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Jun’22 Preview: CVs, Tractors and PVs likely to see sequential improvement

* In Jun’22, CVs are expected to maintain positive growth momentum on a sequential basis. Tractor volumes are also likely to trend higher in a seasonally strong month. Further, 2W volumes would be better for most OEMs thanks to a ramp-up in production. In comparison, PV volumes should be a mixed bag for listed OEMs. We retain our positive view on the auto sector. Among OEMs, we prefer TTMT, MSIL and ESC. Among ancillaries, we prefer MSUMI and MNDA.

* CVs should remain in an uptrend. The comparison of YoY growth is not meaningful due to the low-base effect owing to the second Covid wave impact. On a sequential basis, we expect positive growth for AL at 9%, TTMT at 8% and EIM-VECV at 1%, whereas we expect a slight decline for MM at 5%.

* Tractor volumes are likely to improve MoM, with growth of 11% for ESC and 10% for MM in the domestic market. Growth has been restricted as farmer sentiments have been hit by lower crop realizations in recent months.

* PVs should be a mixed bag for listed players. Among OEMs, we estimate domestic volumes to grow by 2% MoM for TTMT, while we expect a decline of 1% for MSIL and 3% for MM. For the industry, we expect a sequential improvement due to better production/dispatches. Vehicle discounts have decreased MoM and remain significantly lower than the elevated levels seen in the past.

* 2W volumes are expected to improve MoM in the domestic market by 4% for BJAUT, 3% for EIM-RE and 2% for TVSL due to a ramp-up in production and better demand in salaried/student segments as per checks. We expect an 8% decline for HMCL. Last month was better for HMCL due to strong marriage season demand.

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