2-wheeler shares rally; Hero MotoCorp surges 6%, TVS m-cap nears Rs 1 trn

Shares of Hero MotoCorp have soared 18 per cent in the past one month

Shares of two/three-wheeler companies were vrooming on the bourses with Hero MotoCorp, and TVS Motor Company surging up to 6 per cent and hitting their respective record highs on expectations of strong demand and healthy operational performance going ahead.

Hero MotoCorp rallied 6 per cent to Rs 4,388.35 on the BSE in Thursday's intraday trade. The stock of the world's largest manufacturer of motorcycles and scooters has soared 18 per cent in the past one month.

Hero MotoCorp sold more than 5.5 million units between January and December, 2023, up 5 per cent over the corresponding period of last year, when it had sold 5.25 million units.

With increased government spending and improved liquidity, encouraging farm activity, and the upcoming marriage season, the company expects a positive momentum to build up from the fourth quarter onwards. The company also, recently, announced its partnership with Ather Energy for an interoperable fast charging network across India.

Meanwhile, shares of TVS Motor hit a new high of Rs 2,094.35, gaining 4 per cent on the BSE. In the past five months, the stock price of the reputed two and three wheeler manufacturer globally has zoomed 55 per cent. In the past one year, it has more than doubled, skyrocketing 107 per cent.

A sharp surge in the stock price of the company has pushed TVS Motor's market capitalisation towards Rs 1 trillion. The company's market cap hit Rs 99,500 crore in the intraday trade today.

During the third quarter (October to December) of the current financial year 2023-24, TVS Motor said two-wheelers posted a robust growth of 27 per cent with sales of 1.06 million units as against sales of 0.84 million units in the third quarter of FY22-23.

"In the medium to long term, rural demand, specifically for the entry-level segment, is slowly expected to pick up on account of increased infrastructure spending by the government and higher retail finance penetration along with expected stability in vehicle prices. Exports have bottomed out and are expected to recover MoM; stocks are at the right level as dispatches were earlier reduced to match retail levels. TVS Motor expects high demand from the LATAM region followed by African, and Asian markets," analysts at Axis Securities said.

Shares of Bajaj Auto, too, rose nearly 4 per cent at Rs 7,320, while Eicher Motors gained 2 per cent to Rs 3,923. In comparison, the S&P BSE Sensex was up 0.20 per cent, and the S&P BSE Auto index was up 1.4 per cent at 01:08 PM.

Brokerage firm Motilal Oswal Financial Services (MOFSL), in its automobiles sector report, said that they are already witnessing a reversal in demand patterns, especially in the 2Ws, wherein it anticipates a high growth potential. As compared to other categories, 2Ws have a relatively better scope for growth over FY23-26E.

"However, commodity prices have remained favorable over the last few quarters. Inflationary pressures peaked in Q3FY23, following which, prices corrected for most of the commodities. We expect a volume CAGR of 9-11 per cent for 2Ws over FY23-26," it added.