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* 2W industry volumes are expected to improve ~13% YoY in Apr-23E on a lower base, aided by production ramp-up of BS6 phase 2 models as well as improving replacement demand. We expect domestic volumes to improve by 72% for BJAUT, by 32% for TVSL, 22% for HMCL and by 3% for EIM-RE. Overall volumes are expected at 67k for RE (8% YoY), 496k for HMCL (18% YoY), 315k at TVSL (12% YoY) and 280k for BJAUT (flat YoY). EIM-RE volumes in Apr-23 could see some impact from a fire incident at a key supplier’s plant, even as underlying demand is picking up, as per our channel checks. BJAUT had mentioned that the domestic motorcycle industry is showing ‘true’ underlying growth – its Management has guided for 6-8% industry growth in FY24; the 125cc & above segment is expected to grow faster with 100cc segment also likely to recover.

* After several months of weakness, 2W exports are expected to improve sequentially; market leader BJAUT recently indicated that exports have bottomed out, with retails improving at the margin and sharp channel inventory now behind

* PV industry’s wholesale volumes likely to grow ~7% YoY; MSIL volumes to be restricted by supply-side issues. Among OEMs, we estimate domestic volumes to grow by 55% YoY for MM (on a low base and new launches; ~35k units), 2% YoY for MSIL (~130k units) and 1% YoY for TTMT (~42k units). MSIL recently highlighted (refer our 4Q update note) that semiconductor shortages would continue to impact production in Q1FY24, even as the underlying book has expanded to 412k units (13% QoQ). Blended vehicle discounts (Exhibit 20) have increased MoM and been on an increasing trend, with moderating retail growth, albeit still remaining below the earlier peak levels.

* MSIL expects SUV actions to help outperform the industry’s 5-7% YoY growth in FY24: The PV industry is expected to grow by 5-7% in FY24; MSIL expects to outperform the industry led by recent SUV launches (new Brezza, Grand Vitara), the recently unveiled Fronx (refer press release), the upcoming Jimny (dispatches for which would begin in 1QFY24), and stabilization of the entry-level/small-car portfolio.

* CV industry’s volumes should grow by 10% YoY, driven by replenishment of channel inventory (post the strong pre-buy in Mar-23). We expect 29% YoY growth for AL, 19% for VECV, 6% for MM and 4% for TTMT.

* ESC’s and M&M’s tractor volumes are likely to decline 2-5% YoY, respectively. Retail growth has moderated to ~2% YoY in Apr-23E for the industry vs. double-digit growth for FY23.

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