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Banks: Growth Conundrum #1: Auto Loan Growth Why So High?
Banks: Growth Conundrum #1: Auto Loan Growth Why So High?
July09,2013
Adarsh Parasrampuria
adarshparasrampuria@plindia.com
+91-22-66322236
Surjit Arora
SurjitArora@plindia.com
+91-22-66322235
System sectoral credit data by RBI has been exhibiting a few trends which seem
difficulttoexplainincluding(1)Increasingautoloangrowth(27%y/ygrowth)(2)
Significant pickup in Infra especially power/road credit recently and (3) High
volatility in other services/industries data (10% of system loans). We intend to
analysethe above conundrums in a series of 23 reports and this report analyses
divergenceinautoloangrowthandOEMsalesforlast1218mnts.
!
Divergence in Loan growth and OEM numbers: OEM volumes have been
moderating for the last 2 yrs with Maruti led slowdown in FY12 and overall
petrol cars slowdown in FY13 leading to just 4% volume growth in FY11-13
(down from 26% y/y growth in FY09-11) v/s ~23% CAGR growth in Auto loans in
FY11-13. Incremental RBI data also points to auto loan growth remaining strong
at 27% y/y growth in spite of expectations of moderation in auto loans as OEM
numbers continue to disappoint (-9% y/y in Apr-Jun 13).
Sustainability a question for FY14 But Loan growth will not be as bad as
disbursements:ASP growth aided FY13 auto disbursements but with persistent
increase in diesel prices, Diesel car/UV demand has waned and this is likely to
impact both volume and realisation growth. While our auto analyst expects ~7%
volume growth and some ASP increase, there remains possibility of a negative
surprise on both volumes/realisations and hence v/s ~20% auto disbursement
growth in FY13, we expect ~5 y/y disbursement growth in FY14. But loan
growth tends to remain much more sticky and in spite of a collapse in
disbursementgrowth(from~20%to5%orunder),weexpect~15%autoloan
growth in FY14 (organically) and possibly a little more if banks increase
LTV/tenures (credit negative) or gain market share relatively (NIM dilutive).
Parul Gulati
parulgulati@plindia.com
+91-22-66322242
Auto disbursements realisation growth driven
ratherthanhigherLTV/tenuredriven
40.0%
Car Volumes
Car Realisations
30.0%
20.0%
10.0%
0.0%
2010 2011 2012 2013 2014 2015
Source:PLResearch
Kotak/HDFCB/IIB have largest share of auto
loans
25%
Auto%
20%
15%
10%
5%
0%
Source:PLResearch
Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that
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Please refer to important disclosures and disclaimers at the end of the report
SectorUpdate
GrowthConundrum#1:AutoLoangrowthWhysohigh?
Banks
Exhibit1: Passengervehiclesaleshavebeenmutedforthelast2yrs
80.0%
Exhibit2: UVgrowthhashelduprelativelybetter
100.0%
60.0%
UV % YoY
80.0%
40.0%
60.0%
20.0%
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Jan-11
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Source:SIAM,CompanyData,PLResearch
Apr-11
0.0%
Oct-10
-40.0%
Jul-10
20.0%
Jan-10
-20.0%
Apr-10
40.0%
0.0%
Source:SIAM,CompanyData,PLResearch
Exhibit3: Autoloangrowthhasbeenindivergencetoautovolumegrowth
30.0%
25.0%
Autoloangrowthat+20%hasbeenat
significantdivergencetoautovolume
20.0%
growth(whichhasbeenmutedforlast12
15.0%
18mnts)
10.0%
5.0%
0.0%
-5.0%
FY08
FY09
FY10
FY11
FY12
Source:CompanyData,PLResearch
Exhibit4: ASPforMarutihasinchedupsignificantlyinFY13drivenby Exhibit5: ASP for M&M has also seen a significant jump due to
Dieselisationdrivingsignificantvaluegrowth
productmixchangedrivingsignificantvaluegrowth
20.0%
20.0%
15.0%
15.0%
10.0%
10.0%
5.0%
5.0%
0.0%
-5.0%
0.0%
2009
2010
2011
Source:CompanyData,PLResearch
2012
2013
2014E
2009
2010
2011
2012
2013
2014E
Source:CompanyData,PLResearch
Banks
Exhibit6:
LargepartofthegrowthinFY13wasrealisationlinkedandpossiblynotthroughincreaseinLTVs/tenures
2008
2009
2010
2011
2012
2013
2014E
Growthrate
2010 2011 2012
1,111 1,284
y/ygrowth
24.5%
25.0%
20.0%
2.9%
14.5%
22.2%
15.6%
TotalDisbursememts(Rsbn) 254 291 266 324 428543 570
y/ygrowth
15%
9%
22%
32%
27%
5%
TotalPassengervehicle
volumes(mn)
Total2WVolumes(mn)
Avg. Passenger vehicle
