Maruti Suzuki, Tata Motors, Mahindra stocks fall on double-digit decline in August auto sales

Auto stocks fell in early trade today after automobile manufacturers including Maruti Suzuki India, Hyundai, Mahindra & Mahindra, Tata Motors and Honda reported a high double-digit decline in their sales in August as auto sector continued to reel under one of the worst slowdowns in its history.

While Maruti reported a 33 per cent drop in August sales at 1,06,413 units, sale of passenger vehicles by Tata Motors fell 58 per cent during the month under review.

Honda Cars India and Toyota Kirloskar Motor (TKM) sales dropped 51 per cent and 21 per cent, respectively. Mahindra and Mahindra (M&M) too reported a 25 per cent fall in total sales to 36,085 units in August. The company had sold 48,324 units in the corresponding month last year, M&M said.

In the domestic market, sales were down 26 per cent to 33,564 units last month, compared to 45,373 units in August 2018.

TVS Motor Company reported a 15 percent fall in August sales to 290,455 units. Ashok Leyland's domestic sales fell 50 percent to 8,296 units in August. Similarly, Royal Enfield-maker Eicher Motors saw monthly sales in August decline 24 percent to 52,904 units.

Mustafa Nadeem, CEO at Epic Research said, "There are worries over overvaluation and asset quality along with various official unions of banks coming out and opposing the merger. There are also concerns over asset quality of various banks that are underperforming by large and now being merged.

For example, while Canara bank has been posting a net profit and in its last report it was up 12% on the back of an increase in total income, we have Syndicate Bank which is in net loss despite higher total income.  Since merger is a long-term story in financial consolidation of the PSBs space, there are now concerns over asset quality mix and rather this would turn out to be a burden on a much healthier bank in terms of books."

Tracking the fall in sales, the BSE auto index tanked 255 points to 15,513 compared to the previous close of 15,768 on Friday. The Nifty auto index too fell 121 points to 6914 level in early trade.

Tata Motors share price fell 4.58% to Rs 111.4 intra day compared to the previous close of Rs 116.75 level. Similarly, Maruti Suzuki share price fell 1.88% intra day to Rs 6,006 compared to the previous close of Rs 6,121.60 on BSE.

Mahindra & Mahindra stock too took a beating in early trade with the stock falling 2.91% to Rs 513.5 compared to the previous close of Rs 528.90 on BSE.

Tracking the fall in August sales, Eicher Motors share price fell 2.52% to Rs 15,850 on BSE.

Meanwhile, Sensex and Nifty were trading in the red. While Sensex fell 413 points to 36,919, Nifty lost 127 points to 10,895 level.

Edited by Aseem Thapliyal