Delhi takes a giant stride towards curbing vehicular pollution: Angel Broking

Views of Mr. Shrikant Akolkar (Research Analyst - Auto, Angel Broking):

"In a surprise move, the Ministry of Petroleum and Natural Gas has advanced the date for implementation of Euro BS-VI norms in the Delhi & NCT region by 2 years. Thus the Euro BS-VI norms will now kick in effective from April 01st 2018 rather than the original schedule of April 01st 2020. This appears to be an obvious reaction to the massive smog problem in Delhi which has been caused by farmers burning paddy husk across Haryana and Punjab. As a result, the OMCs like IOCL, HPCL and BPCL will now have to be ready with Euro BS-VI compliant fuel in the NCT region by April 2018. It may be recollected that the original deadline for BS-VI compliance was April 2024 which was advanced by 4 years to 2020. That has been advanced by a further 2 years in case of the Delhi and NCT region. It is expected that this stringent compliance may be extended to other cities too where the problem of vehicular pollution is rather acute.

For auto companies, it will be a repeat of the April 2017 situation when the court ordered a blanket ban on sale of BS-III compliant vehicles after April 2017. Therefore auto companies selling in the Delhi and NCT region will have to plan their inventories well in advance to avoid any backlog of inventories of BS-IV vehicles. It could be negative for auto companies which predominantly sell in the Delhi region. This brings another round of uncertainty in the automobile sector after demonetization, BSIV transition, and GST. We believe that auto shares will see some volatility on this news."

Source : Equity Bulls

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