Mumbai, January 30: Emkay Global Financial Services conducted a channel check to gauge the volumes’ estimate for the month of January. The channel checks indicate PV volumes to be higher on healthy order book and ramp-up in production. Further, CVs are likely to maintain their double-digit growth momentum on better freight availability. In addition, tractor volumes are likely to be better on improving customer sentiments and finance availability. Lastly, 2-Wheelers’ volume growth is expected to be positive, supported by festive season (Uttarayan) and marriage season demand.
The research house remains constructive on the auto sector. Their preferred picks in the OEM space include Maruti Suzuki, Eicher Motor, Ashok Leyland, and Escorts.
Passenger Vehicles
PV industry’s volumes should witness robust growth (~12% YoY) on account of a large order book and higher production. Uncertainties remain on the supply chain, but production is improving in a staggered manner. Emkay Global’s channel checks indicate that dealer inventories are notably below normal levels. Among OEMs, they estimate domestic volumes to grow by 55% YoY for M&M, 10% for Tata Motors, and 8% for Maruti Suzuki. Blended vehicle discounts have been reduced on MoM basis due to seasonality and remain lower than the peak levels seen in the past.
Commercial Vehicles
CV industry’s volumes should grow in double digits (~13% YoY) with robust demand in both passenger and cargo segments. Transporters are buying trucks to get GST input credit and preponing purchases before the implementation of RDE/OBD2 norms. Emkay Global expects 49% YoY growth for Eicher Motor-Volve Eicher Commercial Vehicle, 41% for Ashok Leyland, 6% for Tata Motors, and 4% for M&M in the domestic market.
Two-Wheelers
2-Wheelers industry volumes are expected to improve (~7% YoY). The channel checks indicate that demand in the festive season and marriage season aided 2-Wheelers’ volumes in the latter part of the month, post the commencement of the auspicious period. OEMs are going slow on dispatches as model-changeovers are happening due to OBD2. Emkay Global expects domestic volumes to improve by 29% for Eicher Motor-Royal Enfield, 16% for TVS Motor, 8% for Hero Moto Corp Ltd, and 2% for Bajaj Auto.
Tractors
Tractor industry’s volumes are likely to register strong growth (~13% YoY) on improving customer segments and better finance availability. Crop prices are better YoY in the wholesale market for rice, wheat, and tur dal, among others. Minimum support prices (MSPs) are also better YoY, and government procurements are happening in proximity to farmers, resulting in lower logistics costs. Emkay Global expects double-digit growth in domestic volumes, at 18% YoY for Escorts and 15% for M&M.
COMPANY-SPECIFIC / REGULATORY DISCLOSURES BY EMKAY GLOBAL FINANCIAL SERVICES LIMITED (EGFSL): Disclosures by Emkay Global Financial Services Limited (Research Entity) and its Research Analyst under SEBI (Research Analyst) Regulations, 2014 with reference to the subject company(s) covered in this report-: 1. EGFSL, its subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of January 27, 2023 2. EGFSL, and/or Research Analyst does not market make in equity securities of the issuer(s) or company(ies) mentioned in this Research Report Disclosure of previous investment recommendation produced: 3. EGFSL may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by EGFSL in the preceding 12 months. 4. EGFSL , its subsidiaries and/or other affiliates and Research Analyst or his/her relative’s does not have any material conflict of interest in the securities recommended in this report as of January 27, 2023. 5. EGFSL, its subsidiaries and/or other affiliates and Research Analyst or his/her relative’s does not have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the January 27, 2023 6. EGFSL, its subsidiaries and/or other affiliates and Research Analyst have not received any compensation in whatever form including compensation for investment banking or merchant banking or brokerage services or for products or services other than investment banking or merchant banking or brokerage services from securities recommended in this report (subject company) in the past 12 months. 7. EGFSL, its subsidiaries and/or other affiliates and/or and Research Analyst have not received any compensation or other benefits from securities recommended in this report (subject company) or third party in connection with the research report. 8. Securities recommended in this report (Subject Company) has not been client of EGFSL, its subsidiaries and/or other affiliates and/or and Research Analyst during twelve months preceding the January 27, 2023
