Nuvama sees pressure on Bharat Forge, SAMIL, others on muted demand outlook

The global auto industry continued to reel under pressure in Q2CY25, with contraction seen across heavy commercial vehicles (HCVs), construction equipment (CEs), tractors and passenger vehicles (PVs), analysts said. 

 

Domestic brokerage Nuvama Institutional Equities highlighted that “the muted outlook for CVs, CEs and tractors does not bode well for vendors such as Bharat Forge (BHFC), Ramkrishna Forgings (RMKF), Balkrishna Industries Limited (BIL) and Samvardhana Motherson International (SAMIL). Even so, these firms should outpace industry, in our view, on orders/diversification efforts. Meanwhile, a subdued outlook for PVs implies bumpiness for Tata-JLR.”

 

HCVs: CY25 likely to stay weak

 

Retail sales of HCVs in Q2CY25 fell 5 per cent Y-o-Y in North America (NA) and 13 per cent in Europe (EU). OEMs including Daimler, Volvo and Paccar expect volumes to contract by up to 19 per cent in NA and 15 per cent in EU in CY25. 

 

US freight recession, tariff uncertainty and pending EPA 2027 emission standards are prompting a wait-and-see stance. In Europe, weak macroeconomic conditions continue to weigh. In contrast, India’s medium and heavy CV growth is expected to remain flat-to-positive in FY26.

CEs: Demand outlook subdued

 

Heavy CE volumes in NA declined 10 per cent Y-o-Y in Q2CY25, while EMEA rose 6 per cent. Light CE dipped 3 per cent in EMEA and 2 per cent in NA. Combines slumped 23 per cent in NA but grew 8 per cent in EU. OEMs like CNH, John Deere and Volvo guide for continued weakness, with NA/EU CE demand likely to fall up to 15 per cent/5 per cent in CY25.  ALSO READ | PL Capital bets on these 3 chemical stks despite sector headwinds; details

Tractors: Persistent decline

 

NA tractor sales remain under stress – small tractors (0-140HP) declined 7 per cent Y-o-Y while large tractors (>140HP) plunged 37 per cent in Q2CY25. EMEA volumes also fell 7 per cent. OEM commentary points to further contraction of up to 15 per cent in NA and 5 per cent in EU in CY25, citing weak consumer confidence and elevated rates. By contrast, India’s tractor segment is forecast to post mid-to-high single-digit growth in FY26.

 

PVs: Mixed global signals

 

Volkswagen, BMW, Audi, Tesla and Mercedes saw weaker sales in Q2CY25. OEM outlooks diverge: BMW expects growth, Volkswagen sees flat volumes, Mercedes a mild decline, while Audi projects between -3 per cent and +3 per cent. Tesla and Volvo withheld guidance. S&P Global projects lower PV production in NA/EU but growth in China. Bosch India expects PV output to rise 4-7 per cent in FY26.

 

That said, for vendors like BHFC, RMKF, BIL and SAMIL, analysts believe subdued global CV, CE and tractor demand poses headwinds, though order wins and diversified portfolios may cushion the impact. For Tata Motors, muted global PV trends suggest continued bumpiness for JLR despite growth pockets in India and China.