Broad-based recovery across segments bodes well for auto sector - Acuité Ratings

PV Segment:

The demand for PVs across the country witnessed improvement during June'22 on yearly as well as sequential basis marked by the domestic sales reported by top 13 PV players in the country. The total domestic sales witnessed growth of 27.9% YoY and 9.0% MoM in June'22 compared against June'21 and May'22 respectively. The demand during the month was majorly driven by new model launches by PV players, ease in supply chain constraints and improved consumer sentiments. During Q1FY22, the top 13 PV players registered total domestic sales of 9.08 lakh units with a YoY growth of 38.6%YoY albeit on a low base; however, on a QoQ basis, the sales during the quarter witnessed decline of 1.1% compared against Q4FY22.

Says Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research Ltd, "In our opinion, better availability of semiconductor chips, new upcoming product launches for many players, moderation in commodity prices and improving consumer sentiments is expected to improve the growth momentum of PVs across the country."

2W Segment:

The improvement in the overall demand scenario for 2Ws continued during June'22 going by the sales volumes reported by the top 5 players in the industry. The improvement was witnessed on both domestic and exports sales on a yearly as well as sequential basis. The total sales of the major 5 players in the industry improved by 19.1%YoY and 6.9% MoM during May'22 compared against June'21 and May'22. Also, during Q1FY23, the total sales of 2Ws registered growth of 35.3% YoY and 43.8%QoQ compared against Q1FY22 and Q4FY22 respectively.

Says Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research Ltd, "With a good rabi harvest and the expectation of a normal monsoon that should translate to another good kharif output, a healthy recovery of the rural economy is likely, driving the domestic demand revival for 2Ws. Also, healthy demand from the international market is likely to sustain export growth for 2Ws over the medium term."

CV Segment:

The domestic CV segment continued its growth momentum during June'22 as well marked by the domestic sales reported by the top four CV manufacturers in the country. While the domestic sales shown significant growth of 85.2% on a YoY basis albeit on a low base, the sales also witnessed growth of 5.5% MoM on a sequential basis as well during the same month compare against May'22. The growth in demand for CVs has been on account of a step-up in infrastructure asset creation across the country. Also, the high demand of e-commerce is also supporting the increase of demands for LCVs across the country. The market leaders of the segment, Tata Motors and Ashok Leyland reported growth in domestic sales by 75.6% and 130.2% YoY respectively during June'22. Other key players M&M and VECV also reported growth of 61.0% and 212.1% YoY during the same period.

Says Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research Ltd, "We believe that the growth of CV demand will continue going ahead owing to growing construction activities across the nation including road construction and mine development activities. Furthermore, the normalization of economic activities, healthy momentum in trade despite the geo-political factor and high demand from the e-commerce industry is expected to sustain the demand of CVs over the medium term."

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Source : Equity Bulls

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AutoSales PassengerVehicles TwoWheelers AutoSector AcuiteRatings CommercialVehicles