas%ofannualincome(%) Assuming10%increaseinfuelprices Fuelcostperkmpostincrease(INR) Annualfuelcostpostincrease(INR) Fuelcostas%ofannualincomepostincrease(%) Riseinfuelcostas%ofannualincome(%) 1.25 13,529 2.7 0.2 Twowheelers 1.14 12,299 0.50 2.5 5.37 57,983 6.3 0.5 PassengerCars 4.88 52,712 0.91 5.8

Source:AvendusResearchNote:*Assumingvehicleusageof30kmsperday.

Impactofpetrolpricehike isloweronatwowheeler ownerdespitelower income.

Ourestimateoftheincomeoftwowheelerandpassengervehicleownersarebasedontheestimated contribution to demand across various categories of households (Source: NCAER). The income of a twowheeler owner is estimated at INR0.50mn, while the income of a passenger vehicle owner is

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estimatedatINR0.91mn.Theincomeofapassengervehicleowneris1.8xhigherthanatwowheeler owner. Exhibit4: Annualpretaxincomeofavehicleowner

Annualpretaxincomeofatwowheelerowner(INRmn) WeightsEstimated AverageIncome contributiontodemand(%) Global(>INR1.7mn) Middleclass(INR0.34mntoINR1.7mn) Aspirers(INR0.15mntoINR0.34mn) Deprived(<INR0.15mn) AverageIncome A 1.70* 1.03 0.23 0.08 B 2% 32% 58% 8% Annualpretaxincomeofpassengervehicleowner(INRmn) WeightsEstimated AverageIncome contributiontodemand(%) A Global(>INR1.7mn) Middleclass(INR0.34mntoINR1.7mn) Aspirers(INR0.15mntoINR0.34mn) Deprived(<INR0.15mn) AverageIncome 1.70 1.03 0.23 0.08 B 11% 67% 22% 0%

Householdtype

WeightedAverageIncome AxB 0.03 0.33 0.13 0.01 0.50

Householdtype

WeightedAverageIncome AxB 0.18 0.68 0.05 0.00 0.91

Source:NCAER,AvendusResearchNote:*Conservativeaverageincomeestimateforglobalhousehold.

Lowerimpactofinterestratehikesontwowheelerowners
Interestratesroseby200bpto300bpduringFY11.
Interestratesonan uptrend.

Exhibit5: StateBankofIndiasPLR
15

13

11

9 Mar10

Jun10

Sep10

Dec10

Mar11

Jun11

Source:StateBankofIndia

Theinterestcostasapercentageofthemonthlyrunningcostofavehicleis24%fortwowheelersand 43%forpassengervehicles. Automobiles 6

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Exhibit6: Interestcostasapercentageofrunningcost(%)
(A+B+C) A B C Interestcostassumptionsforathreeyearloan Averagecostofvehicle(INR) Loanamount(80%;INR) InterestrateHDFCBank(Flatrate)(%) Interestcostasapercentageofrunningcost(%) Runningcostpermonth(INR) Interestcostpermonth(INR)* Fuelcostpermonth(INR) Maintenancecostpermonth(INR) Twowheeler 24 1,501 358 1,025 118 47,000 37,600 11.4 524,000 419,200 12.4 Passengervehicle 43 10,026 4,323 4,393 1,310

Source:HDFCBank,AvendusResearchNote:*Assuminginterestforathreeyearloan.

Theadditionalburden followinga1%riseinthe interestrateonavehicle loanwouldcorrespondto 0.1%and0.5%ofannual pretaxincomesfortwo wheelerandpassenger vehicleowner respectively.

A1%increaseintheinterestrateonavehicleloanleadstoa0.1%increaseincostasapercentageofpre taxincomeforatwowheelerowner,whiletheincreaseis0.5%forapassengervehicleowner. Exhibit7: Sensitivityanalysisimpactofhigherinterestrate

Interest(%)Flatrate Annualinterestcost(INR) Annualpretaxincomeofvehicleowner(INRmn) Interestcostas%ofannualincome(%) Assuming1%increaseininterestrate Interest(%)Flatratepostincrease Annualinterestcostpostincrease(INR) Interestcostas%ofannualincomepostincrease(%) Riseininterestcostas%ofannualincome(%) Interestcostassumptionsforathreeyearloan Averagecostofvehicle(INR) Loanamount(80%;INR) Twowheeler 11.4 4,296 0.50 0.86 12.4 4,672 0.93 0.07 47,000 37,600 524,000 419,200 13.4 56,068 6.13 0.46 Passengervehicle 12.4 51,876 0.91 5.67

Source:HDFCBank,AvendusResearchNote:*Assuminginterestforathreeyearloan.

Marginallylowerimpactofcommodityinflationontwowheelers
Exhibit8: Rubberprices(INRperkilogram)
300 70% 200

100

0 Apr09

Jul09

Oct09

Jan10

Apr10

Jul10

Oct10

Jan11

Apr11

Source:Capitaline

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Exhibit10: Aluminumprices(USDpertonne)
Galvanized 3,000 21% 2,500

Exhibit9: Steelprices(USDpertonne)
Steel,aluminumand rubberpricesareonan uptrend.
Hotrolled 1000 16% 800 Coldrolled

2,000 600

1,500

400 Apr09

Oct09

Apr10

Oct10

Apr11

1,000 Apr09

Oct09

Apr10

Oct10

Apr11

Source:Bloomberg

Source:Bloomberg

Pricesofsteel,aluminumandrubberincreasedby16%,21%and70%,respectivelyinFY11impacting therawmaterialscostofOEMsintheautomobileindustry.
Theimpactofcommodity inflationismarginally lowerfortwowheelers thanforpassenger vehicles.

Theadverseeffectofanincreaseincommoditypricessuchassteelandaluminumismarginallylower fortwowheelersduetothehigherproportionofconversioncostasapercentageoftotalrawmaterial cost. Conversion cost refers to the expenditure incurred for converting commodities into finished goodsthatarebuiltintoavehicle.Conversioncostasapercentageoftotalrawmaterialcoststandsat 69%fortwowheelers,incomparisonto66%and48%forpassengervehiclesandmediumandheavy commercialvehicles(MHCVs),respectively. Exhibit11: Conversioncostasapercentageoftotalrawmaterialcost(%)
(INR) Twowheeler Passengervehicle Mediumandheavy commercialvehicle Source:AvendusResearch Costof commodities A 8,456 78,739 458,067 Conversion Totalrawmaterial Conversioncostofvendorsasapercentage costofvendors cost oftotalrawmaterial/cost(%) B 18,544 153,261 421,933 A+B 27,000 232,000 880,000 69 66 48

A10%increaseincommoditypricesislikelytoimpacttherawmaterialcostofatwowheelerby3.1%, comparedto3.4%forpassengervehiclesand5.2%forMHCVs. Exhibit12: Increaseinrawmaterialcostduetohighercommodityprices(%)

Costpervehicle(INR) Costofcommodities(INR) Increaseincommodityprices(%) Increaseincommodityprices(INR) Totalrawmaterialscost(INR) Increaseinrawmaterialscost(%) Source:AvendusResearch Twowheelers 8,456 10 846 27,000 3.1 Passengervehicles 78,739 10 232,000 3.4 Mediumandheavy commercialvehicles 458,067 10 880,000 5.2

