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Quick Pointers:

* 2Ws – ICE 2Ws retail momentum mixed while EV 2Ws declined sharply as expected MoM, post FAME 2 subsidy cut.

* PVs – Overall demand flattish MoM resulting in slight increase in stock levels.

* CVs – Double digit MoM decline in retails while flattish YoY.

* Tractors – Subsidy flow continues to be healthy, ahead of elections

Our interaction with leading channel partners indicates positive MoM demand trends for PVs and tractors while CV, 2Ws retails are expected to decline in mid-single to double digits. In 2Ws, we note overall demand sentiments remained mixed for ICE as recovery from rural markets is visible only in select key pockets, but yet to be broad based. On the other hand, as expected EV 2Ws sales is witnessing a decline of sharp 40-50% MoM post cut in FAME 2 subsidy effective 1st June, 2023. Our checks with dealers indicate, TVS have announced compensation of Rs7-8k/unit by for iQube customers (those who have booked till 31st May, 2023) of which Rs1k/unit would be compensated by dealer partners and rest by TVS. Tractors retails are expected to be positive led by 1) increased farm realizations this season for key commodities like Cotton, 2) continues disbursement of farm subsidies and 3) OEM support.

Key wholesales expectations – MSIL at ~163k (+4.6% YoY/ -8.5% MoM due to plant maintenance shut down), AL at ~13.2k (-9.2% YoY/ +0.5% MoM), Royal Enfield 74k (+20.5% YoY/ -4.5% MoM).

Top Picks - AL (BUY), EIM (BUY), TTMT (BUY), MSIL (ADD) and TVS (ADD) are our top OEM picks while BHFC (BUY), MSS (BUY) and ENDU (BUY) among ancillaries.

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