According to Motilal Oswal Financial Services, the number of auto wholesale sales is expected to decline on a MoM basis due to state-located lockdowns and supply issues.
According to the MOFSL report, in May surveys were significantly below normal levels, except for “tractors”.
“While a strong order book and continued preference for personal mobility would support PV, strong demand for 2W seems unlikely given high inventory in the system and a severe impact of second wave Covid on rural and semi markets. -urban, ”the report says.
“Wholesale sales are expected to decrease MoM due to the impact of state localized lockdowns and supply side issues.”
Additionally, he said demand for 2W remains moderate, with dealer inventory at 30-60 days.
“PV demand dynamics are expected to resume once the lockdown is lifted as inventory levels are below normal (less than 30 days), with a 6-8 week waiting period for quick sell models. Demand for M & HCV remains strong in the Infrastructure segment (given current market inquiries), while the same in the freight segment has slowed. “
“Demand for tractors has largely held up on the agricultural side, but commercial demand has slowed.”
Further, he said that while May 2021 has been affected by the Covid-led lockdown across all segments, volumes are expected to recover with the phasing out of lockdown restrictions.
“The current valuations largely take into account a sustained recovery (our base scenario), leaving a limited margin of safety for possible negative surprises. We prefer 4W to 2W, because photovoltaics are currently the least affected segment and provide a stable competitive environment. “
“We expect the recovery of the CV cycle to continue and accelerate. We prefer companies with: better visibility in terms of recovery in demand, a strong competitive positioning, margin factors and a strong balance sheet “–IANS
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