Monday, February 3, 2025

Auto stocks surge up to 7% on robust December sales; Eicher Motors leads the rally

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Stock market today: Indian auto stocks experienced strong demand in today’s trading session (January 2), as investors responded positively to the December sales data, particularly strong numbers from the PV segment, prompting brokerages to maintain a positive outlook on the sector.

Thirteen out of 15 constituents of the Nifty Auto index traded in the green, with Eicher Motors emerging as the top gainer, rallying 7.3% to record high levels. It was followed by Ashok Leyland, Maruti Suzuki, TVS Motor Company, Mahindra & Mahindra, Bajaj Auto, and Hero MotoCorp, which gained between 1.5% and 4.2%, respectively.

This strong performance lifted the Nifty Auto index by 3% to 23,829.

Also Read | Bajaj Auto investors get a demand reality check

In terms of PV sales, Maruti Suzuki led in 2024 as the country’s leading car manufacturer sold 178,248 car units in December, marking a 30% YoY improvement. The company exported 37,419 units during the month, its highest-ever monthly exports.

So far in the current financial year (April-December), total sales, combining domestic and exports, rose by 5% to 1.629 million units.

Mahindra & Mahindra also recorded a strong performance in December with sales of 69,768 units, reflecting 16% YoY growth. Nearly 60% of sales (41,424 units) came from the utility segment.

Domestic sales for commercial vehicles stood at 19,502 units. Mahindra’s farm equipment sector reported domestic sales of 22,019 units in December 2024, up from 18,028 units in December 2023.

Also Read | Maruti, Mahindra lead Indian carmakers’ December sales to dealers

Hyundai Motor India reported total sales of 55,078 units, comprising 42,208 units sold domestically, and 12,870 units exported. While these figures indicate a slight decline of 2.4% compared to December 2023, they reaffirm the company’s consistent performance throughout the year.

Tata Motors reported total sales of 76,599 vehicles in December, a slight increase from 76,138 units in the same period last year, according to a Wednesday filing on the BSE.

Overall, the PV industry posted moderate growth in CY24, and the car makers expect to reach a sales volume of 4.3 million units in Q3FY25, with strong growth in the SUV segment and sustained traction for emission-friendly powertrains.

Meanwhile, in the 2-wheeler space, Eicher Motors reported stellar December sales, with a 25% increase to 79,466 units. In contrast, Bajaj Auto reported flat numbers, with total sales (including two-wheelers and commercial vehicles) at 323,125 units, a marginal decline of 1% compared to 326,806 units in December 2023. While Bajaj Auto’s domestic sales were weak, exports continued to perform well.

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Besides this, Ashok Leyland reported a 5% increase in total sales to 16,957 units in December 2024 compared to 16,154 units a year ago. Hero MotoCorp and TVS Motor have yet to report their December sales numbers.

Analysts bullish on PV stocks

Global brokerage firm Morgan Stanley noted that two-wheeler (2W) retail sales weakened, while passenger vehicles (PVs) saw an improvement in trends. The brokerage believes that Maruti Suzuki is estimated to have ended the month with 10-12 days of inventory, as retail sales showed early single-digit growth.

Bajaj Auto underperformed relative to the brokerage estimates. It is overweight on Maruti Suzuki, Mahindra & Mahindra, Hyundai Motor India, and Ashok Leyland.

Citi has maintained its ‘Buy’ rating on M&M and Maruti Suzuki with target prices of 3,520 and 13,500, respectively, while maintaining its ‘Sell’ rating on Bajaj Auto with a target price of 7,800.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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