Analyst Corner: In run-up to BS-VI, demand for PVs is encouraging

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Majority of the demand is being driven by the ongoing marriage season.

Our interactions with leading industry channel partners indicate positive demand trends in PVs but weakness in 2Ws, CVs and tractors. However, compared to December’18, wholesales are likely to remain weak across OEMs (except MSIL, BJAUT).

The sentiment turned negative, partly due to the ongoing protests around social issues in some markets of India. Wholesale volumes are estimated to decline ~3%/~5%/~7% YoY in 2Ws/PVs/Tractors. In CVs, volumes are expected to decline by ~3% in LCV and higher by ~42% in M&HCVs.

Inventory correction has led to comfortable inventory below 30 days across segments. Trends in the demand environment for PVs are encouraging, particularly in the run up to BS6 transition.

Retail is expected to remain flat YoY. While demand turned negative in urban areas due to the current weak sentiment, it remained flat in rural areas despite strong monsoon/ harvest season.

Majority of the demand is being driven by the ongoing marriage season. Strong festival sales and inventory management resulted in inventory being under control. We expect wholesales to decline marginally by ~2% YoY for BJAUT (~7% decline for domestic 2Ws) and ~9% YoY for TVSL.

HMCL’s wholesales should remain flat, while RE dispatches are likely to decline ~6% to 55,000 units.

Retail demand momentum was good with high discounts due to seasonality.

Volumes are expected to remain flat for MSIL while it should decline ~11% YoY for M&M’s UV (including pick-ups). TTMT’s PV volumes are estimated ~21% lower YoY.

Demand has stabilised month-on-month but remained weak year-on-year.

Discounts and offers have started tapering off due to lower inventory levels.

LCVs continue to do better than M&HCVs. Inventory levels stood at lower than 30 days.

We expect CV wholesales to decline ~25% for TTMT (-43% for M&HCVs) and ~37% YoY for AL (-49% for M&HCVs).

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