realisations
Avg. 2W Realisations
PassengervehicleValue
Sales(Rsbn)
2WValueSales(Rsbn)
1.45 1.45
2013 2014E
3.9%
2.0%
2.9%
3.0%
305,119
316,680
324,568
348,317
369,799
445,639
459,009
2.5%
7.3%
6.2% 20.5%
3.0%
41,835
41,835
43,314
45,395
47,237
50,000
51,613
3.5%
4.8%
4.1%
5.8%
3.2%
442 458 584 797 886 1,109 1,165 27.5% 36.4% 11.1% 25.2%
5.1%
6.3%
CarFinancing(%ofTotal)
75%
75%
60%
67%
75%
75.0%
75.0%
2WFinancing(%ofTotal)
40%
40%
40%
40%
40%
40.0%
40.0%
8.9%
LTVs(assumption)
75%
75%
65%
70%
75%
75.0%
75.0%
Valueofvehiclesfinanced
453 468 513 748 918 1,108 1,167 9.6% 45.8% 22.7% 20.7%
(Rsbn)
ValueofFinancingatabove
339 351333 523 688831 876 5.0% 57.0% 31.5% 20.7%
LTVs(Rsbn)
Potentialgrowthin
3.4%
5.0%
57.0%
31.5%
20.7%
5.4%
disbursements
5.4%
5.4%
Source:CompanyData,PLResearch
Exhibit7: CarSalesgrowth(includingvolumesandrealisation)
Car Volumes
40.0%
Car Realisations
Exhibit8: 2WSalesgrowth(includingvolumesandrealisation)
35.0%
2-W Volumes
2-W Realisations
30.0%
30.0%
25.0%
20.0%
20.0%
15.0%
10.0%
10.0%
5.0%
0.0%
0.0%
2010
2011
2012
2013
2014
Source:CompanyData,PLResearch
2015
2010
2011
2012
2013
2014
2015
Source:CompanyData,PLResearch
Banks
Exhibit9: 1Q14autonumbersaredown~9%y/y
PassengerVehicles(Units)
1QFY13
1QFY14
YoY%
Passenger Cars
490802
439005
-10.6%
Utility Vehicles
117711
117893
0.2%
Total
608513
556898
8.5%
66055
54629
-17.3%
Total LCVs
117160
110007
-6.1%
TotalCommercialVehicles
183215
162636
11.2%
Source:SIAM,CompanyData,PLResearch
Dieseldemandwhichhadincreasedby
+50%inFY13isnowwaning.Accordingto
ourAutoanalyst,Dieselvolumedemandis
down10%y/yin1Q14
Exhibit10: PetrolvehicledemandandDieselvehicledemand
SegmentParticulars
FY10
FY11
FY12
FY13E
163,000
199,000
243,000
368,000
88,000
22.1%
22.1%
51.4%
-10.0%
870,790
1,132,739
1,006,316
1,051,047
245,346
30.1%
-11.2%
4.4%
18.7%
17.6%
24.1%
35.0%
% growth
Maruti - Total Volumes
% growth
DieselSales(%)
Q1FY14E
35.9%
Source:SIAM,CompanyData,PLResearch
Exhibit11: HencedisbursementgrowthlikelytogetimpactedinFY14
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
Disbursement % YoY
2009
2010
2011
2012
2013
2014E
Source:CompanyData,PLResearch
Banks
Alldefensivenameshavehigherexposure
Exhibit12: DependenceonautoloanshighforKotak/HDFCB/IIB
25%
toAutoloansbetween1418%oftheir
Auto%
totalloans.Axis/ICICI/SBIhave<5%
exposuretoautoloans
20%
15%
10%
5%
0%
Kotak
HDFCB
IIB
Axis
ICICI
SBI
Source:CompanyData,PLResearch
Exhibit13: Growthhasbeenstrongforallretailbanks
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
HDFCBank
Car Loans
257,620
263,980
275,130
290,040
300,410
309,420
YoY%
16.2%
19.3%
18.5%
17.9%
16.6%
17.2%
%ofLoans
14.5%
14.8%
14.1%
13.7%
13.7%
14.2%
Car Loans
97,710
106,000
111,610
117,480
122,170
127,500
YoY%
22.2%
24.0%
24.3%
19.2%
25.0%
20.3%
%AutoLoans
18.5%
19.9%
19.6%
19.2%
18.2%
19.2%
Car Loans
80,084
87,739
91,174
95,115
100,081
109,540
YoY%
13.9%
13.9%
17.3%
23.6%
25.0%
24.8%
%AutoLoans
3.3%
3.5%
3.4%
3.5%
3.5%
3.8%
Auto Loans
43,243
48,841
52,768
57,572
57,682
75,544
YoY%
56.0%
60.0%
50.2%
51.0%
33.4%
54.7%
%AutoLoans
2.9%
2.9%
3.1%
3.3%
3.2%
3.8%
122,00
13,950
16,110
181,20
19,950
20,510
KotakBank
ICICIBank
AxisBank
IIB
Auto
YoY%
69.2%
68.1%
70.1%
68.6%
63.5%
47.0%
32540
34120
35770
37840
40070
40400
YoY%
45.1%
34.6%
32.5%
27.5%
23.1%
18.4%
% Auto Loans
13.8%
13.7%
13.9%
14.2%
14.1%
13.7%
174,090
183,050
190,400
202,410
228,460
248,000
12.1%
20.9%
22.5%
28.3%
31.2%
35.5%
2.0%
2.0%
2.0%
2.1%
1.8%
2.3%
SBI
Auto
YoY%
%AutoLoans
Source:CompanyData,PLResearch
Banks
Exhibit14: Marketshareofvehicleloans(withinbanks)
(Rsm)
FY09
FY10
FY11
FY12
FY13
Vehicle Loans
619,950
637,910
730,380
892,420
1,110,890
Y/Y Growth %
25.0%
2.9%
14.5%
22.2%
24.5%
ICICI Bank
22.3%
12.4%
10.5%
9.8%
9.9%
HDFC Bank
28.1%
30.8%
33.0%
32.4%
30.6%
7.7%
10.3%
11.7%
11.9%
11.5%
BankingSystemLoans
MarketShare
Kotak
Indusind
SBI
2.2%
3.6%
4.6%
5.4%
5.5%
15.7%
22.1%
20.7%
20.5%
22.3%
Source:CompanyData,PLResearch
Banks
%ofTotalCoverage
60%
53.6%
50%
40%
30%
25.6%
19.2%
20%
10%
1.6%
0%
BUY
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UnderReview(UR)
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