NGT decision on diesel vehicles may take toll on M&M: Mihir Jhaveri, Religare Capital

The National Green Tribunal has ordered that no new diesel vehicles would be registered in Delhi, and has directed the Delhi government not to buy any diesel vehicles for their departments. In an interaction with ET NOW, Mihir Jhaveri of Religare Capital, shares his views. Excerpts:

ET Now: NGT’s ordered that no new diesel vehicles would be registered in Delhi is surely not good news for diesel manufacturers like Eicher Motors, Tata Motors, and especially M&M which have a 100% diesel portfolio? What is your take on the move?

Mihir Jhaveri: Yes, it looks like it is negative for M&M who has larger diesel portfolio, but having said that, there are also a need to look at the details of these sales given the fact that there could be registrations which could happen outside of Delhi. And NCR is a bigger region. How this will pan out, how the implementation will take place is still not very clear.

ET Now: It has been directed that the centre and state government cannot to buy any diesel vehicles for their departments. Just to clarify, this would include passenger as well as commercial vehicles. What kind of a setback would it be for M&M?

Mihir Jhaveri: It is very difficult to comment right now or to have a rough envelop calculations right now. The only thing is that diesel cars in India had peaked in 2013. It had gone to 47%, now declined to 37% in 2015. Having said that, how much impact will M&M witness non-Delhi registration, it is difficult to give you that number at this point.

ET Now: Mahindra & Mahindra is also offering electric cars, of course, the popularity has not been that great, but do you think with this kind of ban, probably that portfolio can improve? Or for a Maruti Suzuki, the LPG and the CNG variants could see some pickup in a state like Delhi? Also, on the commercial vehicle front, since most of the buses in Delhi especially in the state government transport are already running on gas, don’t you think there will be no impact on commercial vehicle sales for companies like Tata Motors, Ashok Leyland and Eicher Motors?

Mihir Jhaveri: Yes, I think there won’t be much impact on the commercial vehicle side because buses are anyways on CNG, and commercial vehicles could be registered anywhere across the NCR. For that matter, even the four wheelers could be registered in Gurgaon or in Noida. But the immediate impact could be only on M&M, where they only have a diesel portfolio. Whereas for Maruti and all still have an option in terms of having a CNG vehicle or a petrol vehicle. From a negative perspective, it is the only diesel portfolio which is getting impacted. From CV side, still not very clear how things will pan out, but I do not think much of an impact would be there.