Views on SC bans sales of diesel vehicles above 2,000 engine capacity in Delhi till March 31, 2016: Angel Broking

Views of Mr. Bharat Gianani (Sr. Research Analyst - Automobile, Angel Broking) on:

SC bans sales of diesel vehicles above 2,000 engine capacity in Delhi till March 31, 2016

Supreme Court has banned sale of new diesel vehicles above 2,000 cc in Delhi till March 31, 2016. We believe the news is likely to have negative impact on M&M as about 95% of its passenger vehicle portfolio is above the 2,000 cc range. The news would not have much impact on Maruti Suzuki (it hardly has any product above the 2,000 cc segment) and Tata Motors (Tata Motors earnings are driven largely by JLR which is a global player). We think the auto industry is likely to have negotiations/dialogue with the Government and provide a permanent solution which could be banning of the older vehicles (which have more population and are relatively more polluting) or further improving the emission for new vehicles which could then possibly result into the ban not extending beyond March 31, 2016. Further, Delhi contributes about 7% of the overall passenger vehicle sales and the contribution of diesel vehicles is about 2-3% of the overall industry volumes which would further limit the impact of the ban. As of now, we are not making any changes to our stock recommendations.

Source : Equity Bulls

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