MOSL: Morning India (29/November/19): 1. Automobiles (Demand looking up for PVs/2Ws); 2. EcoScope (Fiscal slippage does not necessarily imply growth recovery)
Morning India (29/November/19):
Today’s top research idea
Automobiles: Demand looking up for PVs/2Ws; CV decline arrested MoM | Tractors fails to live up to expectations
** Our interactions with leading PV/2W/CV channel partners indicate positive demand trends in 2Ws/PVs (v/s pre-festive period in 2019 and post-festive in 2018), stability in CVs but pressure in Tractors.
** However, compared to Nov'18, wholesales are likely to decline across OEMs (except RE) due to the timing difference (Diwali in Nov'18).
** Sentiment has improved compared to the pre-festival period (before Oct-19), despite an MoM reduction in discounts/offers.
** Wholesale volumes are estimated to decline ~9%/~12%/~10% YoY in 2Ws/PVs/Tractors. In CVs, volumes are expected to decline by ~11% in LCV and even higher by ~47% in M&HCVs.
** Barring MHCVs, inventory correction has led to comfortable inventory below 30 days across segments.
** Trends in the demand environment for 2Ws and PVs are encouraging, particularly in the run up to BS6 transition.
Piping hot news
Govt plans ₹21,000 crore extra spending
A day after indicating the possibility of a fiscal slippage, finance minister Nirmala Sitharaman on Thursday sought parliamentary approval for gross additional expenditure of ₹21,246 crore, part of which will be used to recapitalize IDBI Bank Ltd and three state-run insurers.
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