More Stories

Informist, Friday, Feb. 28, 2025

MUMBAI – Shares of automobile companies are likely to fall next week as wholesales data for February, which is set to be released over the weekend, is seen weak for some companies, analysts said. Shares of auto-ancillary companies may also see the effect of the weak sentiment across the sector. 

Analysts expect the monthly sales data to be a mixed bag with some growth expected in sales of tractor and passenger vehicles while a decline is likely in the sales two-wheelers and commercial vehicles. Domestic automobile companies are likely to report a muted growth in wholesale volumes for February due to increased discount-led pre-buying in December and price hikes in the first two months of 2025, Nomura Equity Research said in a report Thursday.

The weakness in demand during February has come as a negative surprise, the brokerage said. The passenger vehicle and tractor segments are expected to post a 2% and 11% on-year growth, respectively, in February, whereas sales of two-wheelers and medium and heavy commercial vehicles is expected to fall 6% and 8% on year, respectively, Nomura said.

The tractor segment will likely report a strong sales growth of 11% for February due to positive rural prospects due to improved crop prices and good reservoir levels, Nomura said. The research firm expects Mahindra & Mahindra's tractor volumes to increase 9% in February. Nuvama Institutional Equities expects Escorts Kubota to post a 5% on-year rise in tractor sales.

Lower discounts in February, pre-buying in December month owing to high discounting and sharp slow down in urban consumption will likely lead to fall in retail sales of passenger vehicles, a research analyst tracking the sector at a medimum-sized brokerage said. For March, the analyst expects the sales growth to be flat. While Maruti Suzuki India Ltd. and Mahindra & Mahindra Ltd.'s domestic passenger vehicle wholesale volumes are seen rising on year, Tata Motors Ltd.'s volume is expected to fall in February, Nomura said. 

"The trouble in Tata Motor's passenger vehicle segment is more as most of their car models are reaching end of the cycle and also due to increase in competitive intensity in the fuel-based vehicles and electric vehicles portfolio," a senior research analyst at a domestic brokerage.

Despite higher discounts by some original equipment manufacturers, wholesale volumes for two-wheeler segemnt is seen down 6% on year at 1.4 million in February. Apart from wholesale, registrations are also down at 12%, Nomura said. The segment's exports are seen up in double digits due to growth in Latin America and African markets, Nuvama said in its report.

Bajaj Auto Ltd. is expected to post mixed sales growth as strong growth in two-wheeler exports is partially offset by a fall in domestic two-wheeler sales. Eicher Motors may post a rise in its sales while Hero MotoCorp is likely to post a fall, Nomura said. Mahindra & Mahindra Ltd's three-wheeler wholesale volume for the month is seen up 22% on year. 
 

Limited infrastructure-related activities and capital expenditure spends continue to impact near-term demand for commercial vehicles, Nomura said. Ashok Leyland Ltd and Tata Motors' total wholesale volumes are expected to fall in February, Nomura said. 

The Nifty Auto declined nearly 5% this week, closing lower for the third consecutive week. The index closed higher only for seven out of 21 trading sessions this month. "The sector is likely to remain weak through out 2025-26 (Apr-Mar) due to slowing down of urban demand and due to lack of new launches," an executive vice president at a Mumbai-based brokerage, said. The sales will likely be muted for another two-three quarters due to demand constraints and a seasonally weak monsoon period, the analyst added. 

TOP HEADLINES

* PVs to post muted Feb sales growth; two-wheeler sales seen dn 6% - Nomura
* Data Alert: Domestic air passenger traffic up 11.3% YoY at 14.61 mln in Jan
* Jupiter Wagons' arm gets INR 2.55-bln order from Braithwaite & Co
* SpiceJet sees turnaround in Oct-Dec, reports consol PAT against loss yr ago
* Maruti Suzuki starts ops at Haryana unit; initial capacity 250,000 units/yr
* Bajaj Auto arm provides 50-mln-euro loan to finance KTM production
* PRESS: M&M expects its farm machinery sales in FY25 to hit INR 10 bln
* M&M launches Carbon edition of Scorpio-N at INR 1.92 mln ex-showroom price
* Bharat Forge arm's electronics ops in pact with US co for server ecosystem
* Kotak Institutional Equities sees FY26 PV sales growth in low single digit
* HC junks income tax dept's reassessment action against Maruti Suzuki
* Bajaj Auto to invest INR 13.64 bln in Netherlands-based arm Bajaj Auto Intl

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 Deepshikha Bhardwaj

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.