Post outperforming benchmark Nifty 50 by ~10% in the past six months, India auto index (Nifty Auto), we believe, has limited upside triggers left from a 6 month perspective. We expect volume growth moderation across PVs, CVs, 2Ws and tractors in FY24 along with benefits of reduction in raw material basket cost (RMB) being fully priced in.

Wood panel companies under our coverage reported a mixed bag of operating performance in Q4FY23 with Century Plyboards (CPBI) surprising positively. Plywood and allied segment revenue for CPBI and Greenply Industries (MTLM) grew 18.4% and 3.1% YoY, respectively (4-year CAGR of 14.5%/5.6%).

Domestic 2W retails in May’23 (1.5mn units) were up ~9% YoY and up 21% MoM, post a dull April’23, with continuation of marriage season and improving rural sentiment. e-2W retails crossed 100k mark in May post a weak April at 66k units, we believe, driven by pre buying on account of pre-empted price hikes on partial subsidy removal.

Domestic HRC price (in the week ended 31st May declined by an average of Rs500/te WoW in the traders’ market owing to weak domestic demand and competitive imports. Spot spreads contracted 1.5% WoW tracking the decline in HRC price as coking coal price remained stable at US$198/te.

As per HVS Anarock, Apr’23 was another strong month with hotel industry RevPAR of Rs4,536 being 23% above Apr’19 (pre-Covid) levels and 19% above Apr’22 levelsn (YoY basis). For Apr’23, industry ARR of Rs7,200 was up 20% YoY while occupancy remained flat YoY at 63%.

While we are constructive on the long-term growth prospects of the LI sector, we believe major tectonic shifts will create near-term challenges, albeit preparing the industry for a cleaner insurance penetration. Contrary to expectations of relief in the Union Budget, life insurers are expected to be adversely impacted by the first-order and second-order changes proposed in the Finance Act'23. Conversation with industry experts suggest that the top four private life insurers are likely to witness 20-27% adverse impact on FY24E APE predominantly on account of the impending transition to the new tax regime. We flag high ceding charges in guaranteed NPAR savings as the next potential target as policymakers look to protect policyholder interest and improve life insurance (LI) penetration. While the demand for retail term protection remains subdued and the Apr-23 growth print was soft, we await evidence of medium-term growth momentum.

Maruti Suzuki’s overall wholesale volumes for the month of May 2023 increased by 10.3% YoY/ 10.9% MoM. Total Domestic sales grew by 13.0% YoY/ 5.6% MoM. Exports declined by 2.6% YoY but saw a significant uptick of 56.0% MoM.

Auto Monthly Volume May 2023