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IMD and Skymet announce normal monsoon in India; Tractor industry to grow by 8-10% in FY19

IMD and Skymet announce normal monsoon in India; Tractor industry to grow by 8-10% in FY19
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Then Skymet and now, IMD. India is going to have a normal monsoon this year. And that's official. 

In its forecast released today, the India Meteorological Department (IMD) said it expects monsoon rains to hit Kerala coast by May 15 and projected a normal monsoon for the third year in a row. The weather department sees monsoon at 97 per cent of long-term average and is expected to update its forecast by June. 

The monsoon forecast is a positive for Street, said marketmen, who believe a host of agri-consumption sectors would make news on Tuesday. The list may include companies from FMCG, farm equipment, consumer durables and two-wheeler players. 
Earlier this month, private forecaster Skymet had said India was expected to receive normal rainfall in the June-September monsoon season this year although parts of southern and northeastern India were at risk of deficient rain. 

As far as farm equipment sector goes, only 40-45 per cent of agriculture is mechanised in India. And this is where experts see huge potential for higher tractor penetration, and by extension, this is good news for tractor makers, said analysts. M&M is a big listed player in this segment. 

The tractor industryis expected record a volume growth of 8%-10% in the current financial year (2018-19) on the back of good monsoon rain.While the government's push for increased farm mechanisation by subsidising tractor purchases is likely to aid sales in the lower HP segment, a continued customer shift towards increased usage of various agro-implements is likely to lead to a further increase in market size for high HP tractors over the long-term.

Tractor volumes reported a healthy growth during 2017-18, boosted by improving farm sentiments following healthy southwest monsoon and expectations of better cash flows in the backdrop of strong growth in kharif and rabi crop production.

 

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