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Informist, Thursday, Mar. 13, 2025

MUMBAI – Shares of automobile companies are likely to remain in the red next week, mainly due to macroeconomic headwinds. US President Donald Trump's back-and-forth announcements on tariff policies and Tesla's entry into the Indian market are expected to have an impact on the sector, three analysts said. The sentiment is also affected due to continuous weakness seen in volume growth in the past two months due to low demand and discount-led pre-buying in December, analysts said. Overall, automobile wholesales in India fell more than 6% in February, while exports grew by 16%, the slowest in seven months, monthly data from the Society of Indian Automobile Manufacturers showed. 

The domestic market will likely continue to see a dent in volumes across all segments except for tractors, analysts said. Among passenger car-makers, Maruti Suzuki India Ltd. is likely to fare better than Hyundai Motors India Ltd., analysts said. "It is rather a safe bet than any original equipment manufacturers as it continues to gain market share and is immune to policy-driven headwinds," Saral Seth, vice-president of institutional equities at IndSec Securities & Finance, said. As far as Hyundai Motors is considered, there is a shift in customer preference towards the cars made by Kia Motors India, and has failed to maintain margin post its listing, Ravi Gupta, research analyst tracking the automobile sector, said. 

Companies focused on electric cars, such as Mahindra & Mahindra and Tata Motors, will have to be closely watched out for, anlaysts said. There is a bit of nervousness in the market pertaining to the entry of Tesla in India. However, the worries have eased for the near term as it would take more time for policies to pan out, analysts said. Any policy easing by the government in terms of duties will likely lead other global automobile makers to enter the domestic market, Seth said. 

Among two-wheeler companies, the growth has surprisingly slowed down in the past two months, but it will pickup in April, Seth said. Bajaj Auto will likely make better progress than others on the back of its strong growth in exports, especially in regions such as South Africa and Latin America, analysts said. They are, however, cautious about Hero MotoCorp, due to uncertainties in strategies as management has changed recently, and it has also lost its market share to Honda Motorcycle & Scooter India Pvt. Ltd., Gupta said. In the coming week, there could be a slight gain in the shares of Hero MotoCorp as its associate company, Ather Energy, has filed draft papers for an initial public offering, Seth said. 

Commercial vehicle-makers are likely to see better days as government spending has improved after three quarters, but the pickup in volume will take some time, Gupta said. Logistic companies, the main buyers of trucks, have shown improvement in their top line, he said, adding that 2025-26 (Apr-Mar) is the replacement year which would lead to an increase in sales of these trucks. Logistic companies generally replace vehicles they own every 8–10 years, and in the coming financial year, it is expected to benefit Tata Motors and Ashok Leyland's medium and heavy commercial vehicle sales, Gupta said. Light commercial vehicle sales will be weak for some more time as buyers prefer cargo three-wheelers for transportation of goods, he said. 

Shares of Ashok Leyland may decline due to recent issues of IndusInd Bank, Seth said. The bank had said that there are discrepancies in its foreign exchange derivatives segment, and this would result in a 2.35% reduction in its net worth. There would be credibility issues as both are owned by Hinduja Group, Seth said.    

The Nifty Auto index has fallen 2.2% over this week and closed 1.1% lower Thursday at 20554.05 points. Tata Motors was the only stock to rise over the week. Exide Industries, Ashok Leyland, and Samvardhana Motherson were the worst-hit among the 15 constituents of Nifty Auto. Seth expects Nifty Auto to find support at 20100 points and face resistance at 20800 points in the near-term.

TOP HEADLINES

* Data Alert: India Feb automobile despatches fall, export growth slows
* TVS Motor and Petronas extend partnership to promote motorsports in India
* Ola Electric expects to achieve automotive ops EBITDA breakeven in Apr-Jun
* FADA sees March retail automobile sales down 6-7% on year due to poor demand
* TEXT: ICRA assigns BBB+ rating to TASL Automobile Solutions' issuer rating
* Probe report on Hero MotoCorp, Salt Experiences being examined, says govt
* Honda Motor appoints Takashi Nakajima as president, CEO of Honda Cars India
* PRESS:Hyundai Motors India's 7 key related party transactions under scrutiny
* PRESS: Skoda Auto VW in talks with JSW, Tata Motors for EV licensing pact
 

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

US$1 = INR 86.99

Reported by Gopika Balasubramanium

Edited by Deepshikha Bhardwaj

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