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February 2022: Positive growth for CVs/PVs; others remain subdued

In Feb’22, the uptrend in domestic CV volumes continued and PV growth turned positive. In comparison, 2Ws/Tractors saw a double-digit decline due to muted customer sentiments and a high base of last year. 2W demand may see a gradual improvement in subsequent quarters, supported by a staggered re-opening of educational institutions/ offices and a pickup in rural demand. 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), MSIL (TP: Rs9,850) and BJAUT (TP: Rs4,490). In ancillaries, we like MNDA (TP: Rs1,230) and BHFC (TP: Rs950).

Domestic CV volumes improved, with 119% YoY growth for MM, 8% for TTMT, 6% for EIM-VECV and 4% for AL, supported by healthy demand in both passenger and cargo segments. Robust growth for MM was due to the low base. AL’s launch of CNG trucks should support volume improvement and market share recovery ahead.

Domestic PV industry growth turned positive. Domestic volumes grew by 80% YoY for MM and 47% for TTMT, whereas they declined by 9% for MSIL. Although domestic volumes were lower, MSIL’s exports grew strongly by 109%. The pending order book remains robust for the PV industry, providing strong visibility for the next few quarters.

Domestic 2W volumes declined notably due to muted sentiments and chip shortages (especially related to anti-lock braking systems). Among OEMs, domestic volumes fell YoY by 35% for BJAUT, 32% for HMCL, 20% for EIM-RE and 11% for TVSL.

Domestic Tractor volumes were weak, down 47% YoY for ESC and 30% for MM due to a high base

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