Nuvama bets on M&M, TVS Motor & Uno Minda ahead of November auto sales data

On the bourses, M&M has gained about 6% over the past month, while Uno Minda has surged more than 6%. On the flipside, TVS Motor dropped over 1%. In comparison, BSE Auto index declined nearly 2.5%

November auto sales prediction: Domestic brokerage firm Nuvama Institutional Equities (Nuvama) is bullish on automobile manufacturers Mahindra & Mahindra (M&M) and TVS Motor, along with automotive solutions provider Uno Minda, ahead of the November sales data release scheduled for December 1, 2024.

 

Raghunandhan NL, Manav Shah and Rahul Kumar of Nuvama expect November 2024 wholesales to present a mixed performance. While the commercial vehicles (CV) segment is projected to show robust growth, other segments may remain subdued due to a high base effect linked to last year’s festive period, which largely occurred in November. 

 

In the CV segment, all original equipment manufacturers (OEMs) are expected to benefit from improved freight availability, increased infrastructure activity, the easing of monsoons, and a favourable base. In the two-wheeler (2W) segment, TVS Motor is anticipated to outperform its peers, while in the passenger vehicle (PV) category, M&M is expected to post double-digit growth and surpass industry performance. 

 

 

“Over FY24–26E, we believe two-wheeler (2W)/tractor volumes would grow in high single digits vis-à-vis low-single digits for passenger vehicles (PV) and commercial vehicles (CV). Within our coverage, our top picks are M&M, TVS Motor and Uno Minda,” analysts at Nuvama said in a note.

 

Meanwhile, on the bourses, M&M has gained about 6 per cent over the past month, while Uno Minda has surged more than 6 per cent. On the flipside, TVS Motor dropped over 1 per cent during the same period. In comparison, BSE Auto index declined nearly 2.5 per cent and BSE Sensex was down over 1.5 per cent.

 

Here’s the segment-wise expectations ahead of November auto sales data:

 

Commercial Vehicles (CVs)

 

The CV industry, analysts believe, is expected to see a positive growth, with domestic volumes anticipated to rise by about 7 per cent Y-o-Y. The growth is supported by improved freight availability and increased infrastructure activity, aided by the easing of monsoons and a favorable base effect. 

 

Additionally, higher e-way bill generation compared to last year indicates better freight movement for transporters. Within this segment, Ashok Leyland is projected to achieve a 10 per cent Y-o-Y volume growth to 15,500 units, Tata Motors is expected to grow 8 per cent Y-o-Y to 30,300 units, and Eicher Motors is likely to see a 6 per cent Y-o-Y increase to 5,500 units.

 

Passenger Vehicles (PVs) 

According to analysts at Nuvama, the PV segment is likely to remain flat Y-o-Y in the domestic market, largely due to a high base from the previous year's festive period and ongoing inventory de-stocking by dealers. Despite this, Mahindra & Mahindra and Maruti Suzuki India are expected to post positive growth, while Tata Motors-PV is anticipated to remain flat. In order to support demand, blended discounts in the segment remain elevated, they noted. Projections include an 11 per cent Y-o-Y growth for M&M-Auto (including PV, CV, and 3W) to 78,000 units, a 2 per cent Y-o-Y increase for Maruti Suzuki India to 168,000 units, and flat growth for Tata Motors-PV at 46,300 units.

 

Tractors 

The tractor industry is expected to see a slight decline, with domestic volumes projected to fall 1 per cent Y-o-Y. This, analysts said, is attributed to a high base effect and inventory de-stocking at the dealer level. 

 

However, positive farmer sentiment—bolstered by strong Kharif crop production and favourable terms of trade—offers some relief. Key forecasts include a 2 per cent Y-o-Y decline for Escorts (including Kubota) to 9,700 units and a 1 per cent Y-o-Y drop for M&M Farm to 31,600 units.

 

Two-Wheelers (2Ws) 

Nuvama said that the domestic 2W segment is likely to face a modest decline of 3 per cent Y-o-Y due to a high base and dealer inventory adjustments. On the other hand, export volumes are expected to grow in double digits, driven by strong demand in Latin America, Africa, and Asia. 

 

Meanwhile, the performance among OEMs is expected to vary, with TVS Motor estimated to grow 6 per cent Y-o-Y to 385,000 units, Eicher Motors-Royal Enfield expected to rise 3 per cent Y-o-Y to 83,000 units, Hero MotoCorp projected to decline 4 per cent Y-o-Y to 470,000 units, and Bajaj Auto anticipated to decrease 1 per cent Y-o-Y to 400,000 units.