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Three-Wheeler Firm Atul Auto Envisions 100,000 Unit Sales in Coming Years

Published On Mar 21, 2016By Tushar Vijay

Atul Auto is a leading manufacturer of three-wheelers and other commercial vehicles in the country. Following the industry boom the previous year, the company saw vast growth in sales and market share. Its sales volumes boosted by nearly 27.5 percent between 2010 and 2015. With the business climate ripe for further growth, the company is envisioning a further rise of 20 to 30 percent in the coming years. Within five years, it plans to roll out 100,000 units in the next 3-5 years.

Mr. J.V. Adhia, President of the Accounts & Finance division of the company, explains, “The current size of the Indian 3-W market stands at (around) 1 million units, of which around 57% is domestic and around 43% is exports. Traditionally, AAL has been a manufacturer of diesel 3-W’s; hence the addressable market size was only to the extent of 0.35 mn vehicles. Since the launch of its first petrol vehicle the target market has widened, encompassing the high growth 3-W passenger export. In the domestic market, AAL is launching its vehicle in a phased manner thereby understanding the markets & consumers requirements. The new vehicle is already launched in the export market & has received good response.”

Atul Auto has charted out its next spurt of growth in two major stages. The first involves strengthening its already existing network, while the second involves expanding into the domestic passenger vehicle market.

Mr. J.V. Adhia explains, “Atul’s specialised focus has clearly paid rich dividends as evidenced from market share gains (up from 2% in FY09 to 7.6% in FY15). In the past five years, AAL has gained a pan-India presence, establishing its brand in new markets & reducing its dependence on single geography. We believe that with further capacity addition and new petrol product launch, Atul can efficiently tap export markets along with urban markets in India and, thereby, continue the growth momentum. We value the stock at 18x FY18E EPS of Rs 34; with a target of Rs 620 per share, with a BUY call on the stock.”

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