The high inventory and production cuts owing to weak demand will impact March automobile sales, according to Motilal Oswal.
The brokerage said that all the leading suppliers and channel partners have indicated weak demand for the third consecutive month.
"While passenger vehicle (PV) demand is partially supported with new launches, commercial vehicle (CV) demand has been declining over the past two months due to weak demand from major end-user segments", said the brokerage in a research report.
In terms of passenger vehicles, demand trend in Maharashtra, Gujarat, Delhi, and Madhya Pradesh remained weak, leading to high inventory.
"Thus, expect Maruti Suzuki total dispatches to decline 11.5 percent YoY in March," said the report.
In the case of two-wheelers, stock levels remained high at 60-65 days, and, Motilal expects wholesales to grow 12 percent for Bajaj Auto and decline of 24/7 percent Y-o-Y for Hero MotoCorp and TVS Motors, respectively.
"Demand for commercial vehicles remains muted due to weak trends. Expect CV wholesales for Tata Motors and Ashok Leyland to decline 4.7/9.6 percent YoY," the brokerage added.
Motilal Oswal prefers four-wheelers over two-wheelers/CVs as it is the least impacted segment currently, offering a stable competitive environment. Its top picks from large caps are Maruti Suzuki and Motherson Sumi, while Exide Industries and Endurance Technologies are its top picks among mid-caps.
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First Published: Mar 29, 2019 8:23 AM IST
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