Comments
The Supreme Court’s ban on BS-III vehicles is likely to affect only a few automobile stocks. That is because passenger vehicle manufacturers have already started manufacturing BS-IV compliant vehicles, according to analysts. Besides, a large chunk of the inventory of BS-III vehicles pertains to the two-wheeler segment.
According to analysts, any impact on the share prices of Maruti Suzuki India is unlikely. Any impact on Tata Motors is also ruled out as it derives majority of its business from outside India (Jaguar Land Rover).
According to media reports, there are 75,000 unsold BS-III commercial vehicles, 16,000 passenger vehicles, 40,000 three-wheelers and 6.71 lakh two-wheelers. Hero MotoCorp has over 3.28 lakh units of BS-III vehicles in its inventory which is estimated to be worth over ₹1,200 crore.
Within the two-wheelers segment, Hero MotoCorp will be more affected than Bajaj Auto, since exports account for 35-40 per cent of the latter’s overall revenues. Shrikant Akolkar, analyst, Angel Broking, estimated that Ashok Leyland has an inventory of 10,000 units. Shares of Hero MotoCorp and Ashok Leyland fell 4.4 per cent and 6.4 per cent respectively, intraday on Wednesday.
Minimal impact: ALLVinod K Dasari, MD & CEO, Ashok Leyland, said, “Contrary to the various reports in the media about Ashok Leyland having to take a huge write-off of BS-III inventories, the company clarifies that, in fact, the impact will be minimal. Ashok Leyland has been making BS-IV vehicles since 2010 and has sufficient capability and capacity to make BS-IV vehicles.”
“Given the current demand, majority of the vehicles in the pipeline have already been sold. Some more will be sold in the next couple of days where we have customer orders. Of the little inventory that we expect to remain beyond this, we will export them to other markets where we have significant presence and still operate on BS-III norms. Finally, for any other vehicles still left over, the company confirms that it will be able to easily upgrade them to BS-IV at minimal cost.”
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.