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Informist, Friday, Oct. 3, 2025

MUMBAI – Analysts continue to be positive on automobile stocks despite modest volumes in September as they expect the full impact of festival season demand and the goods and services tax cut to be more visible in October sales. Analysts said the demand outlook is strong and is likely to remain so even after Diwali, buoyed by the wedding season that follows in November.

"...lot of feedback from the auto dealer community that demand should continue--maybe not at this level, due to the high mix of pent-up demand as well--at higher levels even after the festive season," a research analyst tracking the sector at a large broking firm said. "And the marriage season is expected to be better YoY (year-on year) this November. So things are looking good for the auto sector over the near to medium term." 

This week, the Nifty Auto sectoral index gained 1%, in line with the rise in the benchmark Nifty 50. Friday, the Nifty Auto closed marginally lower at 26753.10 points. Tata Motors gained the most among the constituents of the sectoral index during the week, followed by Bharat Forge and MRF. The analyst said, "...things are looking good for autos even over the medium term, which I feel is yet to get factored in, as this (rise in sales) is not just a near-term phenomenon."

"Domestic auto volumes delivered modest to strong growth in Sep-2025, with both passenger vehicles and two-wheelers registering healthy growth," Systematix Institutional Equities said. Most automobile companies registered year-on-year growth in overall wholesale volumes. On festival season demand, HSBC said, "Navratri was good, Diwali should be even better."

In the passenger vehicles segment, Tata Motors outperformed its peers with a bumper 47% on-year growth in volumes in September. "Tata Motors has been the key beneficiary due to its strong compact UV (utility vehicle) portfolio," HSBC said in a report. Its compact sport utility vehicle models include Punch and Nexon. Mahindra & Mahindra reported 10% growth in its cars segment while Maruti Suzuki India's overall volumes were up 3% on year, as an 8% decline in domestic sales was offset by a 52% on-year rise in exports.

"Our discussions with channel partners suggest that the Goods and Services Tax cut led to strong demand across segments and especially more at entry level segments," HSBC said in a note. "Most models are stocked out hence we note the wholesales should remain strong over next two to four months."

In the two-wheeler pack, Eicher Motors, which makes Royal Enfield motorcycles, outperformed its peers to report 43% growth on year. TVS Motor Co. reported on-year growth of 11% and Bajaj Auto posted an 8% on-year rise. Though demand for two-wheelers picked up during Navratri, demand was not forthcoming to the level expected as two-wheeler makers did not offer big discounts, which had a negative impact in both urban and rural markets, HSBC said. Demand was also affected in rural areas because the festival season this year has begun earlier while the southwest monsoon season is ending later, the broking firm said. "We also view November as good given the strong marriage season as it will have 14 auspicious days vs 11 days last year," it said.

In the commercial vehicles segment, Tata Motors reported 16% on-year rise in volumes, outperforming its peers. Ashok Leyland reported 7% on-year growth in volumes. M&M's commercial vehicles segment rose nearly 16% on year. "We continue to believe the GST cut will have limited direct impact on CV demand; it will grow in line with overall growth in freight demand," HSBC said.

Analysts said tractor demand remains buoyant because of the strong festival season. "Extended monsoon and relatively weaker cash flow due to early festive season (timing mismatch of crop harvest and festival) are delaying retail momentum," HSBC said in its note. M&M's domestic volume grew by close to 50% on year. For Escorts Kubota it grew 49% on year.

With the October quarter, which is already underway, seen as a litmus test of the impact of the GST cuts, Systematix expects both wholesale and retail sales to gain momentum in the current month, supported by festival season demand and the expected release of pent-up demand.

TOP HEADLINES

* Hyundai Motor starts passenger vehicle production at Talegaon plant
* TVS Motor reports highest quarterly sales of 1.51 million units in Jul-Sept
* Hero MotoCorp September domestic sales at 647,582 units, up 5% on year
* Will increase car production to meet rising demand, says Maruti Suzuki
* Maruti Suzuki Sept sales up 3% YoY; exports rise 52%, domestic sales dn 6%
* Eicher Motors Sept CV wholesale sales 7,619 units, largely unchanged on yr
* Ashok Leyland total despatches in Sept up 9% on year at 18,813 units
* Tata Motors' auto despatches recover in September on GST cut, festival boost
* Castrol India signs MoU to provide after-sales svc to VinFast Auto customers
* Hyundai Motor's Sept India despatches flat despite GST boost; exports steady
* Tata Motors sets Oct 14 as record date to issue shares for demerged CV co
* M&M's Sept car despatches hit record high driven by GST cut, festive demand
* Escorts Kubota tractor sales up 48% YoY in Sept on favourable rural scenario
* Bajaj Auto's domestic 2-wheeler despatches hit 23-mo high in Sept
* Tata Motors invests additional INR 1.2 bln in associate co Freight Commerce
* Tata Motors' arm incorporates wholly owned arm in Netherlands
* Ola Electric arm to raise INR 8.8 bln by issuing pref shares to Ola Cell
* Brokerages see sales in all auto segments rise Sept; PV sales seen up 3-7%
* BNP Paribas buys shrs of Hero MotoCorp, sells IndusInd Bk via NSE bulk deals
* Motilal Oswal MF buys Bharat Forge shares for INR 3.78 bln via NSE bulk deal
* Moody's retains Ba1 rating for Tata Motors, revises outlook to negative
* M&M signs pact with Turkish co Tera Yatirim to sell stake in Sampo Rosenlew
* Tata Motors says JLR to resume manufacturing ops partially in coming days
* Cooperate in handing over EVs to SMAS Auto, HC to Gensol resolution officer
* Tata Motors receives copy of NCLT order sanctioning co's demerger scheme
* Tata Motors makes top level changes; appoints Shailesh Chandra as MD, CEO
* SPOTLIGHT:New fuel efficiency norms may aid small cars, but not in long-term
 

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

End

Reported by Gopika Balasubramanium

Edited by Rajeev Pai

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