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MOSL: AUTOMOBILES-2W – Wedding season fails to perk up demand-Retail demand continues to remain weak across segments

Our interaction with leading PV/2W/CV channel partners indicated continued weak demand momentum in key markets in Feb’19. Inventories in PVs and CVs remained stable at ~15-20 days, while 2W inventory was still high at ~40-45 days.

** PVs: The trend was mixed as demand continued to remain weak in Western and Central India, while it was relatively better in South India. Key markets like Maharashtra, Gujarat, Delhi and MP continued to see a decline in retail. MSIL has average inventory levels of 15-20 days, while it is higher for MM at average 25-30 days.

** 2Ws: Post weak retail in 3QFY19 and Jan’19, key channel partners still suggest weak retail across key markets (average decline of 8-10%) except the South (flat-to-positive). Stock levels remained high at ~40-45 days. We expect BJAUT/TVSL wholesales to YoY grow 2.4%/15.3%, while HMCL dispatches are seen declining 13% YoY.

** CVs: CV demand too was mixed with key markets of Maharashtra, Delhi and Gujarat indicating a decline in retail as demand from all major end user segments, except white goods remained weak. Hence, average discount per unit was high. We expect CV wholesales for AL to grow 1.5% YoY, while it should decline by 9.8% YoY for TTMT.