Nuvama Institutional Equities on Thursday said the automobile wholesales for February 2025 would be a mixed bag, with growth anticipated in tractor and passenger vehicle (PV) while a decline is likely in the 2-wheeler (2W) and commercial vehicle (CV) segment. The domestic brokerage expects tractors to grow in double-digits, driven by benign customer sentiments coupled with a favourable base, adding that Mahindra & Mahindra (M&M) Ltd would be an outperformer.
"Tractor industry volumes to grow in double digits (up ~10 per cent year-on-year in the domestic market) due to positive customer sentiment and a favourable base. We forecast total volumes shall grow 11 per cent/5 per cent YoY for M&M Farm/Escorts (including Kubota) to 24,000/8,100 units. Escorts is underperforming due to lower exposure to the West and South regions," it also said.
PV industry volumes to spur healthy performance, up around 5 per cent YoY in the domestic market. "Growth is better in the north and west regions compared with east and south regions. Rural growth is slightly better than urban. We estimate total volume growth of 14 per cent YoY for M&M-Auto (includes PV, CV and 3W) to 83,000 units, 4 per cent for MSIL (Maruti Suzuki India Ltd) to 205,000 units and 2 per cent for Hyundai Motor India to 62,000 while we forecast a decline for Tata Motors-PV at 2 per cent to 50,200 units," Nuvama stated.
It anticipates the CV industry's volumes to be flat. "On the positive side, E-way Bill generation has been higher than last year, indicating better freight availability for transporters. On the negative side, selective financing by lenders and reasonable levels of fleet utilisation, are limiting new vehicle additions. We estimate total volume growth for OEMs (Original Equipment Manufacturers) at 8 per cent YoY for EIM-VECV (Eicher Motors-Volvo Eicher Commercial Vehicles) to 8,050 units and AL at 3 per cent to 18,000 units. In comparison, Tata Motors-CV to decline by 1 per cent to 34,600 units," the broking firm said.
Nuvama sees a slightly negative growth for 2W industry volumes, down 2 per cent due to high base and selective financing by lenders. "Meanwhile, we reckon exports shall grow in double digits due to growth in Latin America and Africa. We estimate total volume growth shall be 13 per cent YoY for EIM-RE (Eicher Motors-Royal Enfield) to 86,000 units, 6 per cent for TVS Motor to 390,000 units and 4 per cent for Bajaj Auto to 360,000 units. In comparison, Hero MotoCorp shall decline by 3 per cent to 4,55,000 units," it also stated.
Summing up, the brokerage said tractor and 2Ws would outpace PV and CV segments, highlighting that TVS Motor, M&M, EIM-RE, Samvardhana Motherson International Ltd and UNO Minda Ltd are its top picks from the sector in terms of volume growth.