Vehicle sales data for May is good for manufacturers of personal vehicles (PVs) and two-wheelers, but poor for manufacturers of commercial vehicles (CVs). According to analysts, Maruti Suzuki is seeing better growth in the PV segment and Ashok Leyland in the medium and heavy commercial vehicle segment.
Two-wheeler manufacturers may see double-digit sales growth due to wedding season, replacement demand and low base. Thanks to new releases and improved resources, PV modules can increase by more than 10%. According to Anand Rathi, pre-purchases in the last quarter have affected CV sales. He added that tractor sales may be marginally lower due to higher base. Tata Motors, Eicher Motors and Hero MotoCorp are the best choices of brokers.
Nomura India prefers Bajaj Auto for two-wheelers and M&M, Tata Motors and Ashok Leyland for four-wheelers as they have managed to gain market share.
In May, PV industry total sales were expected to register 3,31,000 units, up 12 percent from the previous year. Nomura India said inventory increased by 15,000 items due to lower sales in stores.
We continue to forecast the PV industry to grow at 6% YoY in FY24F. At a low start (volumes on May 23 are 18% below its previous peak in May 2018), we expect 22% YoY growth in 2W. We think MHCV total production will grow by 6% per year. On May-23, we expect the number of trucks to decrease by 9%. According to Nomura India, we plan to have flat volumes for FY24F.
The current inventory level of the PV segment is 30-35 days, which is feasible, Prabhupadas Ludhar said in a note. While major OEMs have large inventories (40-45 days), inventory levels in the two-wheeler market are generally under control. It says the business has enough inventory to last about 20 days. Maruti Suzuki, Tata Motors, TCS Motor, Hero MotoCorp, M&M, Eicher Motors and Ashok Leyland all have ‘Buy’ ratings on the brokerage.
The retail segment is forecast to grow by 3-5%, driven by robust demand in urban areas and a lower base than last year, as per our interactions with key channel partners. But despite it being the wedding season, the demand in the country is yet to come in a big way. MHCV retail sales are expected to decline 4-6% year-on-year, due to pre-purchase effect and seasonal effect ahead of the OBD-2 transition in March. On the other hand, retail sales are forecast to increase by mid-single digits sequentially, which is good news for bus sales. Overall, total sales for PV/3W are expected to increase by 5.5%/32% in May, while total sales for 2W/CV/tractors are expected to decline by 1%/18%/4% year-on-year. This is what Motilal Oswal said.
The brokerage prefers CV over other segments as demand will remain strong and competition will remain stable over the next few quarters. Motilal Oswal prefers to invest in companies with clear demand recovery, strong competitive positions, encouraging margin drivers and strong balance sheets. Tata Motors likes it a lot.
MK Global believes that the current recovery will help the two-wheeler industry grow, with the entry/rural segment adding premium and urban variants as alternative demand increases.
Bajaj Auto expects domestic sales to grow by 72% from low start. It sees sales growth of 25% for TVS Motors, 30% for Eicher Motors’ Royal Enfield (RE) and 5% for Hero MoroCorp.
Market leader Hero MotoCorp reported 11% growth in its retail volumes on MTD basis (compared to 4% sector growth) following a 12% growth in March and April. Total volumes were 75,000 units for RE, up 18% over last year, 2,85,000 units for Bajaj Auto, up 14% over last year, and 3,05,000 units for TVS Motor, up 6% over last year. % is high. last year, and 500,000 units for HMCL, which is 3% higher than last year.
OEM commentary has turned positive as HMCL reiterates its forecast that the industry will grow 6-8% in FY24 (including recovery in the 100 cc market) and revenue will double this time, the brokerage said. Digits. year.
MK Global believes Maruti Suzuki will do well in PV even as semiconductor shortages continue to affect production. The research firm expects Maruti Suzuki’s total volumes to increase by 10% year-on-year (1,78,000 units). M&M’s domestic sales grew 30% year-on-year (from a low base of 35,000 units), while Tata Motors’ sales are expected to grow 4% year-on-year (45,000 units).
Maruti Suzuki said it expects the production decline to continue in the current quarter, but the situation will improve after July. Additionally, shortage of semiconductors could reduce production by 10-12%, M&M said.
