Sharekhan highlights that the auto gross sales volumes had been beneath expectations in November, because the festive season ended. Most OEMs, nonetheless, gave a optimistic outlook for the trade, says a Sharekhan report. Tractor gross sales surged 49.6% yoy, pushed by increased farm incomes, a sturdy Kharif crop, good monsoons and advantages of a low base of the earlier 12 months. Within the two-wheeler area, OEM gross sales grew by 12.6% yoy development at 17.6 lakh models, aided by 14.4% development in Hero MotoCorp’s gross sales and a 24.9% development in TVS Motors gross sales. Hero MotoCorp’s administration expects the demand to strengthen additional attributable to development in private mobility submit COVID-19 restrictions. Nevertheless, Bajaj Auto witnessed demand slowdown in entry-level bikes.

Most popular picks:

Within the OEM area, desire is for rural-centric corporations with a powerful steadiness sheet and thus suggest Hero MotoCorp, Bajaj Auto, and Mahindra abd Mahindra. Within the auto-ancillary area, desire is for agri performs corresponding to Balkrishna Industries, Mayur Uniquoters (attributable to sturdy money steadiness management within the synthetic leather-based trade), Bosch and Schaeffler (attributable to elevated content material per car beneath BS-VI norms) and Suprajit Engineering (on account of elevated share of enterprise with purchasers and new consumer additions).

The home passenger car phase clocked 12.5% yoy development, regardless of flat development reported by Maruti Suzuki. Stance is maintained on the general sector and count on home gross sales volumes to regain momentum from This autumn FY21 onwards. Channel checks counsel increased offtake from semi-urban, Tier-2 and Tier-Three cities. Business car gross sales are bettering sequentially pushed by a restoration in financial actions, revival of the infrastructure sector and enchancment in consumption of petrol/diesel.

Sector-wise efficiency:

Two-wheelers:
Two-wheeler home gross sales registered 12.6% yoy in November pushed by increased offtake from semi city, tier-2 and tier-Three cities. Hero MotoCorp, Bajaj Auto and TVS Motor registered y-o-y development of 14.4%, 12.1% and 24.9%, respectively. Royal Enfield (RE) reported 5.6% yoy development in November, decrease than expectations. Provide chain points proceed to disrupt demand for RE. Nevertheless, Sharekhan expects provide chain points to ease within the second half of FY21E and count on gross sales to enhance aided by new launches. Royal Enfield lately launched Meteor 350 and obtained encouraging response from prospects. Two-wheelers exports remained sturdy in November. Export of TVS Motor, Bajaj Auto and Hero MotoCorp registered yoy development of 10%, 17.8% and 40.4%, respectively.

Passenger autos:

Home passenger autos registered 12.5% yoy development at 272000 models in November on again of sturdy gross sales reported by Hyundai, Kia Motors and Honda Motors. Maruti Suzuki reported flat home gross sales in November, whereas exports grew by a sturdy 29.7% yoy. Flat development in home gross sales was on the again of a 15.1% decline in mini vehicles and 1.8% decline in compact automobile phase. Hyundai Ciaz noticed an increase of 29% in volumes.

Tractors:

Tractor gross sales proceed to develop with sturdy quantity numbers, with M&M’s and Escorts’ mixed gross sales recording a 49.6% yoy development. Rural and farm sentiments proceed to be sturdy attributable to increased farm earnings, sturdy kharif sowing and a great monsoon. M&M reported 55.6% yoy development at 32.6k models in tractors aided 54.9% development in home gross sales and 79.4% development in exports. Escorts reported a development of 33% yoy in November, pushed by 31% home development and 91% development in exports.

Business Autos:

Business car gross sales are bettering sequentially pushed by a restoration in financial actions, revival of the infrastructure sector and enchancment in consumption of petrol/diesel. The LCV phase is driving the expansion for industrial car gross sales. The M&HCV phase witnessed 5.6% yoy development, forward of consensus estimates. Ashok Leyland reported 4.8% yoy development in November, with M&HCV gross sales clocking a decline of 14.3%. The LCV phase grew 31.7% yoy this month. The same development was witnessed in Eicher Motors’s CV gross sales, the place LCV quantity gross sales grew 16.1% yoy in November. Bus gross sales fell by 60.9% yoy. Heavy truck gross sales noticed a development of three.5% yoy.

Key dangers:

A second wave of COVID-19 infections might disrupt provide chains and have an effect on the restoration momentum.





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