BSE Auto index hits 52-week low; tanks 14% in 1 month on muted performance

Barring tractors, wholesale volume performance during February 2025 was muted across most segments

Shares of automobiles companies are under pressure, with the BSE Auto index hitting a 52-week low of 45,289.26, down 1.6 per cent in Tuesday’s intra-day trade as barring tractors, February 2025 wholesale volume performance was muted across most segments. In comparison, the BSE Sensex was down 0.16 per cent at 72,967, at 02:09 pm.

 

Shares of Bajaj Auto (Rs 7,324.60) and Hero MotoCorp (Rs 3,495.15) are down 5 per cent and 4 per cent, respectively. Balkrishna Industries, Apollo Tyres, Eicher Motors, Ashok Leyland, TVS Motor Company and MRF from the auto index are down between 2 per cent and 3 per cent.

 

In the past one month, the BSE Auto index has underperformed the market by falling 14 per cent, as compared to the 7 per cent decline in the BSE Sensex. In the past six months, the auto index slipped 22 per cent, compared to the 11 per cent fall in the benchmark index. The BSE Auto index has corrected 27 per cent from its all-time high level of 62,443.41, touched on September 27, 2024.  READ: Stock Market Today LIVE

 

February 2025 saw divergent performance across segments and original equipment manufacturers (OEM’s). Performance of the tractor segment stood-out compared to the subdued performance in other segments. 

 

Wholesale volumes in the passenger vehicle (PV) segment are estimated to have grown in low-single digits year-on-year (YoY), led by channel filling. In the two-wheeler (2W) segment, wholesale volumes declined amid demand moderation post the festive season. In the commercial vehicle (CV) segment, the demand trends remained weak across most sub-segments, said Arun Agarwal, VP- Fundamental Research, Kotak Securities.

 

In the near term, Axis Securities expects the auto sector to undergo consolidation across all segments. However, for the long term, the brokerage firm said it prefers TVS Motors and Hero Motocorp in 2Ws; M&M (non-coverage) as a play in the PV/LCV/tractor segment, followed by Maruti in PVs. Analysts said they also keep a close watch on Ashok Leyland and Eicher (VECV) in the CV space for potential volume growth.

 

InCred Equities retained its 'Neutral' sector rating as the stock prices corrected. The sharp sell-off in the Auto index in recent months disappoints. The underperformance of Auto Index vs. Nifty 50 Index was sharper than the brokerage’s expectation. Forward P/E valuation eased below the 10-year mean level, while the ingredients for demand recovery are being sowed in the form of easing interest rates and improved disposable incomes via the recent cut in income-tax rates, the brokerage firm said.  READ: Bajaj Auto share price falls 4%, hits 52-week low; stock down 13% in 8 days

 

According to analysts at JM Financial Institutional Securities, the tractor segment continues to do well with wholesale volumes increasing on a Y-o-Y basis. Overall sentiments remain positive led by higher Rabi sowing and healthy reservoir levels. Continued Government of India (GOI) support and a bumper Rabi harvest are expected to drive the growth momentum in the near-term.

 

In the PV segment, wholesales in the near-term are likely to be a function of overall demand revival and response to recent/new model launches. 2W demand is expected to remain healthy led by strong export momentum. In case of the CV segment, volumes are expected to witness gradual recovery led by higher GOI capex and improvement in infrastructure activities, the brokerage firm said in a sector update note.