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■ May'21 volumes have been negatively impacted by lockdowns across states. Although volumes were weak, they were above estimates due to better-than-expected exports and inventory build-up with dealers in Tractors, PV and CV segments. Going forward, we expect a recovery in volumes due to easing of lockdowns and pent-up demand. States such as Uttar Pradesh, Madhya Pradesh, Rajasthan and Delhi have started easing lockdowns, and more states are expected to do so over the next 1-2 weeks. Our top picks among OEMs are TTMT (TP: Rs410), AL (TP: Rs155), MSIL (TP: Rs8,500) and EIM (TP: Rs3,180). In Ancillaries, we like BHFC (TP: Rs760) and APTY (TP: Rs290). ■ In comparison with May'19 numbers, there was a decline across segments -- Tractors/PVs witnessed a lower decline vs. 2Ws/CVs. ■ Tractor volumes were above estimates on a pick-up in retails toward the end of May and channel filling. Two-year CAGR for domestic volume was marginally negative at -1% CAGR of MM and -3% for ESC. ■ Domestic PV industry volumes declined to around 103,000 units, implying -34% CAGR. Among listed companies, TTMT witnessed +18% CAGR, while MM saw -38% CAGR and MSIL -47%. ■ Domestic 2W volumes were weak, but exports were robust due to healthy demand and stable forex rates in key geographies such as Latin America, Asia and Africa. Domestic volume CAGR stood at -42% for EIM-RE, -46% for BJAUT, -50% for HMCL and -53% for TVSL. In comparison, export volume CAGR was +33% for TVSL and +6% for BJAUT. ■ CV industry volumes have been under pressure due to lower freight availability, resulting in the postponement of purchase orders by transporters. Domestic volumes CAGR stood at -36% for MM, -43% for TTMT, -54% for AL and -62% for EIM-VECV. Please see our sector model portfolio (Emkay Alpha Portfolio): Automobiles & Auto Ancillaries | ||||
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