More Stories

Informist, Friday, Feb. 14, 2025

MUMBAI – Shares of two-wheeler makers are likely to rise in the near-term on hopes of better sales after the income tax relief in the Budget. However, the gains may be capped due to the overall weak market sentiment, analysts said. Shares of commercial vehicle and passenger vehicle manufacturers are likely to be in a range as demand for cars is unlikely to see a major pickup due to weak urban demand, and trucks and bus sales may struggle due to lower-than-expected government spending in the coming financial year, analysts said. At the same time, analysts said that the recent correction in the market has made valuations of several stocks in the sector attractive, which is likely to limit their downside.

The Nifty Auto index fell 6% this week to close at 22069.30 points. The sectoral index has underperformed the Nifty 50, which fell 2.7% this week. Eicher Motors and Hero MotoCorp were the worst performers among the pack.

In terms of volume growth, two-wheelers are at a bigger advantage and their sales are expected to grow 7-8% during 2025-26 (Apr-Mar), an analyst with mid-size brokerage said. "This is mainly due to the fact that the growth in volume has not reached the pre-Covid levels," the analyst said. Sales of entry-level motorcycles with engine capacity of 100cc and 110cc and scooters will likely pick up on the income tax relief.

Shares of Eicher Motors fell more than 12% this week and are likely to be under pressure as the company's margin are likely to fall in the near term, analysts said. The fall is a temporary blip as the company is shifting its strategy where it is ready to sacrifice profitability or margins and focus more on improving topline growth, Saral Seth, vice president of institutional equities at IndSec Securities & Finance, said. Seth said Eicher Motors will likely introduce low-priced variants, improve its distribution system, and enter new global markets as part of its new strategy.

Shares of commercial vehicle makers are seen under selling pressure as revival in demand in the second half of FY25 is unlikely with the government spending turning out to be a disappointment. The analyst with the mid-size brokerage said he expects sales volume of commercial vehicles to grow 2-3% next financial year, and that of passenger vehicles to grow by up to 4%, which he said was muted. These segments have done exceptionally well from FY22 and there is a high-base effect, the analyst said. The stocks of these companies have fallen in the last two months and are likely to be in a range but select passenger vehicle players, like Mahindra & Mahindra, have room to rise, the analyst said. Among passenger vehicle players, Seth said Maruti Suzuki India is better placed considering its higher market share in rural market, which has started to see improvement in demand.

Companies betting on electric cars are likely to face headwinds because of slowdown in urban demand and stiff competition in the sector, Seth said. Players such as Tata Motors and Mahindra & Mahindra are likely to be affected because of this, he added. MG Windsor, which is working in joint venture with the JSW group in India, has given tough competition to listed players in the electric-car space, Seth said. He expects the Nifty Auto index to take support at 21800 points and face resistance at 22700 points.

TOP HEADLINES

* Data alert: India Jan auto despatches tepid, but exports dazzle
* Bharat Forge in pact with France-based co to establish mfg facility in Pune
* Earnings Review: Bharat Forge misses Street view, EBITDA down on EU weakness
* Earnings Review: Ashok Leyland posts best-ever Oct-Dec revenue, PAT, EBITDA
* MSCI adds Hyundai Motor to India domestic index, removes Adani Green Energy
* Bharat Forge arm, L3Harris sign MoU for advanced defence tech collaboration
* Analyst Concall: Escorts Kubota sees construction ops business flat in FY26
* Sona BLW to buy land parcel from Escorts Kubota for INR 1.10 billion
* Earnings Review:Eicher Motors' top line growth at 2-yr high on record volumes
* Earnings Review: Escorts Kubota Oct-Dec PAT, revenue up nearly 9% on year
* Analyst Concall:Mazagon Dock may report higher margins due to current orders
* Passenger vehicle sector to see single-digit growth in March qtr - M&M mgmt
* Analyst Concall: M&M to raise EV play, focus on improving infrastructure
* Earnings Review: M&M PAT, revenue grow in double digit Oct-Dec but miss view
* Ola Electric's consolidated net loss widens YoY to INR 5.64 bln in Oct-Dec
 

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Gopika Balasubramanium

Edited by Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.