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Dispatches plunge MoM as OEMs focus on stock mgmt

AL, BJAUT, and MM are yet to report wholesales. After strong festive salesin Oct’24 as both Dussehera and Diwali came in the same month, dispatches declined sharply MoM in Nov’24 across segments, in line with our expectation. In 2Ws, dispatches for RE/TVSL wholesales remained in line, while HMCL dispatches were below our estimates. In PVs, MSIL dispatches exceeded expectations, while HMIL/TTMT were in line. In CVs, TTMT dispatches were in line, while VECV exceeded expectations. Our top picks among auto OEMs are MSIL, MM, and Hyundai.

* 2Ws (below est.): Wholesale dispatches for RE (in line) grew 2.5% YoY to 82.3k units. Its exports continued to recover, up 96% YoY in Nov’24 (FY25YTD export wholesales up 31% YoY). Our channel checks suggested that RE seemed to be recalibrating its dealer stocks after record high dispatches in Oct’24. TVSL (in line) grew 11.5% YoY to 392.5k units, largely driven by scooters (+22% YoY), which is seeing good demand momentum after the launch of new Jupiter 110cc. TVSL EV sales grew 57% YoY to 26.3k units. HMCL (below est.) sales were down 6% YoY at 460k units, in line with our channel checks, which indicated normalized retails for 2Ws after strong festive sales in Oct’24.

* PVs (above est.): Overall PV wholesales grew 5% YoY with similar growth in both cars and UVs. MSIL’s volumes (above est.) stood at 181.5k units (up 10% YoY) and the key surprise was strong UV growth of 20% YoY. For MSIL, domestic volumes grew 8% YoY to 153k units and exports jumped 25% YoY. TTMT’s PV volumes grew 2% YoY to 47.1k units (in line). Hyundai’s volumes declined 7% YoY (domestic volumes fell 2% YoY and exports down 20% YoY). SUV/rural/CNG mix for Hyundai stood at 69%/22%/14% in Nov’24.

* CVs (above est.): MHCVs grew 4% YoY, but LCVs fell 2% YoY overall. CV sales for TTMT (in line) declined 1% YoY (MHCVs up 3% YoY, while LCVs dipped 5% YoY) in Nov’24 to 27.6k units. VECV’s CV sales grew 7% YoY to 5.6k units (above est.).

* Tractors (below est.): For EKL, tractor sales grew 9% YoY to 9k units. During festive months (Sep-Nov’24), EKL’s sales rose 9% YoY to 38.5k tractors. It expects growth momentum to continue in the remaining year, led by favorable macros, higher MSPs, improved terms of trade and higher water reservoir levels.

* Valuation and view:

While the 2W segment has outperformed PVs so far in FY25, we expect its growth to moderate for the rest of the year. MSIL is our top pick among auto OEMs as it continues to be a play on the rural recovery with an attractive valuation. Additionally, we like MM for its healthy demand trend in SUVs and recovery in tractors. We also like Hyundai as it appears well-aligned to benefit from the industry trends toward UVs.

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