India's Two-Wheeler Makers Won't Face EV Disruptor, Says Emkay Global's Nirav Sheth
Nirav Sheth sees less chance of newcomers like Ola beating incumbents like Bajaj and TVS.
![<div class="paragraphs"><p>An electric two-wheeler on display at the Hero Electric Vehicles Pvt. headquarters in Gurgaon. [Photographer: Anindito Mukherjee/Bloomberg]</p></div>](https://media.assettype.com/bloombergquint%2F2021-12%2Fc6accf73-9010-416e-976a-233c21bee943%2F379507581.jpg?rect=0%2C453%2C4840%2C2723&auto=format%2Ccompress&w=200)
Even as Ola Electric Pvt. starts delivering its battery-powered scooters, India’s legacy two-wheeler makers are unlikely to face a Tesla Inc.-like disruptor.
That’s according to Nirav Sheth, chief executive officer, institutional equities at Emkay Global. “These newcomers don’t have competitive advantage in terms of sourcing or costing.”
Ola missed delivery schedules after an initial spurt in demand for its newly launched electric scooter. Sheth sees less chance of newcomers like it beating the incumbents.
“I’m fairly confident that the incumbents will have an advantage,” he told BloombergQuint’s Niraj Shah in an interview, referring to capacity addition by TVS Motor Ltd. and Bajaj Auto Ltd. “I don’t see an outsider coming and disrupting the two-wheeler space. I think the incumbents will end up owning a larger market share.”
The newcomers are increasingly banking on the private equity funding, and now the public market, Sheth said, referring to IPOs of new-age startups. “When you live on borrowed cash, it’s a question of time and at some point, it is going to hit you.”
Electric two-wheeler adoption in India has been growing, with costlier fuel only accelerating the shift. The nation with some of the world’s worst polluted cities looks to turn 80% of scooters and motorbikes and 30% cars electric by 2030.
According to Sheth, the shift towards EVs is not in doubt. “We are only debating the pace of adoption, if it will be five times or 10 times in 10 years."
But it's impossible for passenger vehicle makers to electrify at the price point of Rs 7-14 lakh as bulk of the volumes come from vehicles priced lower.
Still, among carmakers, he sees Maruti Suzuki India Ltd. having a greater advantage over its competitors even as its Chairman RC Bhargava had said that the maker of Swift hatchback will enter the EV market post 2025.
“Just because Maruti isn’t talking about it doesn’t mean it doesn’t know how to go about EVs,” he said. “We look at Maruti along with Suzuki, and they’ve access to technology.”
Key Themes
Autos also remains one of the preferred bets for Sheth, along with banks and forward and backward linkages (ancillary segments) to real estate.
Sheth, however, has a neutral stance on information technology, including mid-cap IT, right now.
Watch the full conversation here: