The first month of financial year 2017-18 is expected to be upbeat for car and two-wheeler makers but not for commercial vehicle (CV) manufacturers, in terms of volume sales. It will also be the first full month when companies won't be selling BS-III vehicles.
"Car sales have been growing in the past few months and we expect the momentum to continue. Two-wheeler inventory level at the end of March 2017 was low because of the Supreme Court's verdict banning BS-III vehicles and hence we believe two-wheeler original equipment manufacturers or OEMs pushed inventory to dealers in April 2017," Gaurant Dadwal and Vivek Sarin, analysts at brokerage Nirmal Bang Institutional Equities (NBIE), said in a note on Friday.
"In case of commercial vehicles or CVs too, inventory was high at the end of March 2017, but prepurchases in recent months will restrict sales growth of companies and hence weak sales are likely in April 2017," the analysts added.
Companies are expected to report their volume sales data on May 1 and 2.
Car sales expected to be robust
Within the car manufacturing space, Maruti Suzuki India Ltd. (MSIL), India's leading player by volumes sold, is expected to post 16 percent increase, year-on-year. The company had sold 1,17,045 vehicles in May last year in the domestic market while exports stood at 9,524 cars.
Tata Motors is also expected to report good numbers, on the back of new launches, the Tiago and Tigor.
In April 2016, domestic passenger car sales stood at 1,62,566 units, up 1.87 percent from 1,59,588 vehicles in April 2015.
Two-wheeler sales
Bajaj Auto is expected to report 7 percent fall YoY while market leader Hero Motocorp is likely to post single-digit growth. For Chennai-based TVS Motor Co., growth is projected at 6 percent.
Commercial vehicles
Tata Motors, Ashok Leyland, Mahindra & Mahindra and Eicher Motors are the key players in the CV space. Sales are likely to remain tepid for obvious reasons. "In the medium and heavy commercial vehicle or MHCV segment, inventory level was high before the BS-III ban and pre-purchases were witnessed in recent months. Hence, sales are expected to be weak in the MHCV segment," the NBIE analysts said.
On Friday, MSIL shares closed 2.42 percent higher at Rs 6,525 apiece, Tata Motors up 0.41 percent at Rs 458, Ashok Leyland was down 1.44 percent to Rs 85, Hero Motocorp ended 1 percent higher at Rs 3,330 and Bajaj Auto closed almost flat at Rs 2,872.
MSIL reported 15.8 percent rise in net profit for the March quarter (Q4) at Rs 1,709 crore from Rs 1,476 crore in the corresponding period last year. Sales grew 20.3 percent to Rs 18,005 crore.
The company declared a dividend of Rs 75 per share for 2016-17, up from Rs 35 paid in the previous financial year.
