Auto Sector Outlook: Recovery in the auto sector is accelerating now. Recovering from the corona epidemic, the sector has now gained momentum. The figures of auto sales in the month of February are indicative of this. Wholesale and retail sales have grown in most segments, including private vehicles and tracts. Due to the high demand for passenger vehicles, there has been a significant increase in volume growth. Experts say that along with the recovery in the economy, the challenges of the auto sector are getting reduced. Problems related to supply have come down. The waiting period has increased for vehicles. The sectors that will benefit the most from getting back on the economy include the auto sector.
Wholesales, retail sales growth
According to brokerage house MK Global, wholesale growth is positive in February 2021 in tractors, private vehicles, two-wheelers and commercial segments. While retail sales growth has been positive in tractors, private vehicles and cargo commercial vehicle segment. Only two-wheelers segment has seen pressure on retail sales growth. Challenges related to supply chain were also seen at some places, which affected the dispatch. Its impact has been seen in Mahindra and Mahindra.
Private vehicle demand increased
Due to good demand, the volume growth of the domestic private vehicle industry in February was 23%, which is a positive sign. Tata Motors, Mahindra & Mahindra and Maruti Suzuki have seen good growth. Discounts have also been reduced by companies before now. Dealers inventory has improved.
Domestic two wheeler volume has also been positive. The performance in premium and executive segments is consistently looking better. TVS Motors, Royal Enfield, Bajaj Auto and Hero MotoCorp have been growing in volume.
However, there are mixed indications in the domestic commercial vehicle volume. Eicher Motors saw 25 per cent volume growth, Tata Motors 22 per cent and Ashok Leyland 20 per cent. Whereas in Mahindra & Mahindra, 42 per cent decline due to supply related problems.
The waiting period is increasing
According to brokerage house Motilal Oswal, the wholesale growth of tractors, private vehicles, three wheelers and two wheelers has been as expected. While in the commercial vehicle segment, it has been weaker than expected. The demand for private vehicles has strengthened and the waiting period has increased. Growth in TVS and Royal Enfield in Two Wheelers has been as expected. While growth was slow in Hero MotoCorp and Bajaj Auto. Volume growth in PV / 2W has been 15% / 7.6% on an annual basis. Volume growth in CV / LCV has been 24% / 31.9% per cent year-on-year. 3W volume growth is down 12% year-on-year.
Keep an eye on which shares
The stocks that MK Global has given a positive opinion on including Tato Motors (target: Rs 375), Ashok Leyland (target: Rs 155), Maruti Suzuki (target: Rs 9,000) and Eicher Motors (target: Rs 3,300). Whereas in auto ancillaries BHFC (target: Rs 760) and APTY (target: Rs 306). Are included.