Hero MotoCorp, Tata Motors, Eicher Motors, Ashok Leyland: Auto stocks that analysts like post May sales data

Auto wholesale volumes for May came in steady, with a sequential recovery witnessed across segments. Analysts said rural demand recovery was visible with motorcycle sales growth coming in ahead of scooter sales growth on month-on-month (MoM) basis. Export too staged a comeback and was up on MoM basis for most of the OEMs, they said.

ICICIdirect said Hero MotoCorp led the growth in the two-wheeler segment, Maruti Suzuki in personal vehicle (PV) space, Tata Motors in commercial vehicle (CV) sales and Escorts in the tractor segment. Analysts largely positive on shares of Tata Motors and Ashok Leyland.

May sales data

Among automakers, Maruti Suzuki’s volumes for the month stood at 1.8 lakh units, up 10.9 per cent MoM. Tata Motors' total sales came in at 74,973 units, up 7.7 per cent MoM. Mahindra & Mahindra's automotive segment volumes de-grew 1.4 per cent MoM to 61,415 units. For Ashok Leyland, volumes were up 1.2 per cent MoM at 13,134 units and was led by M&HCV segment.

Among two-wheeler makers, Hero MotoCorp led the volume recovery with total volumes rising 31 per cent MoM to 5.2 lakh units. Bajaj Auto's volumes were up 7.2 per cent MoM at 3.6 lakh units. Domestic sales were up 7.1 per cent while exports logged 7.3 per cent growth for Bajaj Auto. TVS Motors’ two-wheeler sales were up 8.3 per cent MoM to 3.2 lakh units. its three-wheeler sales were broadly flat MoM.

ICICIdirect said chip supplies continue to limit the production ramp-up in the PV segment despite healthy order-book across. In the CV space, growth at the industry leader was encouraging amid guidance for YoY decline in Q1FY24 tracking high base of last year & pre-buying witnessed in Q4FY23. In the tractor space, numbers were a mixed bag amid guidance of low single digit growth in FY24E.

Auto stocks that analysts like

Within OEMs, Nomura India prefers Mahindra & Mahindra, Ashok Leyland, Tata Motors and Bajaj Auto. It said industry wholesale volumes for PV segment were ahead of its estimates while medium-heavy commercial vehicles and two-wheeler wholesales were largely in-line.

Motilal Oswal Securities said it prefers CVs over other segments, considering strong demand and a stable competitive environment. We prefer companies with: higher visibility in terms of demand recovery, a strong competitive positioning, encouraging margin drivers, and a strong balance sheet. Tata Motors and Ashok Leyland are the broker's top OEM picks.

Anand Rathi has retained its optimistic view on the auto sector and suggested Tata Motors, Eicher Motors and Hero MotoCorp as its preferred picks.

"In PV segment, wholesales in near-term are likely to be a function of further normalisation of supplies and response to recent model launches. Two-wheeler demand remains contingent on rural sentiments. Steady freight rates are supporting CV operators. Rising interest rates, however, remains a key deterrent. We expect CV volumes to be supported by demand from infra & construction sectors," JM Financial said.

 

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