Feb ‘22 Auto Volume Preview: CVs/PVs To Clock Positive Growth

Emkay Global Financial Services conducted a channel check to gauge the volumes' estimate for the month of February. The channel checks indicate that CVs should maintain upward momentum in February 2022. PV volume growth should also be positive thanks to improving chip supplies. 2-Wheelers and Tractors are likely to decline due to subdued customer sentiments and the high base effect.

Emkay Global retains their positive view on the auto sector, underpinned by expectations of a cyclical upturn in the next three years. They are positive on Tata Motors (TP: Rs 575), Ashok Leyland (TP: Rs 160) and Bajaj Auto (TP: Rs 4,490) and in ancillaries, Minda Industries (TP: Rs 1,230) and Bharat Forge (TP: Rs 950).

"CV industry volumes are likely to improve, aided by improving chip supplies for LCVs and better demand for ICVs. Emkay expects domestic volumes to grow by 90% YoY for M&M, 2% for Tata Motors and 1% for Ashok Leyland. In comparison, they expect a 5% fall for Eicher Motor-Volvo Commercial Vehicles. Robust growth for M&M is due to the low base and improving chip supplies for LCVs," Emkay Global Financial Services has said.

2-Wheelers industry volumes are expected to be lower vs. last year, due to muted customer sentiments and the high base effect. In addition, the chip shortage has affected dispatches of premium motorcycles. Emkay expects domestic volumes to fall by 10% YoY for Bajaj Auto, 14% for TVS Motor, 25% for Eicher Motor-Royal Enfield and 26% for Hero Moro Corp Ltd.