December auto sale volumes are seen growing 6-10 per cent year-on-year (YoY) for the passenger vehicle segment amid persisting high discounts to clear off year-end inventory. Sales growth for two-wheeler (2W) industry is seen at 2-3 per cent while medium and heavy commercial vehicle (MHCV) is seen contracting marginally on year-on-year basis, auto analysts said ahead of the data releases. The volume growth is likely to stay 5-10 per cent for tractors due to good rainfall.
"Our industry surveys indicate slowing demand trends in 2W as well. Registrations are likely to be down 14 per cent YoY due to last year’s high base on delayed festive season. We expect 12 per cent volume growth for the 2W industry for FY25F, which can have some downside risk," Nomura India said.
For tractors, it sees wholesales to be up 11 per cent YoY. Demand should be supported on the back of a good rainfall, good reservoir levels, crop prices and improved rural sentiment, it said.
"We expect a gradual recovery of MHCVs, as government spending will likely improve in 2H25F. Factors such as pricing discipline in the industry and a low base should further underpin the growth prospects.
Here are company-specific sales estimates by Nuvama:
Stocks to buy, target price for auto stocks Amid the broader growth moderation in the auto space, Emkay Global said its prefers companies with bottom-up growth and margin expansion triggers. It likes TVS Motor Ltd due to sustained market share gains across major categories; exports recovery, underlying margin improvement. It also likes Eicher Motors on renewed growth focus, early signs of export recovery.
"We also like the CV space (Ashok Leyland) with improving government capex-led demand revival, and ESC (domestic market share gain optionality, strong export story post Kubota acquisition). Despite the near-term weakness in volumes and margins for Maruti Suzuki India, we like it for its reasonable valuations and upcoming 2 ICE-SUV launches," Emkay said.
Nomura India's target price for M&M at Rs 3,664 suggests 20 per cent potential upside. It has target of Rs 990 on Tata Motors Ltd, hinting at 32 per cent potential upside. On Hyundai Motor India Ltd, the target of Rs 2,472 suggests 38 per cent upside. It is neutral on Royal Enfield maker Eicher Motors with a target price of Rs 4,391.
MOFSL said while the 2W segment has outperformed PVs so far in FY25, its growth may moderate for the rest of the year.
"MSIL is our top pick among auto OEMs as it continues to be a play on the rural recovery with attractive valuation. We like M&M for its healthy demand momentum in both SUVs and tractors for FY25. We also like Hyundai, as it appears well aligned to benefit from the industry trends toward UVs," it said.
Nuvama likes M&M, TVS Motor, Eicher Motors, SAMIL and UNO Minda among auto names.