[Investors Please Listen] Automobiles: impact of below normal monsoon will be minimal to players like Maruti Suzuki and Bajaj Auto due to a much lesser proportion of total sales coming from rural areas.

SECTOR UPDATE  

• An alarming monsoon deficiency is certainly a matter of concern, where the cumulative rainfalls received by the country as a whole was a sharp 29.2% below normal till the week ended August 12, 2009. The resultant jitters could be felt by the players in the Auto sector who have a greater dependency on the rural areas. 
• We believe that the volumes would get impacted, but will be limited to a certain extent on account of the manufacturers having backup in the form of new launches, concentrating on high end models also in the near term the onset of the festive season will help them to build up significant inventories in the Tier I and Metro cities.
• There are pockets of the country where certainly the deficient monsoon does pose some concern. But going forward, looking at the government stimuli, on back of an increase in the allocation of NREGA coupled with a higher minimum support prices for farm produce and the interest subvention schemes, we believe the impact would be limited. 
• We believe that the impact of below normal monsoon will be minimal to players like Maruti Suzuki and Bajaj Auto due to a much lesser proportion of total sales coming from rural areas. However players like Mahindra & Mahindra (more than one third of total sales (standalone) come from tractor division) and Hero Honda (~45% of total sales come from rural areas) having much higher exposure to the rural markets (agriculture dependent) are likely to be the most impacted.

--~--~---------~--~----~------------~-------~--~----~
Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.

You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en
-~----------~----~----~----~------~----~------~--~---