7,874 45,807

Conversion of commodities into finished goods is done by automobile component manufacturers or vendors.Thus,conversioncostreferstothepaymentmadebyOEMstothevendors.Asvendorsare dependentonOEMs,thepriceincreasegiventovendorsforconversionofcommoditiesintofinished goodsishalftheriseincommodityprices.A5%increase(halfofthe10%increaseincommodityprices) inconversioncostislikelytoimpacttherawmaterialcostofatwowheelerby3.4%,comparedto3.3% forpassengervehiclesand2.4%forMHCVs. Automobiles 8

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Exhibit13: Increaseinrawmaterialcostduetoincreaseinconversioncostofvendors(%)
Costpervehicle(INR) Conversioncostofvendors(INR) Increaseinconversioncostofvendors(%) Increaseinconversioncostofvendors(INR) Totalrawmaterialscost(INR) Increaseinrawmaterialscost(%) Source:AvendusResearch Twowheelers 18,544 5 927 27,000 3.4 Passengervehicles Medium&heavycommercialvehicles 153,261 5 7,663 232,000 3.3 421,933 5 21,097 880,000 2.4

The combined effect of the increase in commodity prices (assuming 10%) and conversion cost (assuming5%halfofincreaseincommodityprices)islikelytoimpacttherawmaterialcostofatwo wheelerby6.6%,comparedto6.7%forpassengervehiclesand7.6%forMHCVs.Thus,thedifferencein totalimpactonrawmaterialcostbetweentwowheelersandpassengervehiclesismarginal. Exhibit14: Increaseintotalrawmaterialcost(INR)
A B Costpervehicle) Costofcommodities(INR) Increaseincommodityprice(%) Increaseincommodityprice(INR) Conversioncostofvendors(INR) Increaseinconversioncostofvendors(%) Increaseinconversioncostofvendors(INR) Totalrawmaterialcost(INR) Increaseincost(%) 27,000 1,773 6.6% 18,544 5.0% 927 Twowheelers 8,456 10.0% 846 Passengervehicles 78,739 10.0% 7,874 153,261 5.0% 7,663 232,000 15,537 6.7% 880,000 66,903 7.6% 421,933 5% 21,097 Medium&heavy commercialvehicles 458,067 10.0% 45,807

A+B Increaseincost(INR) Source:AvendusResearch

Therawmaterialcostpervehicleincreasedby9%,11%and12%forBJAUT,TVSLandHH,respectively, inFY11.WedonotestimatethecommoditypriceincreaseinFY12ftobeassevereasthatinFY11.We estimatetherawmaterialcostpervehicletoincreaseby3%4%fortwowheelercompanies,basedon our projections for steel (increase of 14% in FY12f over average FY11 prices), aluminum (increase of 4%)andrubber(increaseof16%)prices.

Increasingshareofruralsales
Strongruraldemanddue tolowerpenetrationand risingincome.

Theruraldemandfortwowheelershasconsistentlyoutperformedurbandemand.Ruraldemandhas beenincreasingduetolowerpenetrationandrisingincomelevels.Ruralpenetrationstandsat9%in FY11,whereasurbanpenetrationstandsat40%. Exhibit15: TwowheelerpenetrationinruralandurbanareasinFY11(%)

Households Rural Urban Overall Penetration(%) 9 40 27

Ruraldemandgrowthhas outpacedurbandemand.

Source:Company

Theruraldemandgrowth(CAGRof16%overFY07FY11)hasoutpacedurbandemandgrowth(CAGRof 8%).

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Higherincomeinrural areasisdrivenbyrecord cropproduction,higher farmproductpricesand ruraljobguarantee schemes.

Twowheelers

Only 25% of total twowheeler sales are funded by loans, significantly lower than that for other automobilesegments(forpassengerandcommercialvehicles,60%65%ofsalesarefundedbyloans). Thepenetrationoffinanceavenuesislowerinruralareas;inspiteofthis,ruralareascontribute45%of twowheelersales.Thisindicatesahigherpercentageofcashpurchases,drivenbyhigherincome.The higherincomeinruralareasisdrivenbyrecordcropproduction,higherfarmproductpricesandrural jobguaranteeschemes. Theruralcontributiontodemandishigherfortwowheelers(45%inFY11)thanforpassengervehicles (11%).Twowheelercompaniesderive45%50%oftheirrevenuesfromruralareas.Totakeadvantage of the highgrowing rural demand, companies are further expanding their dealership network and touchpointstopenetratedeeperintoruralareas. Exhibit16: DealershipnetworkandtouchpointsFY11

Companiesareexpanding theirnetworkto penetratedeeperinto ruralareas.

HH BJAUT TVSL Source:Company

Dealers 800 610 700

Touchpoints 4,400 4,270 2,700

Structuralgrowthstorystillintact
Ayoungpopulation impliesalargerworkforce andlesserdependents, leadingtohigher discretionaryspend.

Indiasyoungpopulation,growingmiddleclassandrisingincomelevelsarefuelingthehigherspendon twowheelers.Almost50%ofthepopulationisunder25,whilec65%isunder35.Ayoungpopulation impliesalargerworkforceandlesserdependents,leadingtohigherdiscretionaryspend. Exhibit17: Populationbyagegroups

50+ 14% 3549 17% 014 36%

2534 15%

1524 18%

Source:2001Censusdata

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Exhibit18: Estimatedgrowthinmiddleclasshouseholds(INRmn)
Over70%ofmiddleclass householdsowntwo wheelers;thissectionis likelytogrowataCAGRof 11%CAGRFY12fFY16f.
150 113.8 100 11%CAGR ` 50 31.4 10.7 0 FY01 FY05 FY11e FY16e FY26e 13.3 53.3

Thesalespriceofavehicle asaratioofpercapita income(FY11)fortwo wheelersandpassenger vehiclesis0.9xand9.6x, respectively,implying easyaffordabilityinthe twowheelersegment.

Source:NCAER

Over70%ofmiddleclasshouseholdsowntwowheelers;thissectionislikelytogrowataCAGRof11% overFY12eFY16e(Source:NCAER). The sales price of a vehicle as a ratio of per capita income (FY11) for twowheelers and passenger vehiclesis0.9xand9.6x,respectively,implyingeasyaffordabilityinthetwowheelersegment. Thestructuralstoryinthetwowheelersegmentisstillintactwithruraldemandinthedriversseat. WeestimatethetwowheelersegmenttogrowataCAGRof12%overFY12fFY14fledbyaCAGRof 12%indomesticgrowthand18%inexportgrowth.

Exhibit19: Percapitaincome(INR)
70,000

Exhibit20: Domestictwowheelersales(mn)
18 12%CAGR 14

50,000 13%CAGR 10 30,000 6 11%CAGR

10,000 FY01
Source:RBI

FY03

FY05

FY07

FY09

FY11

2 FY96

FY99

FY02

FY05

FY08

FY11

FY14f

Source:SIAM,AvendusResearch

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MomentuminexportslikelytopersistdespitetheendtoDEPB
Exportsasapercentageoftotalsaleshavegrownto12%inFY11,from7%inFY06.Thestronggrowthinexportswas duetopositioningofIndiantwowheelersatcompetitivepricesintheglobalmarket,whichisdominatedbyJapanese andChineseOEMs.IndianvehiclesarepricedbetweenJapaneseandChinesevehicles.Countrieswithlowtwowheeler penetrationorinadequatepublictransportsystemsarethetargetsforIndiantwowheelerexports.Exportdemandis estimatedtoslowfromaCAGRof25%overFY07FY11aswithdrawalofDEPBbenefitsarelikelytoleadtoanincrease invehicleprices.EvenafterwithdrawalofDEPB,weestimateexportstogrowataCAGRof18%overFY12fFY14f;likely tocontribute13%oftwowheelersalesbyFY14f.

