INSUBCONTINENT EXCLUSIVE:
due to better than expected tractor sales.
Its other prominent division of sports and multi utility vehicles (SUVs and MUVs) has not yet
contributed to the stock valuation
This may however change in the coming quarters given a slew of new car launches in the category.
For MM, the volume growth in the utility
segment in the past few years has not been inspiring
With a combined monthly sales volume of around 25,000 units, SUV is one of the fastest growing categories in the passenger car segment
The share of SUV in the total passenger car increased to nearly 30 per cent in FY18 compared with 15 per cent in FY12.
However, MM has not
been able to take advantage of the booming SUV market since it failed to launch a successful urban SUV after XUV 500 in 2011
Therefore, stakes are high for the company this time around
The near-term performance of the stock will hinge on whether the incremental volume growth from the new launches beats the street
estimate.
The first launch will be Marazzo, an MUV, which will be launched on September 3
at Rs 17-24 lakh.
In the past six months, the monthly average sales volume of Ertiga and Innova is 4,895 and 6,545 units respectively
If Marazzo is able to clinch 20 per cent of the volume in the category, it will translate into around 3,000 units of monthly volume.
MM will
launch two more SUVs, one in the third quarter of the current fiscal and the other one in the March quarter.
Analysts have so far maintained
received weak response.
The street expects incremental volume of 3,000-4,000 units per month from the new launches
But, if the pricing is right, the company may be able to surpass the expectations
