Tata Motors, Maruti, Bajaj Auto, Hero Moto: Auto stock that analysts like ahead of March sales data

Auto sales data for March may show healthy growth in volumes for the two-wheeler segment, slowing growth for passenger vehicle (PV) segment and weak commercial vehicle (CV) sales, analysts said.

Ahead of auto sales data, Motilal Oswal Securities said while the two-wheeler segment may continue to outperform other segments in FY25, this seems fully priced in after the recent strong rally in two-wheeler stocks. It prefers Mahindra & Mahindra Ltd (M&M) among auto OEMs as the brokerage feels new launches may continue to help the company drive market share gains in PVs.

In the case of PVs, Nomura India expects industry wholesale volumes likely to be up 10 per cent YoY March. IT estimates Maruti Suzuki’s domestic PV wholesales (excluding OE and LCV) to increase 15 per cent YoY. It pegs Maruti's wholesale market share at 41 per cent.

"We estimate retail growth to be in mid single digits driving 5,000-10,000 inventory addition. MSIL’s growth could be slower in FY25F as the new model cycle is not as strong as last year and there will be more new launches by competition. We estimate M&M’s UV volumes to rise 20 per cent YoY. We believe the company will be able to grow well ahead of the industry in FY25F, given its healthy order book and ramp-up of capacity to 49,000 per month," Nomura said.

M&M’s tractor volumes are, however, likely to be down 16 per cent YoY in March. Nomura India estimates Tata Motors PV sales at 51,000 (up 16 per cent YoY). Nomura says there is potential to have two models among the top three SUVs in India.

This brokerage has 'Buy' ratings on M&M and Tata Motors with targets of Rs 2,143 and Rs 1,057, respectively.

"March volume trend shall be a mixed bag with expectation of robust growth in 2W/PV, and contraction in tractor/CVs. Within 2W, we anticipate TVS/Bajaj Auto to rev on with 20 per cent-plus growth while Eicher Motors Enfield and Hero MotoCorp are likely to lag at single-digit growth. Among PV OEMs, we expect positive growth— M&M shall outpace Tata Motors and Maruti. In CVs, a drop is likely on a high base. In tractors, all OEMs are likely to face contraction on high base (festive season), not to mention weak sentiment in Maharashtra/south states," Nuvama Institutional Equities said.