M&M could surpass Tata Motors and Maruti Suzuki in the PV segment in June: Nuvama
M&M in pictures: According to a recent Nuvama Institutional Equities (Nuvama) report on the auto sector, Mahindra and Mahindra (M&M) is expected to surpass Tata Motors and Maruti Suzuki in the passenger car segment by June 2024, driven by a low base.
Raghunandhan NL, director at Nuvama, forecasts total volume growth of 13 percent for M&M’s automotive sector (including PVs, commercial vehicles and three-wheelers), to 70,500 units. Meanwhile, Maruti Suzuki is expected to see a 2 percent increase to 163,000 units, and Tata Motors’ PV division is expected to remain steady at 47,400 units.
Apart from this, the PV industry in the domestic market is expected to post a positive growth of 3 percent year-on-year, led by rising demand for commercial vehicles (UVs) and build-up of dealer inventories, Raghunandan said. He further pointed out that vehicle discounts are on average higher than last year.
Nuvama also expects growth in two-wheelers and PVs, stable performance in commercial vehicles and a slight decline in the tractor segment due to high base and weak agricultural sentiment in the southern states.
Over the period from FY24 to FY26, Nuvama expects high single-digit growth in two-wheelers and tractors, contrasting with low single-digit growth in PV vehicles.
Among OEMs, Bajaj Auto and Mahindra & Mahindra are identified as its top picks.
In the meantime, you can expect the following from other segments:
Two-wheelers (2W)
According to Nuvama, domestic 2W industry volumes are expected to show positive growth of 5 percent year-on-year, despite some postponement of purchases due to extreme heat and a high base due to strong demand during last year’s wedding season. Meanwhile, wholesale volumes are expected to exceed retail sales due to dealer inventory buildup.
According to the domestic brokerage, TVS Motor Company is expected to grow 9 percent to 345,000 units, while Bajaj Auto’s volumes are expected to remain flat at 340,000 units. Conversely, Hero MotoCorp and Eicher Motors Royal Enfield are likely to experience a decline of 3 percent and 9 percent respectively, with volumes expected to be 425,000 units and 70,000 units.
Commercial vehicles (CV)
Despite a slowdown in road construction project awards, Raghunandan believes industrial volumes in the CV segment are expected to remain flat year-on-year. Higher e-way bill generation compared to last year suggests improved freight availability for carriers.
Analysts therefore estimate varying volume growth rates: the Eicher Motors VE Commercial Vehicles, Ashok Leyland and Tata Motors Trucks and Buses divisions are expected to grow by 4 percent, 3 percent and 1 percent respectively, with volumes reaching 7,000 units. 15,700 units and 34,600 units. Meanwhile, Mahindra & Mahindra’s CV segment is expected to decline 1 percent to 20,800 units.
Tractors
Nuvama said the tractor industry is expected to see a marginal decline of 1 percent year-on-year in the domestic market, attributed to high base and subdued customer sentiment in southern states. Favorable trading conditions in recent months, with output inflation exceeding input inflation, provide some positive indicators.
Mahindra & Mahindra’s Farm Equipment and Escorts divisions, meanwhile, are expected to experience a decline of 1 percent and 4 percent respectively, with expected volumes of 44,200 units and 9,500 units.
First print: June 27, 2024 | 8:39 am IST