“They have built up overall the market, but later on this new-age players have entered into the market and the whole market dynamics have been changed,” says Abhishek Gaoshinde, Mirae Asset Sharekhan.
You have been covering auto for as long as I think most of us, I cannot even remember given the fact that you understand the auto industry peg very well. Especially about two-wheeler industry that one has gone through dynamic changes and with EV coming in, it has just been disrupting the market. If you could help us understand how is that entire scenario or the stage set for two wheelers especially, EV?
Abhishek Gaoshinde: So, if we talk about the EV segment, then obviously I can say that the first phase of the EV segment is almost over. So, initially, the new-age players have started coming into the market. They have gained the market space.
They have built up overall the market, but later on this new-age players have entered into the market and the whole market dynamics have been changed. So, in last five years if you see, the cumulative market share of the new-age players have been declining, while the cumulative market share of the legacy players have been increasing and we can see that the Bajaj Chetak and the TVS Motor have been aggressively gaining the market share. In the market yesterday, only this TVS Motor indicated that almost 19% of its revenues coming from the EV segment and for Bajaj 20-25% of its domestic revenue is coming from the EV segment.
So, now the industry is entering into the second phase where we have started monitoring that what kind of a profitability these players will gain over the period and over the period what we are assuming that industry will enter into the third phase where we will see some kind of a consolidation in the market and under the third phase we will see the exit from the non-serious or the weak players from the market and what we can assume based on the trend so far the legacy players will gain more market share over the period.
But now, we already have Ola, that has already come into the market, saw a bumper listing and from there on we know what has done to the fortunes of a lot of investors and not to forget that they also have their own internal issues that they are yet to figure out a sort. Now, despite having burnt fingers for most of the investors in Ola, now you have Ather Energy coming out with the IPO. How should one position themselves? What is the primary readings of the company and how is it placed when you compare it to Ola actually?
Abhishek Gaoshinde: If you talk about the Ola, I can say that the post Ola, the EV euphoria has somehow started diminishing. Say, for example, in 2024 the overall investment or the funding for the EVs have been started declining and if you can talk about the Ola, so Ola is currently trading below its listing price and from top we can say it has been corrected over 60%. So, yes, people are cautious about Ather now because things are not materially different in both the companies. Both are the lossmaking companies, both are now facing competition with the legacy players and still we do not know at what point this kind of a companies will turn around. So, when people talk about the valuations or the intrinsic value of the company, at this point of a time we do not have a clearcut visibility about the future cash flow of the company and you know that fundamentally we follow this DCF valuations or whatever be the valuations you follow, you have some kind of a visibility about the future cash flow and by that you assess the current value of the company or the current valuation about the company, but at this point of a time you do not have that kind of a matrix and on the top of that your subsidies are declining and when you are talking about the Ather Energy, it has not been eligible for this PLI benefit.
So, what is happening actually in this that you talk about the disruption, we have seen some such kind of a disruptions by the new-age players in the some other sectors like e-commerce or Q-commerce or some other technology added products, but thing at here is completely different. In commercial space or in the fmcg space, people make losses or people burn the cash to get the market share.
But here the case is completely different, you are burning the cash to sell a product and you do not know by this burning of the cash you will get a repetition of the purchase or the same customers again because what is happening that in this space is that as the competition is rising, new products are coming, new technologies in the market you do not know that at some point of a time your technology will get out of the market.
So, thing is completely different and here the legacy players are coming out as a disruptor for the new-age players.
