Farmers income boosted by timely and robust procurement of kharif crops, and expectation of record rabi production have kept outlook on the rural economy firm.
February despatches of automobile companies indicate continued sales momentum in passenger vehicle and tractor segments. Commercial vehicle sales are catching pace with improving economic activities. Two-wheeler sales remained soft, but analysts see improvement going forward.
“Wholesales growth was positive across Tractor, PV, 2W and CV segments. Retail sales growth was positive in Tractor, PV and Cargo CV segments, while it was subdued in 2Ws as per our check “said analysts at Emkay Global Financial Services Ltd.
PV sales stole the show as Tata Motors Ltd was an outlier recording 119% year-on-year growth. “February 2021 sales have been the highest ever sales for Tata Motors PV in nearly 9 years (107 months)," said the company. In the CV segment, Tata Motors registered a 22% year-on-year growth in domestic sales. Not surprising, the strong momentum meant Tata Motors stock prices gained more than 5%, hitting 52-week highs on Tuesday.
“We estimate that India's passenger vehicle (PV) industry wholesales grew 20-22% YoY in February — the seventh consecutive month of growth," said analysts at Jefferies India Limited.
Apart from Tata Motors, Mahindra and Mahindra Ltd (M&M) too continued its strong show with PV sales growing 41% albeit on a low base. The major boost to M&M was provided by strong tractors sales that marked 24% year-on-year rise in the domestic arena. M&M shares gained more than 5% intraday on Tuesday.
Maruti Suzuki India Ltd (MSIL) registered a decent 11.8% growth in vehicle sales on a year-on-year basis. With sales momentum picking up, MSIL stock prices are picking pace too.
For PVs, discounts have declined year-on-year by up to 2% of vehicle prices. Dealer inventory stood at the levels of one week-three weeks, said analysts.
The tractor segment of Escorts too impressed with a 32.8% growth in domestic sales.
Tractor industry wholesales rose at a robust pace of 25-30% YoY in February, suggests Jefferies data. Tractor demand continued to remain strong with rabi sowing at an all-time high aided by healthy reservoir levels post good monsoon. Farmers income, boosted by timely and robust procurement of kharif crops, and expectation of record rabi production have kept outlook on the rural economy firm.
Two-wheeler sales however continued to disappoint. Bajaj Auto Ltd clocked 12% rise in exports even as domestic volumes grew a muted 1% year-on-year. Hero MotoCorp Ltd too saw similar domestic growth. TVS Motor Company Ltd, however, posted sales growth of 15% in the domestic arena, while Eicher Motors Ltd recorded 10% growth.
“Among 2W, TVS and RE (Royal Enfield) sales were in line, whereas Hero and Bajaj Auto sales were below our estimates" said analysts at Motilal Oswal Financial Services Ltd. Overall analysts say that premium and executive segments continued to performer better, while entry segment sales declined.
Analysts are hopeful of recovery in two-wheeler sales, though they remain watchful going forward.