Auto stocks are in focus on concerns about Tesla’s India entry and the possible impact of Trump’s reciprocal tariffs. However, most industry observers believe that in the near-term impact on auto stocks will be limited as India does not export any vehicle to the US after. International brokerage firm, Citi has identified Maruti Suzuki, Mahindra & Mahindra, and Hyundai as top picks in the automobile sector after the strong showing in the February sales.
Citi on Indian Auto stocks: PV, tractor volume encouraging
In February, the automobile sales volume for Indian manufacturers showed a reasonable upward trajectory and Citi’s choice of the top picks in the sector was on the basis of healthy passenger vehicle volume growth. In addition, M&M’s robust tractor volume growth also added to the positive rating.
It said that the Indian automobile sales are more positive than negative as underlying year-on-year trends are better than the numbers. However, the brokerage house highlighted the impact of a high base in some cases and said that there are some pockets of concerns. Hyundai saw a slight year-on-year decline in PV sales volume, which was still better than Tata Motors. The Tata Group company saw weak trends in both commercial vehicles and passenger vehicles.
“Hero MotoCorp, Bajaj Auto and Ashok Leyland have not reported Feb’25 volumes yet. Our preference order remains Maruti, M&M, Hyundai. YoY volume trends in February 2025 were impacted by around 350 basis points due to a higher base as 2024 was a leap year,” said Citi.
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Moving forward to two-wheelers (2W), the brokerage house said that TVS Motor has shown a strong exports trend. TVS Motor reported a 3% YoY increase in its domestic sales volume and 28% YoY growth in two-wheeler exports volume. On the other hand, Hero MotoCorp and Bajaj Auto showed weak performance. Bajaj Autos’ domestic two-wheeler volumes were down 14% YoY and 15% month-on-month while Hero MotoCorp’s domestic 2W volumes were down 20% YoY and 13% sequentially.
However, the exports of both these companies also headed north. Bajaj Auto’s exports rose 23% YoY while Hero MotoCorp’s exports increased 33% YoY.
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