MoM growth trend continues in auto sector for CVs

News: Market leader Tata Motors (TML) reported January 2022 CV volumes of 35,268 units, up 3.3% MoM, with volumes at M&M up 32.5% MoM at 21,111 units. VECV volumes at Eicher Motors decline was 11.7% MoM to 5,434 units while Ashok Leyland reported volume prints of 13,939 units, up 11.4% MoM.

Views: With CV space in a cyclical upswing amid greater infrastructure spend by the government and revival in private capex cycle, we expect CV space to continue improvement in volumes going forward. Recent announcements in the Union Budget 2022-23 i.e. robust allocation of Rs.7.5 lakh crore (up 35% YoY) as capital expenditure for FY23E & extension of commissioning date by one year to avail concessional tax rate (~15%) for new manufacturing set-ups is expected to further spur commercial vehicle sales, going forward.

Impact: Positive