More Stories

Informist, Friday, Feb. 21, 2024

MUMBAI – Shares of automobile and auto ancillary companies are seen lower next week due to concerns that the entry of global carmakers in India--on likely relaxation in duties by the government--will pose stiff competition to companies such as Mahindra & Mahindra who have been betting on higher growth in this segment, analysts said. Sentiment has been further dented because of the proposed imposition of 25% tariff on automobile imports into the US by President Donald Trump, analysts said. Clarity on Trump's tariff plans will come after April, when he will address the issue in the Senate.

On Wednesday, Trump said he intends to impose a 25% tariff on automobile imports into the country. Similar tariffs are likely to be imposed on import of pharmaceuticals and semiconductor. Tata Motors, which sells 23-25% of its premium cars Jaguar and Land Rover in US, will have a very negative impact, an analyst at a small-sized brokerage said. Tata Motors will likely lose its market share to US peers if it decides to pass on the import charges to US customers through price hikes, the analyst said. Maruti Suzuki India is unlikely to get affected by the tariffs as it exports to regions such as West Asia and South Africa, three analysts said.

Mahindra & Mahindra was the main focus this week. Shares of the company have fallen 10% so far in February, with most of its fall coming in the last two weeks. The stock has fallen 19% since it hit a 52-week high on Feb. 10. Investors sold the shares on fear that the company will lose its competitive edge to global carmakers such as Tesla who plan to enter the Indian market, analysts said. "As the government is likely to reduce import duties for the electric car imports from 110% to 15%, it will give headroom for global players to enter the market with ease," Ravi Gupta, research analyst at InCred Equities, said. 

"Roughly, if the import duties are reduced to 15%, Tesla can price in its cars at INR 3 million than INR 5 million with 110% duty," Gupta said, and added that this is the price range that M&M is looking to capture market in premium electric vehicle segment. The new electric models, XEV 9e and BE 6, secured 30,179 bookings and had a booking value of INR 84.72 billion, M&M had said in a press release last week.

He also pointed out that Tata Motors leads the electric vehicle space and has a 65-70% market share in India if the monthly sales are looked at. While there are worries about competition due to global players, Gupta said that Tata Motors and Maruti Suzuki may not be affected much because their electric cars are priced below INR 2 million.

Gupta said it is hard for global carmakers to crack the Indian automobile market as customers are inclined towards domestic players. He added that there are exceptions like Hyundai Motor which has done well in the fuel-based cars segment. Major players like Ford Motors and Toyota had to either discontinue their operations or sell their business to domestic companies, he said. Tesla has to establish itself as per government rules and hence its growth has to be watched, he said.

When asked about valuations, Gupta said that M&M is still expensive while Maruti Suzuki and Eicher Motors are fairly priced. Even though M&M is priced high, for the long-term, he said "every dip should be a buy" as the company's fuel-based cars and tractor segment are strong and have superior margins.

This week, Nifty Auto fell 2.6% while Nifty 50 fell only 0.6%. On Friday, the sectoral index hit a three-month low of 21435.50 points and closed lower in 11 out of 16 trading sessions in February. Only five out of 15 stocks closed higher. Eicher Motors gained the most. The Nifty Auto is expected to find support at 21200-21000 points and face resistance at 22000-22100 points, a technical analyst at Angel One said.

TOP HEADLINES

* Great Eastern Shipping delivers Supramax dry bulk carrier Jag Rishi
* CIE Automotive Oct-Dec consol net profit rises 9.5% on year to INR 1.85 bln
* Samvardhana Motherson incorporates arm to provide treasury related svcs
* Suzuki Motor aims to up annual sales in India to 2.54 mln units by Mar 2031
* PRESS: Indian carmakers see sales growth of just 1-2% in FY26
* Mahindra Group to partner Anduril to develop autonomous maritime systems
* JBM Auto arm gets INR 55-bln electric bus order under govt scheme
* Bharat Forge arm signs letter of intent to supply artillery cannons to US
* Ashok Leyland gets INR 2.98-bln order to supply 320 buses to Tamil Nadu
* Uno Minda in JV pact with China co to form JV for mfg powertrain products
* GMR Airports' passenger traffic at 10.69 mln, up 11% YoY, down 2% MoM in Jan
* Great Eastern cancels proposal for early redemption of INR 1.5 bln NCDs
* Cochin Shipyard, Maersk ink MoU for ship repair, shipbuilding opportunities
* Uno Minda buys out German firm's stake in EV systems JV for INR 1.41 billion
* Earnings Review: Samvardhana Motherson PAT up 62% YoY, beats Streets' view

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. 2025. All rights reserved.