The world’s largest two-wheeler manufacturer sold 806,848 units of motorcycles and scooters in October 2020 – its highest-ever sales in any single month. The company had sold 599,248 units in the corresponding month of the previous year (October 2019).
A positive turnaround in customer sentiments – particularly for motorcycles across markets, continued government policy support and a credible resumption of supply chain, logistics and business operations have enabled the company to achieve record numbers during the auspicious festive period.
HMCL was the market leader in domestic motorcycle segment (52 per cent market share of FY20) with 50 per cent sales contribution from rural geographies was an outsized beneficiary of the trend in June-August (retail market share 37-41 per cent vs. 34-39 per cent YoY, backed by consistently lower de-growth than 2-W industry).
However, with urban pockets now returning amid reduced pandemic restrictions, usual market share readings should prevail. Nevertheless, continued buoyancy in the tractor industry courtesy firm farm incomes, positive sentiment (normal monsoon, healthy Kharif sowing, growth in government spends) indicate that rural 2-W demand should also remain supportive, according to analysts at ICICI Securities.
In the short-term, HMCL’s retail offtake in the rest of the festive period is a key monitorable, given the element of channel restocking observed in September wholesale dispatches, the brokerage firm said in September quarter result update.
However, despite 5 per cent gain in the past two trading days, HMCL's stock has underperformed the market by falling 7 per cent in the past month. In comparison, the S&P BSE Sensex was up 4 per cent during the same period. The stock hit a 52-week high of Rs 3,394 on October 16, 2020.