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MOSL: Morning India (30/September/19): 1. Automobile (Inquiries improve with the start of crucial festive season); 2. Brigade Ent.; 3. Cement; 4. Infrastructure; 5. Consumer

MOrning India (30/September/19): 1. Automobile (Inquiries improve with the start of crucial festive season); 2. Brigade Ent.; 3. Cement; 4. Infrastructure; 5. Consumer

 

Today’s top research idea

Auto: Inquiries improve with the start of crucial festive season

Our interaction with leading PV/2W/CV channel partners indicates an MoM improvement in inquiries with the start of the festive season and the record discounts on offer. With no GST cut, the onset of the peak festive season and OEMs going all-in with offers, the upcoming festive season is critical for resurrecting FY20 volumes. Most OEMs continued their inventory cutting efforts through production cuts in Sep'19. 

• 2Ws: OEMs are hoping for festive cheer and accordingly building inventory (55-60 days). We expect BJAUT's wholesales to decline ~15% YoY (~23% decline for dom. 2W volumes). TVSL's volumes are estimated to decline by ~22% YoY, HMCL's wholesales are estimated to fall ~26.5% YoY and RE dispatches to decline ~25% YoY to 54k units.
• PVs: The substantial increase in discounts and the start of the festive season have led to an improvement in sentiment and inquiries. Inventories are reasonable at 35-45 days. We estimate MSIL's volumes to decline ~29% YoY, MM's UV (incl. pick-ups) volume to be ~35% lower YoY and TTMT's PV volumes to decline ~46% YoY.
• CVs: Retails across regions were weak, as demand from all major end-user segments remains tepid, resulting in a further increase in average discounts. However, continued production cuts have led to inventory correction. We expect CV wholesales to decline by ~43% (~54% decline for M&HCVs) for AL and by 44.5% YoY for TTMT.
• We would revisit our estimates post more feedback on upcoming Navratras.

Piping hot news

DHFL lenders led by SBI expected to complete debt resolution plan quickly

State Bank-led lenders of crisis-hit Dewan Housing Finance Ltd (DHFL) are expected to complete a debt resolution plan quickly so that fresh funds start flowing in, sources said on Sunday. "The banks led by SBI, are expected to move quickly to complete the debt resolution proposal so that fresh lending starts to move into the company and turnaround of a systemically large retail financial enterprises is done smoothly," they said.