Apr-17 Sales Estimates
PV to outperform 2W and CV
Strong demand of new products to drive PV sales
PV to continue its growth momentum and outperform the auto industry growth in Apr-17.
2W and CVs volume is expected to decline in Apr-17 YoY and MoM. Our channel check
suggests, retail off-take in 2W segment is expected to remain weak followed by pre-buy of
BS-3 vehicles in the previous month.
Maruti Suzuki is expected to outperform the PV industry, while we expect Ashok
Leyland and TVS to outperform the CV and 2W industry respectively.
PVs to continue its growth trajectory and outperform auto industry growth led by
MISL, which we expect to report ~8% growth in its overall volumes in Apr-17. The
growth in MSIL volumes will be led by strong demand of Baleno and Brezza. Our
channel check indicates these models still enjoys healthy waiting period of 5-7weeks.
Tata Motors PV segment is expected to maintain strong growth momentum driven by
Tiago and complimented by newly launched Tigor.
In the 2W segment, we expect TVSL is likely to record a 5.9% YoY increase in volumes
led by strong growth in its scooters and mopeds portfolio. While, HMCL’s volumes are
expected to decline 5.3% YoY, we expect Bajaj Auto volumes to decline sharply by
17.8% led by decline in domestic 2W and 3W volumes.
Our channel check suggests, retail off-take in 2W volumes are expected to remain
weak followed by pre-buy of BS-3 vehicles in the previous month.
We expect RE volumes to grow at ~25% YoY growth in Apr-17 at 60k units. Situation in
2Ws is expected to improve on a MoM basis as demonetization impact wanes off,
however as indicted by management of 2W OEM, situation is improving gradually.
CV players are expected to record decline in sales due to pre buying effect on account
of change in emission norms. We expect TTMT and AL to report double digit decline in
their CV volumes by 21% and 23% respectively.
We prefer 4Ws over 2Ws and CVs due to stronger volume growth and stable
competitive environment. While we expect 2W volumes to benefit from rural recovery
in near term, competitive intensity remains high in segment witnessing changing
customer preferences. For CVs, we expect volumes to remain muted atleast for next 2-
3 quarters due to pre-buying, GST implementation and cost inflation with relatively
weak freight availability.
Our top-picks are Tata Motors, Maruti Suzuki and Amara Raja. We also like M&M as
best bet on rural market recovery.
Sector Update | 28 April 2017
Automobiles | Update
”company is planning
massive investment into
India over the next four
years and expects to launch
eight new models in next
four yeras.” Rakesh
Srivastava, Director (Sales
and Marketing) at Hyundai
(Jinesh@MotilalOswal.com); +91 22 3982 5416
(Jigar.Shah@MotilalOswal.com); +91 22 6129 1534
rs are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.