ExportslikelytogrowataCAGRof18%overFY12fFY14f
The twowheeler segment has witnessed robust growth in exports (CAGR of 25% over FY07FY11), chieflydrivenbymotorcycles(CAGRof31%).DuringFY07FY11,exportgrowthoutperformeddomestic growth(CAGRof11%)byahugemargin.Exportsasapercentageoftotalsaleshavegrownfrom7%in FY06to12%inFY11.Weestimatethecontributionofexportstogrowto13%oftwowheelersalesby FY14f.
Exportgrowthhas outpaceddomestic growth.

Exhibit21: Exportsales
Exports Scooters Growth(%) Motorcycles Growth(%) Mopeds Growth(%) Total Growth(%) Source:SIAM 513,169 43,181 386,054 FY06 83,934 FY07 35,685 57 545,887 41 37,566 13 619,138 21 FY08 25,482 29 776,007 42 18,224 51 819,713 32 FY09 25,865 2 970,969 25 7,300 60 1,004,134 22 FY10 30,125 16 1,102,978 14 6,905 5 1,140,008 14 FY11 CAGR:FY07FY11(%) 52,312 74 1,480,983 34 6,295 9 1,539,590 35 25 32 31 9

Exhibit22: Domesticsales
Domestic Scooters Growth(%) Motorcycles Growth(%) Mopeds Growth(%) Total Growth(%) Source:SIAM FY06 909,051 5,810,599 332,741 7,052,391 FY07 940,673 3 6,553,664 13 355,870 7 7,850,207 11 FY08 1,050,109 12 5,768,342 12 413,759 16 7,232,210 8 FY09 1,145,798 9 5,835,145 1 431,214 4 7,412,157 2 FY10 1,462,507 28 7,341,265 26 564,584 31 26 FY11 CAGR:FY07FY11(%) 2,073,797 42 9,019,090 23 697,418 24 26 18 9 16 11

9,368,356 11,790,305

Indiantwowheelerspositionedatcompetitiveprices
ChineseandJapaneseOEMsdominatetheworldtwowheelermarket.Chinesevehiclesarecheapand are positioned at the lower end of the market, whereas Japanese vehicles are expensive. In such a scenario,IndianOEMsarepricingtheirproductsbetweenJapaneseandChinesevehicles. IntheNigerianmarket,BJAUTsellstwowheelersata40%premiumtoChinesevehicles.Despitehigher prices,BJAUThassuccessfullycapturedc28%marketshare(secondlargestplayer)inthismarket. IntheIndonesianmarket,BJAUTofferstwowheelersatcheaperpricesagainstJapanesevehicles.The companysellsthreevariantsofthePulsarinIndonesianmarket.HondaMotors(7267JP;NR)vehicles arecostlierthanBJAUTsvehiclesbyatleast15%34%intheirrespectivecategories. Automobiles 12

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Exhibit23: ComparisonofBJAUTsvehicleswithHondasvehiclesinIndonesia
Hondasvehiclesare costlierthanBJAUTs vehiclesbyatleast15% 34%.
Engine[cc] Price[IDR] PricedifferencewithBJAUT(%) Engine[cc] Price[IDR] PricedifferencewithBJAUT(%) Engine[cc] Price[RP] PricedifferencewithBJAUT(%) Source:Company,AvendusResearch BJAUT Pulsar135LS 135 14,750,000 BJAUT Pulsar180DTSi 179 15,900,000 BJAUT Pulsar220DTSi 220 18,600,000 Honda Citisport1 125 17,190,000 17 Honda MegaproCW 149 19,500,000 23 Honda TigerD/SHeadlight 197 24,940,000 34 Honda MegaproSW 149 18,300,000 15

Targetexportcountries forIndianOEMsare countrieswithlow penetrationorinadequate publictransportsystems.

LowpenetrationinAfrica,LatinAmericaandAsiancountries
IndianOEMsaretargetingAfrica,theMiddleEast,LatinAmerica,SouthAsia,SouthEastAsiaandWest Asiancountries.Manyofthesecountrieshavelowtwowheelerpenetration.Someofthesecountries arehaveinadequatepublictransportsystems,whereinasignificantpartoftheruralpopulationhasno accesstothetransportsystem.Thismakesthemidealtwowheelerexportdestinations. Exhibit24: Twowheelerpenetrationacrosscountries(penetrationperthousandpersons)

Source:MeszlerEngineeringServices2007

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Exhibit25: RuralAccessIndexproportionofruralpopulationwithaccesstotransportsystems
Region Africa LatinAmerica Asia Source:WorldBank2005 Country Sudan Tanzania Kenya Nigeria Brazil Peru Nepal Myanmar Bangladesh Bhutan India RAI(%) 5 38 44 47 53 43 17 23 37 47 61

WithdrawalofDEPBlikelytoerodeFY12fEPSbyupto6%

The DEPB scheme, which gave liberal reimbursements to exporters at 8%9% free on board (FOB) value, is coming to an end. Exporters will have to migrate to the Duty Drawback scheme where the reimbursementislikelytobemuchlower(estimatedtobebetween1%and5%ofFOBvalue). ThegovernmenthasannouncedthewithdrawaloftheDEPBschemefromSep11.Thegovernmentmay also extend the scheme till Dec11 as the rates under the Duty Drawback scheme are yet to be determined.
Wehaveassumedthat companiesarelikelyto increasevehiclepricesand lowerdistributor commissionsbyupto4% tocompensatefortheloss ofDEPBbenefits.

We did asensitivity analysis to gaugetheimpact ontheFY12f EPS, based on DEPBexpiry dates and DutyDrawbackrates. We have assumed that companies are likely to increase vehicle prices and lower distributor commissionsbyupto4%tocompensateforthelossofDEPBbenefits.Ifthedifferencebetweenthe DEPBrateandtheDutyDrawbackrateismorethan4%,itislikelytoadverselyaffecttheFY12fEPS.For instance, if the new Duty Drawback rateis 3%andthe DEPB scheme expires in Sep11, then BJAUTs FY12fEPSislikelytobeadverselyaffectedby1.5%asshowninExhibit26. Exhibit26: ImpactofwithdrawaloftheDEPBschemeonFY12fEPS(%)
DEPBschemeextensiondate BJAUT TillSep11 TillDec11 TVSL TillSep11 TillDec11 HH TillSep11 TillDec11 Source:AvendusResearch 0.0 0.0 0.1 0.1 0.2 0.1 0.3 0.2 0.4 0.2 0.0 0.0 1.6 0.8 3.2 1.7 4.7 2.5 6.3 3.3 0.0 0.0 0.8 0.3 5.0 DutyDrawbackRates(%) 4.0 1.5 0.7 2.2 1.0 2.9 1.3 3.0 2.0 1.0

