PV/CV very strong; tractors stay weak in August: IIFL Securities

2 Sept 2022 , 10:07 AM

MHCV, LCV growth stays strong

In August 2022, MHCV industry grew about 45% YoY, and was flattish MoM. MHCV SAAR stands at ~320k in the month - in line with IIFL Securities’ FY23 volume forecast of 325k. Ashok Leyland, which lost share in April-December 2021 (25% MHCV share), is consistently clocking ~30% share thereafter (January-August 2022). LCV industry grew more than 40% YoY. Current LCV SAAR of 640k implies significant upside to IIFL Securities’ current forecast of ~600k (+25% YoY).

PV industry on course to beat IIFL Securities’ 21% growth estimate

Analysts at IIFL Securities estimate the PV industry to be up 26% YoY in August 2022. They estimate Maruti’s market-share at about 41%, which is lower than its FY22 full year market share of 43.5%. Tata’s market share stood at ~14% versus 12% in FY22. M&M has seen good ramp-up in UV volumes, at ~30k units (versus average monthly volume of 18.6k in FY22).

Tractors flattish YoY on inventory filling; retails are declining

Analysts at IIFL Securities estimate tractor industry volumes to have been flat YoY or marginally down. They understand underlying retails are down double digit YoY. However, an earlier festive calendar in 2022 led to tractor OEMs pushing inventory into dealerships earlier this year versus 2021. This may continue in September 2022, but would even out in subsequent months.

2 wheelers - Festive inventory build-up starts

Analysts at IIFL Securities estimate 2 wheeler wholesales to have grown ~15% YoY and 12% MoM. The YoY growth in wholesales is slightly higher than YoY growth in retails. However, absolute wholesale volumes are much higher than retails, as OEMs commenced build-up of inventory for the upcoming festive season (this happens every year). Retails have seen some softening in July-August, as against the strength seen in April-June (good marriage season). They are hopeful of a pick-up in retails in the upcoming festive season.