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Key Pointers for Jun’24:

* 2Ws –Retails sustained; ~Rs1k/unit price hike for TVS/HMSI likely from Jul’24.

* PVs – Multitude of factors dent retails YoY causing inventory flare-up.

* CVs –Flat Retails YoY on low base likely, led by pre-buys ahead of OBD2.

* Tractors – Weak demand prevails given dampened sentiments. Our interaction with channel partners hints at weak demand trends for Jun’24 YoY: Flat retails for 2Ws and CV, low-mid single digit decline for tractors and 10-12% drop for PV. Having said that, overall sentiments within 2Ws stay positive as semiurban/rural growth continue to beat urban growth for the fifth consecutive month as per our checks. For PVs, demand impact is visible led by multiple factors like high base, weak customer walk-ins, and purchase decisions deferred till the festive season. Consequently, inventory flared up to >5 weeks in North and ~4 weeks in South with near to peak average discounts in few segments. CV retails would be flat YoY despite low base given prebuys due to OBD 2, with better dispatches owing to stocking ahead of Jul’24 price hike. We expect CV inventory at ~4 weeks by June end. Net pricing suffered slight deterioration as reflected in the ~0.5-1% increase in average discounts MoM. Tractor retails stayed weak, and we expect a decline of ~4-5% YoY. Key wholesale expectations – MSIL at ~164k (+3.8% YoY/ -7.8% MoM), AL at ~16.7k (+9.4% YoY/ +13.4% MoM), Royal Enfield at 483k (+10.5% YoY/ -3.0% MoM). Top Picks - TTMT (ADD), TVS (ADD), MSIL (ADD), BJUAT (ADD) among OEMs and MOTHERSO (BUY) and ENDU (ADD) among ancillaries.

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