Similarly,wedidasensitivityanalysistogaugetheimpactofDEPBexpiryontheFY13fEPS(shownin Exhibit27). Automobiles 14

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Exhibit27: ImpactofwithdrawaloftheDEPBschemeonFY13fEPS(%)
Company BJAUT HH TVSL Source:AvendusResearch 5.0 0.0 0.0 0.0 DutyDrawbackRates(%) 4.0 1.7 0.2 3.1 3.0 4.5 0.5 8.5 2.0 6.4 0.8 12.1 1.0 8.7 1.0 16.4

As TVSL has a lower EBITDA margin (6.2% in FY12f) than BJAUT (19.8% in FY12f) and HH (14.4% in FY12f),theimpactoftheDEPBschemeexpiryislikelytobehigherforthecompany. Wehaveassumedthenewdutydrawbackrateat5%inourestimatesforthecompanies.Weestimate thegrowthinexportstoslowfromaCAGRof25%overFY07FY11,ascompaniesmaytakepricehikes tocompensateforthelossofDEPBbenefits.EvenafterwithdrawalofDEPB,weestimateexportsto growataCAGRof18%overFY12fFY14f.

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Robustgrowthinscootersaddstotwowheelergrowth
Scootersarethepreferredfamilyvehicleofmiddleclassfamiliesduetohigherpower,easeofhanding,loadbearing capacityandunisexsuitability.Scootersarepreferredbyyoungadults(learners),womenandbymenbeyondtheageof 45. In the domestic market, scooters, which grew at a CAGR of 18% over FY07FY11, have outpaced mopeds (16% CAGR)andmotorcycles(9%CAGR),giventhewidercustomerbase.Scooterscontributed18%ofdomestictwowheeler salesinFY11asagainst13%inFY06.Weestimatescooterstocontribute20%oftwowheelersalesbyFY14f.

Widercustomerprofileforscooters
Scootersgrowthhas outpacedgrowthin mopedsandmotorcycles.

Inthedomesticmarket,thescootersegmentgrewataCAGRof18%overFY07FY11,outperforming mopeds(16%CAGR)andmotorcycles(9%CAGR).Thisgapingrowthratesoftwowheelercategoriesis duetothedifferenceincustomerprofiles. Exhibit28: Salesgrowthfordomesticscooters,motorcyclesandmopeds(%)

Scooters 40 Motorcycles Mopeds

20

20 FY07
Source:SIAM

FY08

FY09

FY10

FY11

Scootersarepreferredby youngadults(learners), womenandbymen beyondtheageof45.

Scooters are the preferred family vehicle of middle class families due to higher power (there is a growing preference for 100cc+ scooters over the past five years), ease of handing (gearless and self start), higherloadbearingcapacity(luggage carryingspace inthe front,near the legsandbelow the seat),lighterhandling(visvismotorcycles)andunisexsuitability(suitedforbothmenandwomen). Scootersarepreferredbyyoungadults(learners),womenandbymenbeyondtheageof45. Exhibit29: Customerprofilesofscooters,motorcyclesandmopeds
Scooters Motorcycles Mopeds Gender Menandwomen Men Men Specificsection Youngadults,women,menabove45 Malesupto45years Malesupto45years Class RichandMiddleclass RichandMiddleclass LowerMiddleclass

Source:AvendusResearch

Given the wider customer base for the scooter segment, domestic scooter segment sales as a percentage of domestic twowheeler sales have increased from 13% in FY06 to 18% in FY11. We estimate this trend to continue and scooter segment sales as a percentage of twowheeler segment salestoincreaseto20%byFY14f(representsaCAGRof17%overFY12fFY14f).

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Exhibit30: Domesticsalesbreakup(%)
Weestimatescooter segmentsalesasa percentageoftwo wheelersalestoincrease from18%inFY11to20% byFY14f.
Scooters 100 5 5 6 6 Motorcycles 6 6 Mopeds 6 6 6

50

82

83

80

79

78

76

76

75

74

13 0 FY06

12 FY07

15 FY08

15 FY09

16 FY10

18 FY11

18 FY12f

19 FY13f

20 FY14f

Source:SIAM,AvendusResearch

Majorplayersinscooter,motorcycleandmopedsegments
Themotorcyclesegment sawentryofoneplayer MM,whereasthescooter segmentsawtheexitof anoldplayerBJAUT.

The motorcycle segment has the highest number of players, at eight, as against five in scooters and oneinmopeds. The motorcycle segment witnessed the entry of one player, Mahindra & Mahindra (MM IN, NR), whereasthescootersegmentwitnessedtheexitofoneofitsoldestplayers,BJAUT.TVSListheonly playerinthemopedsegment. After the split from HH, HMSI is planning several product launches, especially in the mass market category.Thecompanyisalsoaggressivelyrampingupitsdistributionnetworkby200dealersperyear.

Exhibit31: Marketshareinmotorcycleandscootersegments(%)
HH BJAUT TVSL HMSI YamahaMotor RoyalEnfield SuzukiMotorcycleIndia MM LML KineticMotor* Motorcyclesmarketshare(%) FY06 48.2 30.9 13.0 1.6 4.2 0.5 0.0 0.0 1.1 FY07 45.8 33.5 13.0 2.4 3.8 0.5 0.9 0.0 0.0 FY08 49.4 32.7 9.4 4.3 2.6 0.6 0.9 0.0 0.0 FY09 52.4 28.0 9.3 5.9 3.0 0.7 0.7 0.0 0.0 FY10 51.9 29.7 7.6 6.2 3.4 0.6 0.6 0.0 0.0 FY11 48.0 32.3 8.0 7.1 3.6 0.5 0.5 0.0 0.0 Scootersmarketshare(%) FY06 1.5 11.7 24.7 50.3 0.0 0.0 4.2 7.6 FY07 9.5 2.1 26.5 56.0 0.0 0.0 0.0 5.9 FY08 9.7 2.0 24.2 58.5 2.3 0.0 0.0 3.4 FY09 13.3 1.0 21.2 56.9 7.1 0.0 0.0 0.5 FY10 14.4 0.3 20.7 50.3 9.5 4.8 0.0 0.0 FY11 17.0 0.0 21.9 42.7 10.9 7.5 0.0 0.0

Source:SIAMNote:*Mahindra&MahindraacquiredKineticMotorinFY09

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Indiantwowheelerscontribute22%24%ofglobaltwowheelers
Indiantwowheeler segmenthassalesof 13.3mnandisworth cINR441bn.

InIndia,thetwowheelersegmenthasgrowninsalesandvaluetermsovertheyears.Thesegmenthad salesof13.3mninFY11(at93%capacityutilization)andisvaluedatcINR441bn. Exhibit32: Segmentsize

Twowheelers Scooters Motorcycles Mopeds Source:SIAM,AvendusResearch FY11Sales(mn) 13.3 2.1 10.5 0.7 FY11fSalesValue(INRbn) c441 c69 c359 c12

Globally,thebulkoftwo wheelersaleshappenin utilitymarkets.Theglobal marketisdominatedby ChineseandJapanese OEMS.

