ICRA expects 12-14 pc growth for two-wheeler sales this fiscal

On Thursday, ICRA, a rating agency retained its forecasts for two-wheeler (2W) sales growth at 12-14% for FY22, amid pandemic induced challenges and restrictions.

ICRA stated that in the festive season, the two-wheeler demand is expected to be driven by a strong rural cash flows, a low base and constant inclination for personal mobility.

It added, “The rural economy of the country is expected to offer certain aid, while the overall investment demand and consumption might take a little time for the recovery from the second wave.”

It added that rural demand is expected to rebound due to several factors such as rapid rabi production forecasts, good monsoons projections, an increase in the minimum support prices for kharif crops and governments support schemes.

The ratings agency said, “Amid the pandemic, the constant inclination for personal mobility solutions is also expected to drive the demand growth. A steady growth is expected for 2W exports and is anticipated to boost industry volumes in FY22.”

Mr. Rohan Kanwar Gupta, ICRA Vice-President & Sector Head, Corporate Ratings, said, "By the end of May 2021, the inventory at dealerships, was estimated at relatively high, indicating gradual recovery in wholesale volumes due to COVID-19 induced restrictions and challenges. For the forthcoming festive season, the stocking has begun.”

Amid the uncertainty of the COVID-19 pandemic, ICRA stated that it retains its ‘stable’ outlook for the 2W industry.

Mr. Gupta stated that in line with ICRA's stable outlook on the 2W industry, the credit portfolio of 2W OEMs is projected to remain strong, backed by solid balance sheets, reduced debt and strong cash and liquid investments.

He added, “The OEMs are expected to continue investments in the area of network expansion and new product development in both domestic and overseas market.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.