Tata Motors, Maruti Suzuki, M&M, Bajaj Auto: Auto stocks that analysts like amid April sales data

Auto sales numbers could be tepid for the month of April, with passenger vehicle (PV) enquiries and footfalls falling, especially for the small car segment. Analysts said medium and heavy commercial vehicles (MHCVs) demand was impacted due to pre-buying in February and March, adding that the two-wheeler (2Ws) demand has not shown much recovery, though YoY volumes may see a surge on low base. 

Motilal Oswal said it observed a decline in retail sales on a YoY basis, which can be attributed to a mismatch in festive demands. Further, both Navratri and the marriage season witnessed a decrease in demand in April, contributing to a decline in sales.

"Bookings across PVs have largely remained stable for Maruti, while we noted 5-7 per cent decline in bookings for M&M and Tata Motors. In CVs, fleet availability remains healthy, led by demand from construction-led activities, auto carriers, white goods, and FMCG. While retail sales have declined, we believe dispatches should grow during the month," Motilal Oswal said. 

Nomura said there will be some re-balancing of growth in FY24F, where mass segment like 2Ws can see demand picking up, on a low base while PV demand is likely to slow down.

"Thus, OEMs may need to step up advertising and promotional spends as the industry inventory is likely to rise further," Nomura India said.

Emkay Global said  two-wheeler volumes may rise 13 per cent YoY, commercial vehicle segment 10 per cent, two-wheeler by 7 per cent and tractors to see a 2-5 per cent YoY edgrowth.

"Among OEMs, we estimate domestic volumes to grow by 55 percent YoY for M&M, 2 per cent YoY for MSIL (1,30,000 units) and 1 per cent YoY for Tata Motors (42,000 units). MSIL recently highlighted that semiconductor shortages would continue to impact production in Q1FY24, even as the underlying book has expanded to 4,12,000 units (13 per cent QoQ)," Emkay Global said.

The brokerage said blended vehicle discounts increased MoM and been on an increasing trend, with moderating retail growth, albeit still remaining below the earlier peak levels.

Auto stocks that analysts like

Anand Rathi prefers picks in OEMs such as Eicher Motors, Bajaj Auto and Ashok Leyland. Motilal Oswal said it prefers commercial vehicles over other segments, on the back of strong demand along with a stable competitive environment.

"We prefer companies with: a) higher visibility in terms of demand recovery, b) a strong competitive positioning, c) encouraging margin drivers, and d) a strong balance sheet. Tata Motors and Ashok Leyland are our top OEM picks," it said.

 

Nomura India prefers Bajaj Auto within two-wheelers and Mahindra & Mahindra (M&M) , Tata Motors and Ashok Leyland within four-wheelers due to their ability to gain market share.

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