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February 2022 preview: CVs/PVs to clock positive growth, 2Ws/Tractors to remain muted

Our channel checks indicate that CVs should maintain upward momentum in Feb’22. PV volume growth should also be positive thanks to improving chip supplies. 2Ws and Tractors are likely to decline due to subdued customer sentiments and the high base effect. We retain our positive view on the auto sector, underpinned by expectations of a cyclical upturn in the next three years. We like TTMT (TP: Rs575), AL (TP: Rs160) and BJAUT (TP: Rs4,490). In ancillaries, we like MNDA (TP: Rs1,230) and BHFC (TP: Rs950).

CV industry volumes are likely to improve, aided by improving chip supplies for LCVs and better demand for ICVs. We expect domestic volumes to grow by 90% yoy for MM, 2% for TTMT and 1% for AL. In comparison, we expect a 5% fall for EIM-VECV. Robust growth for MM is due to the low base and improving chip supplies for LCVs.

2W industry volumes are expected to be lower vs. last year, due to muted customer sentiments and the high base effect. In addition, the chip shortage has affected dispatches of premium motorcycles. We expect domestic volumes to fall by 10% yoy for BJAUT, 14% for TVSL, 25% for EIM-RE and 26% for HMCL

PV industry volumes should improve due to better chip supplies and a healthy order book. We estimate domestic volumes to grow by 51% yoy for TTMT and 23% for MM, while we expect a 9% fall for MSIL. Given the robust order book, discounts remain low in comparison to the previous year.

Tractor volumes are likely to see a decline due to the high base of last year. We expect domestic volumes to fall by 30% for MM and 35% for ESC.

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