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MOSL: MOrning India (28/June/19): 1. Automobiles (No signs of recovery yet); 2. Technology; 3. ICICI Pru Life Insurance; 4. Financials – Bank and NBFC

MOrning India (28/June/19): 1. Automobiles (No signs of recovery yet); 2. Technology; 3. ICICI Pru Life Insurance; 4. Financials – Bank and NBFC

 

Today’s top research theme

Automobiles: No signs of recovery yet; Inventory levels still high

• Our interaction with leading PV/2W/CV channel partners still indicates no signs of demand recovery. Inquiries to sales at the retail level remained tepid, while continued production since Mar'19 is yet to help in normalizing inventory levels.
• 2Ws: Despite production cuts, the weak demand led to an increase in inventory levels in Jun'19. We expect BJAUT wholesales to grow 2.5% (6% for 2W volumes), while TVSL volumes should remain flat. On the other hand, our estimates indicate HMCL wholesales to decline ~9% YoY and RE dispatches to decline ~12% YoY to 65.5k units.
• PVs: The demand trend is tepid across major markets with inquiries to sales conversion for existing models remaining weak. The average inventory levels are stable for MSIL at 25-30 days, while it is higher for MM/TTMT at 35-40 days. MSIL's volumes are expected to decline ~14%, while MM's UV volume should decline ~4.5%. TTMT's PV volumes are seen declining ~36%.
• CVs: Retails were weak across regions as demand from all major end user segments was tepid. This resulted in average discount per unit remaining high. We expect CV wholesales for AL to decline 5% YoY and for TTMT to decrease by 26% YoY due to continued inventory correction.

Piping hot news

SEBI tightens regulations for mutual funds to safeguard investors

• The markets regulator on Thursday tightened investment norms for liquid mutual funds to protect investors from credit risks arising out of defaults by borrowers. The Securities and Exchange Board of India (Sebi) said liquid funds can invest a maximum of 20% of their assets in a single sector as against the current cap of 25%, and must keep aside at least a fifth of their assets in cash equivalents to meet sudden redemption pressures.