Globally, the twowheeler market is classified into leisure and utility markets; North America and Europeareleisuremarkets.Thebulkofvehiclesaresoldintheutilitymarkets;withinutility,thereare two types of markets, viz. Mature and Emerging markets. Thailand, Indonesia, Philippines and Brazil constitutematuremarkets,whileAfricaisanemergingmarket. Globally, the twowheeler market is dominated by Chinese and Japanese manufacturers. In mature markets, Japanese OEMs rule the market. In some emerging markets where Japanese OEMs do not haveadirectpresence,ChineseOEMshavemadestronginroads. Exhibit33: Globalsalesoftwowheelers(2010)
Global Asia Africa Europe LatinAmerica NorthAmerica Source:YamahaMotorannualreport,AvendusResearch 2010sales(mn) c5560 43.9 4.0 2.0 4.0 0.5

The Indian twowheeler industry (13.3mn sales) contributes 22%24% of global twowheeler (55mn 60mnsales)sales.

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Newwaveofcompetitorsisleavingitsmark
Theincreasingcompetitioninthetwowheelersegmenthasledtolossofmarketshare,higheradvertisingexpenditure andlowerpricingpowerforexistingplayers.Inthedomesticmotorcyclesegment,HHsmarketsharedeclinedto54.6% inFY11asagainst58.5%inFY10.Inthedomesticscootersegment,HMSIsmarketsharedeclinedto43.1%inFY11as against50.6%inFY10.Ouranalysisofthepricingpowerinthetwowheelersegmentrevealsthatrawmaterialcostasa percentageoftotalincomeincreasedto72.1%aggregateofHH,BJAUTandTVSLinMar11quarterasagainst68.2% inMar10quarter,whereastheEBITDAmargindecreasedto14.5%inMar11quarterasagainst18.1%inMar10quarter. Thus,allthecompaniesfacedmargincontractionduringFY11.
HH,themarketleader, andHMSIwitnessedan erosioninmarketsharein motorcyclesandscooters, respectively.

Lossofmarketshareforleaders
Theincreasingcompetitionhasledtoadropinmarketshareforleadersinthedomestictwowheeler segment.Indomesticmotorcycles,HHsmarketsharedeclinedfrom58.5%inFY10to54.6%inFY11. AfterthesplitfromHH,HMSIhasaggressivelylinedupproductlaunchesandcapacityexpansionplans toincreasecapacityfrom1.6mnunitsto4.0mnunitsby1.4mnunits.HMSIhasalreadyovertakenTVSL in domestic market share. We see HMSI as HH and BJAUTs biggest competitor in the future. MM enteredthemotorcyclesegmentwiththelaunchofStallioinFY11. Exhibit34: Marketshareindomesticsegment(%)
Segment Motorcycles Scooters Source:SIAM Marketleader HH HMSI MarketShare FY10 58.5 50.6 FY11 54.6 43.1

Inthedomesticscootersegment,HMSIsmarketsharedeclinedfrom50.6%inFY10to43.1%inFY11. MMenteredthescootersegmentwiththeacquisitionofKineticMotor,andhasincreaseditsmarket share in scooters from 4.8% in FY10 to 7.7% in FY11. Apart from competition, a long waiting list for HMSIsvehiclesisanothercauseforlossinmarketshare;customersshiftedtowardsproductsofSuzuki MotorcycleIndia,HHandTVSL.

Marketingexpenditureremainsatsimilarlevelsinrelativeterms
As total income grows, fixed costs such as marketing expenditure should reduce as a percentage of totalincome(reductioninrelativeterms)thisisoperatingleverage.Althoughtotalincomegrewby 23% for HH and 42% for TVSL in FY11, marketing expenditure as a percentage of total income has remained at similar levels for HH (2.3% of total income) and TVSL (7.2% of total income). As the competitionintensityincreases,thesecompaniesareincreasingtheirmarketingexpendituretoretain theirmarketshare. The only company whose marketing expenditure declined was BJAUT. The companys marketing expenditure stood at 0.6% of total income in FY11. In future, BJAUT has guided to an increase in marketingexpenditureasithaslineduplaunchesofmotorcyclessuchastheKTMDukeandBoxer150. BJAUThasguidedtomarketingexpenditureasapercentageoftotalincometobeupto1.0%oftotal incomeinFY12. AfterthesplitfromHonda,HHislikelytospendINR1bnonanimagemakeoverandbrandbuildingin FY12.Thisexpenditureisoverandabovetheregularmarketingexpenditure.ItislikelytoincreaseHHs marketingexpenditureto2.7%asapercentageoftotalincomeinFY12fasagainst2.3%inFY11. Automobiles 19

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Exhibit36: Marketingexpenditureasa%oftotalincome(%)
TVSL 9 7.2 7.2 HH BJAUT

Exhibit35: Marketingexpenditure(INRmn)
TVSL 5,000 HH BJAUT

3,500

2,000

2.3 1.5

2.3 0.6

500 FY10
Source:Company,AvendusResearch

0 FY11f FY10
Source:Company,AvendusResearch

FY11f

Reducedabilitytopassthroughcosts
Exhibit37: RawmaterialcostasapercentageofTotalincomeandEBITDAmargin(%)
Rawmaterialcost 76 AdjEBITDAMargin(RHS) 20

73

15

70

10

67

64 4QFY10

1QFY11

2QFY11

3QFY11

0 4QFY11

Source:Company,AvendusResearch

Alltwowheeler companiesfacedmargin contraction.

OEMsworkedharderoncostreductiontechniquesinFY11astheywereunabletofullypassthrough theriseininputcoststoconsumers.Alltwowheelercompaniesfacedmargincontraction. We have calculated the combined raw material costs and EBITDA margins for HH, BJAUT and TVSL during Mar10Mar11 quarters. Our analysis showed that raw material cost as a percentage of total incomeincreasedfrom68.2%inMar10quarterto72.1%inMar11quarter,whereasEBITDAmargins decreasedfrom18.1%to14.5%.Thepressureonmarginsindicatesthelossofpricingpowerfortwo wheelercompanies. Ashighercompetitionislikelytocontinue,thisscenariooflimitedpricingpowerwouldalsocontinue. We have assumed an upward trend in commodity prices over FY12fFY14f. Rising input costs, increasingwagesandhighermarketingexpenditurearealsolikelytoputpressureonmargins. We have calculated the combined raw material costs and EBITDA margins for HH, BJAUT and TVSL duringFY12fFY14f. Weassumerawmaterial costs asa percentageoftotal incometo increase from 72.1%inFY11to73.6%inFY14f;EBITDAmarginsarelikelytodeterioratefrom14.8%to14.0%.

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Exhibit38: RawmaterialcostandEBITDAmarginforHH,BJAUTandTVSL
Weassumerawmaterial costasapercentageof totalincometoincrease to73.6%inFY14fas against72.1%inFY11.
RawMaterialcost/Totalincome 76 AdjEBITDAMargin(RHS) 20

73

15

70

10

67

64 FY10

FY11

FY12f

FY13f

0 FY14f

Source:Company,AvendusResearch

WithdeterioratingEBITDA margins,wehavenegative operatingleverageat work.

