Auto makers are all set to report healthy set of volumes data for September, partly due to early start to the festive season. Customer footfalls at showrooms have jumped, said a few analysts, who sees stock such as Mahindra & Mahindra (M&M), Hero MotoCorp and Maruti Suzuki, among others, doing well going ahead.
Emkay Global Financial Services has retained its positive view on the sector, with Maruti Suzuki, M&M, Tata Motors, Escorts and Ashok Leyland as its preferred picks.
The brokerage said its channel checks suggest a positive volume trend, aided by the early commencement of Navaratri in September in comparison with October last year.
“Tractor and two-Wheelers’ OEMs should post positive growth on continuing inventory build-up with dealers in the run-up to the festive season. Further, PV volumes should be higher, driven by large order book, new products, and ramp-up in production. In addition, CVs are likely to maintain their positive growth momentum,” Emkay Global said.
OEM stands for original equipment manufacturer.
Sharekhan likes auto majors such as Hero MotoCorp, Eicher Motors, TVS Motor and M&M. It also likes Maruti Suzuki and Escorts Kubota. The brokerage expects two-wheelers as a segment to lead the pack, followed by passenger vehicles (PVs), tractors, and commercial vehicles (CVs).
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“Our interaction with dealers suggests a massive increase in enquiries and customer footfalls at the showrooms, especially in the rural and semi-rural locations, likely to result in higher retail purchases across the segments. In case of two-wheelers and PVs, the order books continue to prosper, led by exciting new launches and improving production capacities by the OEM players,” the brokerage said.
The volume growth in medium and heavy commercial vehicles (M&HCVs) segment would be supported by improving economic and infrastructure activities.
Light commercial vehicles (LCVs) may do well because of surge in e-commerce and better last-mile connectivity, Sharekhan said, adding that buses and three-wheelers may also see recovery, driven by the reopening of schools and offices and easing of mobility restrict.
Nomura India said it prefers OEMs with high growth potential such as M&M, Tata Motors, and Ashok Leyland. Besides, the brokerage said rising electrification and content per vehicle will be the key value drivers for suppliers such as Sona Comstar, Uno Minda and Sansera.
In the PV segment, Nomura expects to be up Maruti Suzuki’s domestic personal vehicle (PV) wholesales to be up 126 per cent YoY. It said M&M’s utility vehicle volumes will be likely up 157 per cent YoY (33,000 units) on a strong model cycle and order book, adding that M&M’s tractor volumes are likely to be flat YoY.
In the two-wheeler segment: “We expect growth will likely be driven by Bajaj Auto (Neutral) up 4 per cent YoY and Royal Enfield (up 130 per cent YoY), befitting from the positive reception of the Hunter 350 and channel filling. Hero Motocorp (Neutral) will likely be down 6 per cent YoY and TVS Motor’s wholesales likely to be up 8 per cent YoY,” the brokerage said.