The much-anticipated minimize underneath the brand new RBI Governor Sanjay Malhotra got here on Friday after the conclusion of the three-day Financial Coverage Committee (MPC) assembly even because the Central Financial institution continued its impartial stance.
With the coverage charge at 6.25%, Avenue expects some respite on mortgage repayments.
Lauding the choice, Anirudh Garg, Companion and Fund Supervisor at Invasset PMS stated the coverage measures will create a supportive atmosphere for demand restoration within the auto sector although exterior components similar to inflation, foreign money motion, and shopper sentiment will play an important position in shaping the business’s outlook within the coming months.
“For the auto sector, the speed minimize may have a constructive affect by making automobile loans extra inexpensive, which can encourage shopper demand, significantly within the passenger and two-wheeler segments. Moreover, improved liquidity situations may assist credit score circulation to companies, benefiting automakers and sellers,” Garg stated.Echoing the same sentiment, Adhil Shetty, CEO of Bankbazaar.com stated the minimize would have a notable affect on the auto sector. “The repo charge minimize straight lowers the price of borrowing for banks and monetary establishments, which, in flip, reduces the rates of interest on auto loans. This discount makes it extra inexpensive for customers to finance automobile purchases, which may stimulate demand within the automotive market,” Shetty highlighted, whereas voicing caveats on inflation and gasoline costs.
Auto shares in focus
Maruti Suzuki tops the chart with 9% returns for the reason that Price range and is adopted by Mahindra & Mahindra (M&M) and TVS Motor Firm with practically 6% good points. In the meantime, Exide Industries, Eicher Motors, Tata Motors, MRF, Hero MotoCorp and Baja Auto have delivered returns between 5% and 1%.On the index stage, Nifty Auto’s returns of three.6% are superior to 1.5% given by the Nifty. Auto is the second greatest sectoral performer narrowing its good points with Nifty Shopper Sturdy (3.8%).
On a year-to-date foundation, the typical returns had been nonetheless 2.5% decrease on the index stage. Maruti and Eicher rule within the passenger automotive and two-wheeler house with double-digit returns.
Within the 15-stock index, 9 have seen their share costs erode in 2025 up to now. Most of them are auto ancillary corporations viz. Apollo Tyres, Bosch, Samvardhana Motherson Worldwide (SAMIL), MRF, Bharat Forge, Exide Industries and Balkrishna Industries, which fell between 21% and three% as on February 6, 2025.
Unique Tools Producers (OEMs) Tata Motors and Ashok Leyland have fallen 3.1% and 4.3%, respectively, on this interval.
Price range affect
Whereas the precise affect of the Price range will play out from the following monetary 12 months, the markets have benefitted sentimentally as per brokerages and prime market voices.
InCred calls the federal government’s tax exemption of as much as Rs 12 lakh aid for individuals and expects the transfer may revive demand for private autos, particularly discretionary objects like entry-level automobiles and premium 2Ws.
Finance Minister Nirmala Sitharaman additionally introduced customs obligation cuts on engines with capability as much as 1,600 cc and above this. The levy on semi-knocked down (SKD) engines has additionally been slashed.
The federal government has additionally exempted 35 further capital items for EV battery manufacturing that might increase home manufacturing of lithium-ion batteries for electrical autos.
InCred sees Bajaj Auto as a beneficiary of this EV transition and has upgraded the inventory to ‘Add’ from “Maintain’. In its view, a 30% correction is capturing the latest weak spot in 2W demand.
January gross sales/ Q3 earnings
The expansion in dispatches in January 2025 was wholesome for two-wheelers and tractors whereas a blended development was noticed in different segments, InCred famous. The YoY development leaders by way of volumes had been Eicher Motors (+20%), TVS Motor (+17%), Mahindra & Mahindra (M&M, 15%), Ashok Leyland (+8%), Escorts Kubota (+8%), Maruti Suzuki (+7%), Bajaj Auto (+6%) and Hero MotoCorp (+2%). The YoY laggards had been Tata Motors (-8%) and Hyundai Motor India (-3%).
Corporations like Maruti Suzuki, TVS Motor Firm and Hero MotoCorp have declared good outcomes with income and web revenue development in double-digits. Bajaj Auto’s prime and backside traces have seen a excessive single-digit development.
There are disappointments too in Tata Motors, which has seen a 19% YoY fall in its revenue after tax (PAT) whereas a modest 3% uptick in income. Amongst auto ancillaries, Bosch, Exide Industries have seen their earnings fall by 12% and 22%, respectively. Apollo Tyres and MRF have additionally reported weak units of numbers.
M&M will announce its earnings on Friday whereas Eicher Motors and Ashok Leyland will announce their earnings subsequent week.
Motilal Oswal Monetary Companies is underweight on the auto sector.
Inventory suggestions
– InCred on Hero MotoCorp: ADD | TP: Rs 5,810
– InCred on Maruti Suzuki: ADD | TP: Rs 14,261
– InCred on Tata Motors: Cut back | TP: Rs 661
– InCred on Bajaj Auto: Add | TP: 10,590
– SBI Securities on M&M: Purchase | TP: Rs 3,345
(Information Inputs from Ritesh Presswala)
(Disclaimer: Suggestions, recommendations, views and opinions given by the specialists are their very own. These don’t symbolize the views of Financial Occasions)