ThedeterioratingEBITDAmarginsindicatethepresenceofnegativeoperatingleverage.Weestimate theCAGRof12.0%inEBITDAgrowthduringFY12fFY14ftolagtotalincomegrowth(CAGRof14.3%). Exhibit39: TotalincomeandEBITDAgrowthoverFY12fFY14f

Totalincomegrowth EBITDAgrowth FY11 31.4% 10.0% FY12f 17.7% 10.0% FY13f 12.6% 10.1% FY14f 12.6% 16.0% CAGR(FY12fFY14f) 14.3% 12.0%

Source:Company,AvendusResearch

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Relativevaluationsappliedtoarriveatpricetargets
We use the relative valuation method to derive the standalone valuation for BJAUT and TVSL. We use HH as a benchmark, as it is the largest twowheeler company, to value BJAUT and TVSL. BJAUT, TVSL and HH represent the three largest twowheeler players in India. We value BJAUT at HHs fiveyear historical P/E, while we value TVSL at a 15% discount due to lower growth. In case of HH, the valuations taken are below the fiveyear mean due to lowerearningsgrowth. We value HHat a 10%discount to its fiveyearhistorical P/E.We initiatecoverage onBJAUT (Buy),HH(Reduce)andTVSL(Buy).Riskfactorsarelowerdutydrawbackrates,fuelpriceincreases,higherinterestrates andcommodityinflation.

ValuationsderivedforBJAUTandTVSLusingHHasabenchmark
WehavederivedthestandalonevaluationforBJAUTandTVSLusingtherelativevaluationmethodand havecomparedthesecompanieswithHH.Thesecompaniesrepresentthetopthreecompaniesinthe twowheelersegment.Wevaluethesecompaniesonthefollowingbasis: We value BJAUT at 14.2x 1year forward EPS; this is on par with the fiveyear mean P/E of HH. BJAUT and HH have witnessed similar sales and total income growth over FY07FY11 (shown in Exhibit40). WevalueTVSLata15%discounttoHHsfiveyearhistoricalmeanP/EasTVSLshistoricalgrowthin salesandtotalincomeislowerthanHHs. Exhibit40: HistoricalgrowthcomparisonofHHandTVSLoverFY07FY11(%)
(%) Salesgrowth Totalincomegrowth Source:AvendusResearch HH 12 17 BJAUT 12 16 TVSL 9 14

WevalueTVSLata15% discounttoHHsfiveyear historicalmeanP/Eas TVSLshistoricalgrowthin salesandtotalincomeis lowerthanHHs.

WevalueHHat12.8xP/E,whichisata10%discounttoHHsfiveyearhistoricalmeanP/Eof14.2x. We take a 10% discount to historical valuations as the earnings growth for HH over FY12fFY14f (CAGRof8%)islikelytobelowerthanhistoricalearningsgrowth(CAGRof16%overFY07FY11).HH hastradedata10%discounttotheSensexP/Emeanoverpastfiveyears.Ourvaluationmultipleof 12.8xfactorsinthisdiscountaswell. Exhibit41: HHsP/ErelativetoSensex
40 RelativetoSensexP/E(%) Avgdiscount(%)

0 Average=10% 40

80 Jul06

Apr07

Dec07

Sep08

May09

Feb10

Oct10

Jul11

Source:Bloomberg,AvendusResearch

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Exhibit42: Elementsoftargetprice
BJAUT HH TVSL Multiple(x) AsapercentageofHHs Fairvalue(INR) historicalvaluation 14.2xP/E 12.8xP/E 12.0xP/E 100% 90% 85% 1,706 1616 64 Strategicinvestment(INR) Targetprice(INR) 27 1 1,733 1,616 65

Source:AvendusResearch

Weinitiatecoverageon BJAUT(Buy),HH(Reduce) andTVSL(Buy)withJun12 targetpriceofINR1,733, INR1,616andINR65 respectively.

WeinitiatecoverageonBJAUT(Buy),HH(Reduce)andTVSL(Buy)withJun12targetpriceofINR1,733, INR1,616andINR65respectively.

Forecastslowerthanconsensusestimates
Our aggregate net revenue forecast for BJAUT, HH and TVSL in FY13f is 2% lower than consensus estimates, implying that our sales growth forecast is lower. We estimate aggregate sales growth for these companies to be lower, at 9%, in FY13f (in comparison to 13% in FY12f) due to continuing headwinds. Exhibit43: AvendusandconsensusestimatesoverFY12fFY13f
BJAUT HH TVSL Consensusestimate Avendusestimate Difference(%) Consensusestimate Avendusestimate Difference(%) Consensusestimate Avendusestimate Difference(%) NetSales(INRmn) FY12f 194,909 186,909 4.1 226,062 228,506 1.1 73,285 72,297 1.3 FY13f 223,309 215,127 3.7 256,406 254,886 0.6 84,458 83,110 1.6 EPS(INR) FY12f 102.2 103.3 1.1 112.4 111.0 1.2 5.3 4.7 11.7 FY13f 115.4 116.7 1.1 128.4 125.3 2.4 6.5 5.2 20.8

Source:Bloomberg,AvendusResearch

We largely differ from the consensus in our estimates for TVSL in FY13f (2% and 21% lower than consensusestimatesonnetrevenueandEPS,respectively),implyinghighermarginpressures.TVSLs margins arelikely to be affected by commodityandwage inflation.We alsoestimatethecompanys marketing expenditure to remain at 7.2% of total income in FY13f, as TVSL is likely to continue spendingonmarketingtocountertherisingcompetition.

Initiatecoverageon3twowheelercompanies
Initiatecoveragewitha BuyratingandJun12 targetofINR1,733.

BajajAuto(BJAUT):BJAUThaslinedupnewmodelssuchasKTMDukeandBoxer,andvariantlaunches fordomesticandexportmarketsinFY12f.Theselaunchesarelikelytostrengthentheproductlineup andaidgrowth.BJAUTsvehiclesarewellacceptedinexportmarketsCAGRof43%and25%intwo and threewheeler exports over FY07FY11, respectively. BJAUT is likely to maintain higher EBITDA margins of 19%20% over FY12fFY14f due to exposure to the highgrowth threewheeler passenger segment.WeestimateBJAUTssalestogrowat12%overFY12fFY14f.OurJun12TPforBJAUTstands atINR1,733,anupsideof22%.InitiatecoveragewithaBuyrating. HeroHonda(HH):TheendoftheJVwithHondaMotorpresentsmanychallenges.Themostpressing oneistostrengthenR&Doperationstochurnoutnewmodelsandupgradevehiclesforthenextlevel of emission norms. Another challenge stems from the rise in competitive intensity posed by Honda Motors solo presence in the country. HH faces margin pressure due to a rise in R&D, royalty and advertising expenditures as a result of the split. In addition to breakup woes, the companys sales growthislimitedbyproductionconstraintsandslowinglaunches.Weestimatesalesgrowthtotaperto aCAGRof11%overFY12fFY14f.OurJun12TPforHHstandsatINR1,616,whichimpliesadownsideof 11%.InitiatecoveragewithaReducerating.

Initiatecoveragewitha Reduceratingwitha Jun12targetofINR1,616.

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Initiatecoveragewitha BuyratingandJun12 targetofINR65.

