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Tractor volumes remain in fast lane shows October wholesale data

October tractor sales volumes surpassed analysts’ expectations. (File Photo)Premium
October tractor sales volumes surpassed analysts’ expectations. (File Photo)

Tractor sales are expected to continue to gain traction given the upcoming rabi sowing season. The outlook is rosy led by the government’s announcement of higher minimum support prices along with factors such as high water level in reservoirs and good moisture content in soil

In October, tractor sales continued to ride on the momentum seen in September. Wholesale volumes benefitted from inventory channel filling for the recently concluded festival season. In fact, volumes surpassed analysts’ expectations.

Mahindra & Mahindra Ltd (M&M)’s tractor volumes in October grew nearly 7% sequentially and almost 11% year-on-year to 51,994 units. For perspective, analysts at Motilal Oswal Financial Services expected M&M to clock sales of 44,666 tractor units last month.

Escorts Kubota Ltd saw 18.5% sequential rise and 7.2% year-on-year growth in its October tractor volumes to 14,492 units. In comparison, Motilal Oswal’s analysts estimated Escorts to see nearly 5% sequential decline and 14% year-on-year drop in wholesale volumes.

The broking firm notes that companies have become aggressive in terms of discounting in the festival season with the aim of gaining market share.

Tractor sales are expected to continue to gain traction given the upcoming rabi sowing season. The outlook is rosy led by the government’s announcement of higher minimum support prices. M&M notes that other factors such as high water level in reservoirs and good moisture content in soil would maintain demand momentum for tractors.

“Though tractor wholesale numbers came in at record levels (up about 10% month-on-month), retail demand was up 7% month-on-month signifying that the industry is getting prepared for harvest season with adequate inventory," said analysts at ICICI Securities in a report on 2 November.

Meanwhile, other auto segments such as passenger vehicles (PV) saw sequential decline in wholesale volumes in October. Note that September volumes were boosted by pre-festive channel filling. Even so, the demand environment for PVs continues to remain robust.

The two-wheeler segment continues to be plagued by pressure in the export markets. In domestic markets, demand is yet to rise meaningfully.

To be sure, demand trends across segments post the festive season would be key to watch hereon.

ABOUT THE AUTHOR

Vineetha Sampath

Vineetha Sampath is a chartered accountant and is experienced in the field of research analysis. She joined Mint's Mark to Market team recently and this is her first stint in journalism.
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