Domestic automobile companies will release their wholesale numbers for the month of November in the next week, with analysts expecting double-digit growth across segments, as they believe demand has picked up following the GST rationalization, especially in entry-level vehicles, including both two-wheelers and passenger vehicles.
Motilal Oswal expects two-wheelers (2Ws), passenger vehicles (PVs), commercial vehicles (CVs), and tractors to post 11%, 11%, 13%, and 12% growth in wholesale in November compared to the same period last year.
Among passenger vehicles, it projects Mahindra & Mahindra to lead the growth, with a 12.7% YoY jump in sales to 126,697 units, followed by Maruti Suzuki, expected to post a 9.8% YoY increase to 199,312 units, while Hyundai Motor India is anticipated to see wholesale growth of 5.5% YoY to 64,650 units.
Considering a healthy revival in the compact SUV segment, Motilal Oswal expects Tata Motors Passenger Vehicles to post double-digit growth in November. The brokerage further estimates that this growth should be driven by strong marriage season demand and a revival in small car sales (attributed to a low base and discounts), along with benefits from GST rate cuts.
Like passenger vehicles, Motilal Oswal notes that two-wheeler demand appears to have remained intact in the post-festive period. Key demand drivers include positive rural sentiment and strong marriage season pull, along with the GST rate cut benefit.
Within OEMs, Motilal Oswal expects Eicher Motors and TVS Motor to continue outperforming their peers, projecting RE’s dispatches to increase 24.3% YoY to 102,271 units, while TVS is seen rising 11.3% YoY to 446,466 units.
Demand trends in the commercial vehicle segment appear to be a mixed bag. On one hand, Motilal Oswal observes a healthy revival in the light commercial vehicle (LCV) segment, likely supported by improving consumption trends in the country.
On the other hand, the brokerage notes that medium and heavy commercial vehicle (MHCV) truck demand continues to remain subdued. Overall, Motilal Oswal expects the CV segment to post 13% YoY growth in dispatches in November, largely due to a low base last year.
In the tractor segment, Motilal Oswal expects demand momentum to remain stable going forward, projecting a healthy 12% volume growth in November.
Auto demand recovery to ease discounts; Maruti Suzuki remains top OEM pick
With a recovery in demand, the brokerage expects discounts to gradually reduce after the festive season. Among its preferred stocks, Maruti Suzuki remains its top pick among auto OEMs, as the firm believes new launches and the current export momentum are likely to drive healthy earnings growth.
It also favors Mahindra & Mahindra (MM), given the uptrend in tractors and healthy growth in utility vehicles (UVs). In the two-wheeler segment, it remains positive on TVS Motor, while its top auto ancillary picks include Endurance Technologies, SAMIL, and Happy Forgings.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
