2-wheeler stocks gear up for rollouts

Initial feedback of new launches to drive sentiment

After a sedate run in August, two-wheeler stocks are expected to see a pick-up in activity as a slew of new models are slated for launch over the next one month, ahead of the festive season.

Analysts tracking the sector expect some sharp moves in the stock prices, based on the initial feedback to the new launches.

However, they added that the movement could be largely sentiment-driven as it will be some time before the new models start significantly contributing to the companies' bottomlines.

Among the new product launches, Bajaj Auto has made a soft launch of its new 125cc bike 'Discover' in the executive segment with the commercial launch slated for mid-September.

TVS Motors expects to launch 'TVS Star', an entry-level bike in October.

Hero Honda will be launching a new 125cc bike, while Honda Motorcycles & Scooters India will be launching its 150cc motorcycle 'Unicorn' in the premium segment next month.

"What will make competition more intense in the coming quarters is that the new launches by motorcycle majors is in segments where they want to make inroads," says Parvati Krishnakumar, analyst at Karvy Stock Broking.

Parvati added, "The launch of the 150cc 'Unicorn' by Honda Motorcycle and Scooters will be competing with the Bajaj 'Pulsar', which currently enjoys market leadership in the premium segment."

"Similarly, with the launch of the 125cc 'Discover', Bajaj plans to make inroads into the voluminous executive segment, the stronghold of Hero Honda," she said.

A rise in farm income, a slew of new model launches, wider availability of finance and lower interest rates will help the two-wheeler industry grow at 14-15 per cent in 2004-05 as against 11 per cent a year ago, said Motilal Oswal in a recent sector update on the two-wheeler sector.

In April-July, two-wheeler sales have grown 13 per cent on year to 1.864 million units, as per data from the Society of Indian Automobile Manufacturers. The numbers for August have not been released yet. Motorcycle sales, which comprise around 78 per cent of total two-wheeler sales, grew nearly 14 per cent.

"Two-wheeler companies will continue to face pressure on operating margins, given the higher input costs and also competitive pressures," said Umesh Karne of Sushil Finance.

From the consumer's point of view, the spate of new launches would mean value for money, competitive prices and better product features.

Already, Hero Honda has extended its Rs 1,000 discount on its 'Splendour Plus' and 'Passion Plus' models.

August sales were below-average as dispatches were hit owing to the eight-day-long truckers' strike during the month.

September sales are expected to be better, but not significantly higher.

In anticipation of festive discounts and freebies consumers might defer their purchases for a month, which could affect September sales, said an automobile analyst.