Auto shares rally up to 9%; Bajaj, Hero MotoCorp, M&M, TVS hit record highs

Analysts expect the 2-wheeler industry to have a healthy growth in FY25

Auto stocks today: Shares of automobiles companies were on a roll on Wednesday, with BSE Auto index surging 4 per cent and hitting a record high of 54,789.88, in the intraday trade on higher demand. For the financial year 2024-25 (FY25), analysts expect the growth trajectory to be led by the 2-wheeler (2-W) space.

Bajaj Auto, Hero MotoCorp (HMCL), Mahindra & Mahindra (M&M), and TVS Motor Company rallied up to 9 per cent today, trading at their respective all-time high levels. At 12:22 PM, the BSE Auto index was up 3.7 per cent, as compared to the 2 per cent rise in the BSE Sensex.

Among individual stocks, HMCL hit a new high of Rs 5,777.40, soaring 9 per cent in the intraday trade. In the past two trading days, the stock has surged 12 per cent on expectation that macro‐economic factors could aid the industry’s growth.

Shares of TVS Motor Company, too, hit a record high of Rs 2,353, surging 6 per cent in the intraday trade. The stock surpassed its previous high of Rs 2,313.90 touched on March 7. The stock price of M&M also soared 6 per cent to Rs 2,740.90, while Bajaj Auto gained 4.4 per cent to Rs 9,675 in the intraday trade.

India will be one of the major economies in terms of the growth in FY25. The growth is underpinned by the key socioeconomic fundamentals and proactive and consistent policy by the Government of India and Reserve Bank of India (RBI). The management of TVS Motor expects the monsoon to be normal this year, driving demand.

With commodity prices remaining stable, expectations of normal monsoons, and government spending expected to increase, HMCL said the company will see multiple tailwinds for the sector over the upcoming quarters.

Meanwhile, coupled with timely arrival of southwest monsoon in Kerala and northeast states, and forecast of an above normal monsoon, the on-ground sentiments of the farmers has improved. Land preparation activities for Kharif crops are expected to begin on time, which is likely to boost tractor demand in coming months, M&M said.

Analysts at Elara Capital believe that the new NDA government will not take this underwhelming verdict as a reason to turn populist and start doling out freebies at large. It may not be possible for the BJP to deviate from its core thought process of capex-led nation-building, control on inflation and a strong currency.

"Hence, there is no reason to be Overweight consumption, just based on the outcome of the polls. However, some rural focus, which was already part of BJP’s manifesto, could benefit rural consumption in the third NDA term. It is worth noting that in the speech made by PM Narendra Modi, he sounded confident as regards sticking to the NDA agenda," the brokerage firm said.