Automobiles & Auto Components share price target

Auto - Q4FY23 - Earnings Preview

Retail sales for the automobile industry as a whole rose by 13.8% YoY to 20.4 lakh units in March 2023. Two-wheeler retail sales went up 12.4% YoY to 14.4 lakh units, while car retail sales increased 14.4% YoY to 3.4 lakh units.

On a year-on-year basis, gains were seen across all auto segments, with three-wheeler sales growing the most, by 68.7%.

We recently interacted with a number of commercial vehicle (CV) dealers in Gujarat and Rajasthan to grasp the demand outlook. Key takeaways: a) Feb’23 and Mar’23 retail volumes included ~20-30% impact of pre-buying before the 4-5% RDE-related price hikes anticipated to be effective from Apr’23;

Automobile wholesales of listed companies rose 18.5% YoY to around 13.8 lakh units in March, while exports fell 30.4% YoY to 2,06,035 units.

Domestic two-wheeler wholesales of listed companies were up 22.9% YoY to 9,55,681 units and those of passenger vehicles rose 4.4% YoY to 2,12,804 units.

Auto Monthly Volume Update - Mar 23

Monthly average 2W retails in H2FY23 (1.46mn units) was ~27% higher than H1FY23 monthly average levels, signifying continuity of the improving retail trend post festive season. Thus with favourable base till H1FY24 we expect >10% growth for the industry in FY24E amid limited triggers for TCO inflation.

The Indian automobile industry eclipsed Japan and Germany for the first time in January 2023 to become the third-largest auto market in the world. At the domestic level, the Indian auto industry is valued around USD 100 billion and contributes nearly 8% of the GDP.

On a monthly basis, currently, domestic PV/2W retail volumes are up ~20% vs H1FY23 levels. M&HCVs stand at ~35k units+ monthly levels, similar to FY19 highs already, led by seasonality, demand driven by capex cycle and pre-buying driven by RDE norms coming from April.