Mumbai, October 31: Emkay Global Financial Services conducted a channel check to gauge the volumes’ estimate for the month of October. The channel checks indicate wholesales to grow in PVs, CVs, 3-Wheelers, and 2-Wheelers, supported by the healthy festive season. In contrast, tractor wholesales are likely to decline on account of inventory de-stocking. Further a robust double-digit growth is expected in PVs, CVs, and 3-Wheelers and single-digit growth in 2-Wheelers and tractors for the festive season’s retail sales.
Emkay Global has retained their positive view on the auto sector, top picks in the OEM space includes Maruti Suzuki, M&M, Tata Motors, Escorts, and Ashok Leyland.
Commercial Vehicles’ volumes should grow in double digits (15%+) with robust demand in both passenger and cargo segments. The e-way bill trend indicates better freight availability compared with last year. Emkay Global expects positive growth at 55% YoY for Ashok Leyland, 43% for M&M, 9% for Eicher Motor-Volvo Eicher CV, and 2% for Tata Motor in the domestic market. Ashok Leyland remains an outperformer due to favourable mix and aggressive marketing efforts.
Passenger Vehicles’ volumes should witness robust growth (30%+) on account of strong festive demand, large order book and production ramp-up. Among OEMs, they expect domestic volumes to grow by 64% YoY for M&M, 34% for Maruti Suzuki, and 34% for Tata Motors. Volume tally for M&M and Maruti Suzuki is being supported by dispatches of new products (Scorpio-N for M&M and Vitara for Maruti Suzuki). Vehicle discounts have increased on MoM basis but remain significantly lower than the elevated levels seen in the past.
2-Wheelers industry volumes are expected to slightly improve owing to the festive demand, supported by discount schemes, better finance availability, and favourable base effect. The channel checks indicate that urban demand is better than rural and scooters are doing well in comparison to motorcycles. Within motorcycles, executive/premium segments are outpacing the entry-level segment. Emkay Global expect domestic volumes to improve by 77% YoY for Eicher Motor-Royal Enfield and 4% for TVS Motor. In comparison, they expect a decline of 13% for HMCL and 9% for BJAUT due to inventory de-stocking. EIM-RE remains an outperformer on account of strong festive season and success of the new model, Hunter.
Tractor volumes are likely to decline on inventory de-stocking with dealers. We expect a decline of 5% YoY for MM and 9% for ESC in domestic volumes.
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 October 27, 2022 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 October 27, 2022. 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 October 27, 2022 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 October 27, 2022
