Tata Motors, TVS, Eicher remain Jefferies preferred OEM picks in the Indian auto sector

The festival season has lifted sentiments of investors towards Indian auto sector and two-wheeler manufacturers in particular. As Eicher Motors Bajaj Auto and Hero MotoCorp share prices scaled 52-week highs on Thursday TVS Motor Company Ltd share price is also trading near 52-week highs seen on Wednesday.

The OEMs (original Equipment manufacturers) are expected to report strong whole sale numbers for November.

Indian auto OEMs that are expected to report November wholesale volumes in the next few days. Analysts at Jefferies India Ltd expect volume to grow in double digits for most covered companies, up 22-28% year-on-year for Bajaj Auto, TVS Motor Company, Hero MotoCorp and 10-19% year on year growth for Ashok leyland, Eicher Motors (Royal Enfield), Mahindra & Mahindra and Maruti Suzuki India Ltd. Tata Motors volumes should also grow 5% year-on-year. TVS . TVS Motor Company Ltd, Eicher Motors Ltd and Tata Motors are our preferred OEM picks in the Indian auto sector, said analysts at Jefferies India Pvt Ltd.

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Analysts at other brokerages also expect strong growth for two wheelers in November and analyst at Elara Securities India Pt Ltd said that as per their dealer checks, during the recent festive period, rural sales were robust and motorcycles growth outperformed that of scooters. But two wheeler sales in the upcoming marriage season should be healthy to signal sustained rural demand, they added.

Discounting is high for entry-level cars (micro, hatch backs, and sedan segments) and per analysts at Elara but negligible for Utility Vehicles. With healthy rural sales in festive and upcoming marriage season, they expect domestic two-wheeler sales to grow 34% year on year in November’23 for Hero MotoCorp, Bajaj Auto, TVS Motors and Royal Enfield. The passenger vehicle sales should grow 10% year-on- year for Maruti Suzuki, Mahindra and Mahindra and Tata Motors. They expect inventory to reduce now post festive season.

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The Commercial Vehicles CV retail growth for the festive period also stood at 8% YoY as per EmkaY Financial Services data. The Tractor retail sales momentum picked up towards the end of the festive season, said analysts at Emkay. Though there was 8% decline in sales during Navratri the growth caught pace post Navratri to 2% YoY , as rural consumers’ purchasing power began to strengthen again, said analysts at Emkay.

Disclaimer: 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 taking any investment decisions

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Updated: 30 Nov 2023, 03:36 PM IST