Better demand, tailwinds keeping Street positive on 2-wheeler stocks

Given the stronger rural activity, and potential goods and services tax (GST) impact, investors are bullish on the two-wheeler (2W) segment.

- DEVANGSHU DATTA

In August, dealers in the domestic market picked up 11 per cent more 2Ws year-on-year (Y-o-Y), despite only 2 per cent growth in retail registrations. This indicates inventory stocking ahead of the festival season. Export trends were good. TVS Motor and Royal Enfield may have gained domestic market share.

GST rate cut hopes have pushed the Nifty Auto Index up 10 per cent, with valuations now close to long-term averages. So, the rebound may already have been discounted to an extent.

In August, TVS's volumes were up 30 per cent Y-o-Y, with domestic dispatches up 28 per cent and exports up 35 per cent. Scooter volumes increased 36 per cent, while motorcycle volumes increased 30 per cent.

Electric vehicle (EV) dispatches were flat, affected by supply issues of rare earths. Hero MotoCorp registered combined exports and domestic volume growth of 8 per cent. Motorcycles volume increased by 5 per cent, and scooters increased 53 per cent. Domestic volume increased 6 per cent and export volume was up 72 per cent.

Bajaj Auto saw strong exports offsetting weak domestic volume.