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2W Apr’23 volumes should have grown in double digits y/y, aided by urban and rural replacement demand and production ramp-ups of BS6 phase-2 models. Also, PV volumes are likely to have grown in near double digits owing to healthy order books and launches despite supply constraints. Further, CVs are likely to have maintained their growth momentum, driven by replacement demand due to healthy freight volumes and rates, even with early buying in the last quarter. In contrast, tractor volumes are likely to have been flattish due to heavy rainfall and hailstorms across parts of country. We are enthusiastic regarding the auto sector. Our preferred picks in OEMs are EIM, BJAUT, MSIL and AL.

Robust 2W volume growth continues y/y (~10%): BJAUT 56%, TVSL 27%, EIM-RE 11% and HMCL 9%. OEMs this month would ramp up BS6 phase 2 models and slowly build channel stocks, which are low. EIM-RE growth would have been hit by running down of Bullet 350 before new gen model launches, despite strong retail sales. Growth in BJAUT and in TVSL is high due to the low base (supply constraints last year).

Healthy PV volume growth (~10% y/y): MM 54%, MSIL 2%, TTMT 1%. MSIL’s growth would have been impacted by supply constraints. M/m blended vehicle discounts are broadly unchanged.

CV volume growth (~5% y/y): AL 16%, EIM-VECV 10%, MM 10% and TTMT flat. TTMT growth would have been muted due to loss of market share. We expect growth to improve in coming quarters as the impact of the early buying fades.

Tractor volumes are likely to have been flattish (~1% y/y): MM marginally down (1%) and ESC down 3%.

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