Twowheelers

TVSMotorCompany(TVSL):LaunchesinFY12farelikelytoaidgrowthandstrengthenTVSLsportfolio. The scooter segment is likely to grow at a CAGR of 17% over FY12fFY14f, led by the growing acceptance of scooters as a family vehicle. The company entered the lucrative threewheeler passengersegmentinFY08andsucceededincapturing6%marketshareinFY11.Weestimatethree wheelersalestogrowataCAGRof 15%overFY12fFY14f. TVSLsuccessfullyrodetheexportgrowth story (CAGR of 25% over FY07FY11), led by the growing acceptance of Indian vehicles in several developing countries. We estimate TVSLs exports to grow at a CAGR of 15% over FY12fFY14f. We estimatesalestogrowataCAGRof12%overFY12fFY14f.OurJun12TPforTVSLstandsatINR65,an upsideof28%.InitiatecoveragewithaBuyrating.

Riskfactors
Failureofproductlaunches:Salesmaybeaffectedduetofailureofmodelsorvariantlaunches. Lower Duty Drawback rates: New duty drawback rates are likely to replace DEPB scheme rates. These duty drawback rates for motorcycles are likelyto beanywherebetween 1%and5%.Ifthe rateislowerthan5%,thenmarginsarelikelytobeadverselyaffected. RiseinRawmaterialprices:Wehaveassumedanincreaseofc4%inrawmaterialcostpervehicle inFY12f.Ifthepricesofsteel,aluminum,andrubberincreaseatahigherthanestimatedrate,then marginsanddemandmaybeadverselyaffectedasaresultofpartialpassthroughofprices. Riseininterestratesandfuelprices:Furtherincreaseininterestratesandfuelpricesmayaffect the sentiment of replacement and upgrade buyers (these buyers contribute 50% of domestic demand).

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Twowheelers

Annexure
Exhibit44: Scootersegmentsales,growthandtopplayers
Sco oters Totalvolum e( 000s) Dom esticvolum e( 000s) Exp ortvolume(0 00s) Totalvolum egrow th ( % ) Dom esticvolum egrow th ( % ) Exp ortvolumegrow th( %) Exp ortsaspercentageo fto talvolum e(% ) Top 3P layers Volum e(00 0s) Hond aM otorcycle&Scoo terIndia TV SL HH Growth(%) Hond aM otorcycle&Scoo terIndia TV SL HH Markets hare(%) Hond aM otorcycle&Scoo terIndia TV SL HH
Source:SIAM

FY 07 976 941 36 1.7 3.5 5 7.5 3.7

FY 08 1,076 1,050 25 10.2 11.6 28.6 2.4

FY09 1,172 1,146 26 8.9 9.1 1.5 2.2

FY10 1,49 3 1,46 3 30 27.4 27.6 16.5 2.0

FY11 2,1 26 2,0 74 52 42.4 41.8 73.6 2.5

CAGR (FY07 FY 11)

16.4 17.9 9.0

547 259 93 9.4 5.6 51 9.2 5 6.0 2 6.5 9.5

629 260 105 15.0 0.4 12.7 58.5 24.2 9.7

666 248 156 5.9 4.5 49.0 56.9 21.2 13.3

75 1 30 9 21 4 12.8 24.6 37.2 50.3 20.7 14.4

9 07 4 66 3 61 20.7 50.7 68.7 42.7 21.9 17.0 12.7 13.7 88.9

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Exhibit45: Motorcyclesegmentsales,growthandtopplayers
M otorc ycles Totalv olum e( 000s) Dom esticv olum e( 000s) Exp ortv olume(0 00s) Totalv olum egrow th ( % ) Dom esticv olum egrow th ( % ) Exp ortv olumegrow th( %) Exp ortsaspercentageo fto talvolum e(% ) Top 3P layers V olum e(00 0s) HH BJ A UT TV SL Grow th( % ) HH BJ A UT TV SL M arkets hare(% ) HH BJ A UT TV SL
Source:SIAM

F Y07 7,100 6,554 546 14.6 12.8 41.4 7.7

F Y08 6,54 4 5,76 8 77 6 7.8 12.0 42.2 11.9

F Y09 6,806 5,835 971 4.0 1.2 25.1 14.3

F Y10 8,4 44 7,3 41 1,1 03 24.1 25.8 13.6 13.1

FY1 1 10,500 9,019 1,481 24 .3 22 .9 34 .3 14 .1

CAGR ( FY07 FY1 1)

11.1 9.2 30.9

3,254 2,377 925 9.0 24.2 14.7 45.8 33.5 13.0

3,23 2 2,14 0 61 8 0.7 10.0 33.2 49.4 32.7 9.4

3,566 1,908 636 10.3 10.8 3.0 52.4 28.0 9.3

4,3 86 2,5 07 6 41 23.0 31.4 0.8 51.9 29.7 7.6

5,041 3,387 837 14 .9 35 .1 30 .6 48 .0 32 .3 8 .0 11.0 12.1 0.7

Exhibit46: Annexure3:Mopedsegmentsales,growthandtopplayers
Mopeds Totalvolume(000s) Domesticvolume(000s) Exp ortvolume(0 00s) Totalvolumegrowth (%) Domesticvolumegrowth (%) Exp ortvolumegrowth(%) Exp ortsaspercentageo fto talvolume(%) Top3Players Volume(00 0s) TVSL KineticMoto r MajesticAuto Growth(%) TVSL KineticMoto r MajesticAuto Markets hare(%) TVSL KineticMoto r MajesticAuto
Source:SIAM

FY 07 393 356 38 4 .7 7 .0 13 .0 9 .5

FY08 4 32 4 14 18 9.8 16.3 51.5 4.2

FY09 439 431 7 1.5 4.2 59.9 1.7

FY10 57 1 56 5 7 30.3 30.9 5.4 1.2

FY11 704 697 6 23.1 23.5 8.8 0.9

C AGR(FY0 7FY11)

1 3.4 1 6.0 3 2.0

345 23 26 18 .7 19 .9 54 .4 87 .6 5 .8 6 .6

4 11 12 8 19.4 46.6 67.6 95.2 2.8 2.0

437 2 0 6.2 85.7 NM 99.6 0.4 0.0

57 1 0 0 30.8 NM NM 100.0 0.0 0.0

704 0 0 23.1 NM NM 100.0 0.0 0.0 1 9.4 NM NM

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Exhibit47: Annexure4:3Wpassengersegmentsales,growthandtopplayers
3Wp as segnervehicles Totalvolume(000s) Domesticvolume(000s) Exp ortvolume(0 00s) Totalvolumegrowth (%) Domesticvolumegrowth (%) Exp ortvolumegrowth(%) Exp ortsaspercentageo fto talvolume(%) Top 3P layers Volume(00 0s) BJAUT Piaggio Vehicles MM Growth(%) BJAUT Piaggio Vehicles MM Markets hare(%) BJAUT Piaggio Vehicles MM
Source:SIAM

FY 07 380 237 143 31.7 11.3 88.9 37.6

FY08 375 235 140 1.2 0.9 1.8 37.4

FY 09 415 268 147 1 0.7 1 4.4 4.6 3 5.4

FY10 522 350 173 25.7 30.2 17.4 33.0

FY1 1 695 427 268 33. 2 22. 1 55. 6 38. 6

CAGR(FY 07FY11)

