For Bosch and SKF, two-wheelers, commercial vehicles, and tractors are the main revenue drivers. Passenger vehicles have a smaller role to play. We expect the commercial vehicle (CV) demand to grow c13% in Q1FY17 y-o-y. We believe this demand will be largely driven by replacement vehicles off a low base. June appears to be showing some signs of tiredness with sales growing just c5%. We still believe advance purchases ahead of BS-IV emission norms will drive CV sales in 2HFY17. The tractor segment is also likely to post high double-digit growth during the quarter, driven by the prospect of a strong monsoon season. The two-wheeler (2W) segment surprised us at the beginning of the quarter with 28-34% growth in Scooter production and 8% growth in Motorcycles, which translates into 12% y-o-y growth in Q1FY17.
The passenger vehicle (PV) segment is still awaiting tailwinds but continues on a moderate growth trend, which we forecast to grow 3% y-o-y. Bosch Q1FY17 is likely to be a good quarter buoyed by the tractor segment where it has a near monopoly and strong sales of heavy commercial vehicles where it has more than 70% market share. A decline in diesel driven car sales may be slightly negative for the company. We expect net sales to grow 13% in Q1FY17 resulting in Profit after Tax (PAT) of `3,9billion — a growth of 15% y-o-y — with an EBITDA margin of 20.5%.
