Shares of Maruti Suzuki, Tata Motors and Mahindra & Mahindra (M&M) were trading lower in Thursday's trade ahead February sales data. This is even as the numbers broadly met analyst estimates.
Post February sales data, Motilal Oswal Securities said it prefers four-wheelers over two-wheelers, on the back of strong demand, along with a stable competitive environment.
The domestic brokerage prefers companies with higher visibility in terms of demand recovery, a strong competitive positioning, encouraging margin drivers, and a strong balance sheet. Maruti Suzuki is among its top OEM picks.
"While the adverse impact of chip shortages on Maruti's production volumes was not quite significant, the company expects it to reflect in the March volumes. Thus, the company is taking all possible measures to mitigate the same. Bookings momentum continues to remain healthy and OEMs have a healthy order backlog. Enquiry level in the entry-level segment has not yet recovered completely," Motilal Oswal said.
Shares of Maruti Suzuki declined 1.33 per cent to Rs 8,647. Tata Motors dropped 1.12 per cent to Rs 421.10. M&M slipped 1.69 per cent to Rs 1,252.05.
Kotak Institutional Equities said domestic PV industry volumes jumped 10 per cent on a YoY
basis in February 2023, broadly in line with its estimates. Maruti's total volumes increased 5 per cent YoY in February, led by an 11 per cent YoY improvement in domestic segment volumes, partly offset by a decline in export volumes.
"The growth in volumes can be attributed to a modest recovery in sales of the hatchback segment and continued strong performance of the SUV segment due to the improvement in chip supply. Maruti Suzuki’s market share stood at 44 per cent (flat YoY and +150 bps QoQ). Hyundai and Kia Motors reported 7 per cent and 36 per cent YoY increase in domestic volumes, respectively. Tata Motors and M&M’s domestic volumes grew 7-10 per cent YoY," it said.
Nomura India likes M&M; it has a neutral rating on Maruti Suzuki and a buy
It said PV retail sales were up 10 per cent YoY, but said industry retails would have been lower than wholesales, leading to inventory addition of 30,000 units in Febuary.
"Nevertheless, inventory is still 2.5 weeks for the industry. Overall for PVs, waiting periods are getting shorter, and is in line with our view of the industry slowing down to 6 per cent YoY volume growth in FY24F (from 25 per cent YoY volume growth in FY23F)," it said.
Nomura said Maruti Suzuki's domestic volumes were ahead of its estimate, partly offset by a sharp 28 per cent YoY decline in exports. M&M’s UV volumes were up 10 per cent YoY against Nomura's estimate of 16 per cent YoY growth. Tata Motor’s PV volumes were up 7 per cent YoY against Nomura's 14 per cent YoY growth.
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