19.2 15.0 28.8

279 79 3 29.3 48.7 16.2 73.6 20.9 0.8

264 94 4 5.6 18.8 40.1 70.3 25.1 1.2

264 105 27 0.3 1 1.7 52 9.3 6 3.6 2 5.3 6.6

329 135 31 24.6 28.1 13.7 63.1 25.8 6.0

432 158 47 31. 3 17. 4 52. 3 62. 2 22. 7 6. 8 14.9 24.3 66.5

Exhibit48: 3Wgoodssegmentsales,growthandtopplayers
3Wgoo dsvehicle s Totalvolume(000s) Domesticvolume(000s) Exp ortvolume(0 00s) Totalvolumegrowth (%) Domesticvolumegrowth (%) Exp ortvolumegrowth(%) Exp ortsaspercentageo fto talvolume(%) Top3P layers Volume(00 0s) Piaggio Vehicles MM Atu lAuto Growth(%) Piaggio Vehicles MM Atu lAuto Markets hare(%) Piaggio Vehicles MM Atu lAuto
Source:SIAM

FY 07 168 167 1 13.2 13.5 20.9 0.6

FY08 131 130 1 22.2 22.2 14.0 0.6

FY 09 82 81 1 37 .0 37 .5 40 .7 1 .4

FY10 92 91 1 11.1 11.7 32.6 0.8

FY11 101 99 2 10.0 9.2 97.3 1.5

CAGR(FY 07FY11)

7.5 7.6 5.0

67 31 9 18.2 63.5 12.7 40.1 18.2 5.2

59 30 5 11.8 2.9 38.9 45.4 22.7 4.1

43 17 4 27 .4 41 .2 18 .1 52 .4 21 .2 5 .3

51 14 7 18.3 17.9 68.5 55.8 15.7 8.0

63 17 9 22.6 21.3 21.4 62.2 17.3 8.8 1.9 1.5 2.2

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India Equity Research

AnalystCertification

Twowheelers

I,SriRaghunandhanNL,MBA,researchanalystandauthorofthisreport,herebycertifythatalloftheviewsexpressedinthisdocumentaccuratelyreflectourpersonalviews aboutthesubjectcompany/companiesanditsortheirsecurities.Wefurthercertifythatnopartofourcompensationwas,isorwillbe,directlyorindirectlyrelatedtospecific recommendationsorviewsexpressedinthisdocument.

Disclaimer
ThisdocumenthasbeenpreparedbyAvendusSecuritiesPrivateLimited(Avendus).Thisdocumentismeantfortheuseoftheintendedrecipientonly.Thoughdisseminationtoall intendedrecipientsissimultaneous,notallintendedrecipientsmayreceivethisdocumentatthesametime.Thisdocumentisneitheranoffernorsolicitationforanoffertobuy and/orsellanysecuritiesmentionedhereinand/orofficialconfirmationofanytransaction.Thisdocumentisprovidedforassistanceonlyandisnotintendedtobe,andmustnot betakenas,thesolebasisforaninvestmentdecision.Theuserassumestheentireriskofanyusemadeofthisinformation.Eachrecipientofthisdocumentshouldmakesuch investigationashedeemsnecessarytoarriveatanindependentevaluation,includingthemeritsandrisksinvolved,forinvestmentinthesecuritiesreferredtointhisdocument andshouldconsulthisownadvisorstodeterminethemeritsandrisksofsuchinvestment.Theinvestmentdiscussedorviewsexpressedmaynotbesuitableforallinvestors.This documenthasbeenpreparedonthebasisofinformationobtainedfrompubliclyavailable,accessibleresources.Avendushasnotindependentlyverifiedalltheinformationgiven inthisdocument.Accordingly,norepresentationorwarranty,expressorimplied,ismadeastoaccuracy,completenessorfairnessoftheinformationandopinioncontainedinthis document.Theinformationgiveninthisdocumentisasofthedateofthisdocumentandtherecanbenoassurancethatfutureresultsoreventswillbeconsistentwiththis information.ThoughAvendusendeavourstoupdatetheinformationcontainedhereinonreasonablebasis,Avendus,itsassociatecompanies,theirdirectors,employees,agentsor representatives(Avendusanditsaffiliates)areundernoobligationtoupdateorkeeptheinformationcurrent.Also,theremayberegulatory,complianceorotherreasonsthat maypreventusfromdoingso.Avendusanditsaffiliatesexpresslydisclaimanyandallliabilitiesthatmayarisefrominformation,errororomissioninthisconnection.Avendusand itsaffiliatesshallnotbeliableforanydamageswhetherdirect,indirect,specialorconsequential,includinglostrevenueorlostprofits,whichmayarisefromorinconnectionwith theuseofthisdocument.Thisdocumentisstrictlyconfidentialandisbeingfurnishedtoyousolelyforyourinformation.Thisdocumentand/oranyportionthereofmaynotbe duplicatedinanyformand/orreproducedorredistributedwithoutthepriorwrittenconsentofAvendus.Thisdocumentisnotdirectedorintendedfordistributionto,oruseby, anypersonorentitywhoisacitizenorresidentoftheUnitedStatesorCanadaorislocatedinanyotherlocality,state,countryorotherjurisdiction,wheresuchdistribution, publication,availabilityorusewouldbecontrarytolaworregulationorwhichwouldsubjectAvendusanditsaffiliatestoanyregistrationorlicensingrequirementswithinsuch jurisdiction.Personsinwhosepossessionthisdocumentcomesshouldinformthemselvesaboutandobserveanysuchrestrictions.Avendusanditsassociatecompaniesmaybe performingorseekingtoperforminvestmentbankingandotherservicesforanycompanyreferredtointhisdocument.AffiliatesofAvendusmayhaveissuedotherreportsthat areinconsistentwithandreachadifferentconclusionfromtheinformationpresentedinthisdocument. Avendusgenerallyprohibitsitsanalystsandpersonsreportingtoanalystsfrommaintainingafinancialinterestinthesecuritiesorderivativesofanycompanythattheanalysts cover.Avendusanditsaffiliatesmayhaveinterest/positions,financialorotherwise,inthecompaniesmentionedinthisdocument.Inordertoprovidecompletetransparencyto ourclients,wehaveincorporatedaDisclosureofInterestStatementinthisdocument.Thisshould,however,notbetreatedasanendorsementoftheviewexpressedinthe document. Avendus is committed to providing highquality, objective and unbiased research to our investors. To this end, we have policies in place to identify, consider and managepotentialconflictsofinterestandprotecttheintegrityofourrelationshipswithinvestingandcorporateclients.Employeecompliancewiththesepoliciesismandatory. AnycommentorstatementmadehereinaresolelythoseoftheanalystanddonotnecessarilyreflectthoseofAvendus.

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DisclosureofInterestStatement(asofJuly26,2011)

IndianCompanies BajajAuto EicherMotors HDFCbank HeroHonda HondaMotorcycleandScooterIndia LML Mahindra&Mahindra StateBankofIndia SuzukiMotorcycleIndia TVSMotorCompany YamahaMotorIndia InternationalCompanies HondaMotor KTMPowerSportsAG PTBajajAutoIndonesia PTTVSMotorCompanyIndonesia Yamahamotor

Analystownership ofthestock No No No No No No No No No No No No No No No No

Avendusoritsassociatecompanys ownershipofthestock No No No No No No No No No No No

InvestmentBankingmandatewith associatecompaniesofAvendus No No No No No No No No No No No

No No No No No

No No No No No

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Automobiles 29