Key Points
Kumar Rakesh of BNP Paribas discusses strong demand for electric two-wheelers, caution in two-wheeler segment, impact of FAME II end on EV demand, tractor industry cyclicality, and top pick for 2024 being Maruti Suzuki. we have seen a very strong demand for electric two-wheelers in March..
Kumar Rakesh: To start with, we are slightly more cautious in the two-wheeler segment, than where the Street expectations are, although over the last six months, we have definitely seen an inflection with the demand and growth being quite strong over this period of time...
Now what we are seeing is a reflection of how the incremental demand is panning out and in the absence of any incremental headwind, especially on the cost side, it appears that the industry should at least see a steady growth from here on and if the monsoon season is going to pan out better than the average level, then we should definitely see acceleration in demand, but those demand drivers are yet to fully pan out..
If we go back to last year also when the FAME incentives were reduced, in the immediate month we saw a sharp drop in volume as well as penetration, but each month after that we consistently saw penetration improving and demand gradually coming back to where it was pre-incentive level...
Kumar Rakesh: Look at the long history of the tractor industry and over the last four decades, looking at how the industry has panned out, you would notice that there is a very strong cyclicality to the industry and it is about three to five years of cycle for the industry and typically when we enter into the down cycle, it is not just one year of down cycle that we witness..
