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The auto pack delivered strong performance in Jul-26, with growth momentum accelerating across segments and players (also reflected in Vahan retail volumes).

Key observations:

1) In 2W dispatches, EIM RE (34% yoy) outpaced HMCL (19% yoy); the 2W industry’s retail momentum continued to be strong at 28% yoy (22%/8%/22% in 2HFY26/May/Jun-26), with robust growth across the pack.

2) PVs saw strong growth across OEMs, led by TMPV (59% yoy), healthy momentum at MSIL/M&M (34%/24% yoy), and a recovery at HMIL (25% yoy).

3) MHCV dispatches were robust, with TMCV logging 37% yoy; MHCV retail momentum also returned, with volumes up ~26% yoy (11/18% in May/Jun-26).

4) While tractor dispatches were healthy at Escorts and M&M (22/20% yoy) on favorable macros, Escorts’s management indicated potential moderation in volumes over coming quarters amid monsoon uncertainty, rising input cost pressures, and a high base effect.

5) Retail E-2W penetration reached a fresh high of 11.2% (Jun-26/FY26: 10.6/6.6%); industry volume growth surged to 88% yoy (2HFY26/May/Jun-26: 23/64/76%), with TVSL leading, followed by BJAUT/Ather; E-3W penetration reached 49%, with M&M leading, followed by BJAUT/TVS; E-PV penetration is stable at 7.8%, with TMPV leading.

2Ws: EIM RE outpaces HMCL; strong retail momentum continues

EIM RE logged 34% yoy growth to ~118k units, led by 38%/10% rise in domestic/export volumes. HMCL’s volume grew ~19% yoy to ~533k units, driven by 22% increase in domestic sales amid 14% decline in exports. The 2W industry’s strong retail momentum continued, with volumes up 28% yoy (2HFY26/May/Jun-26: 22%/8%/22%). E-2W penetration reached a fresh high of 11.2% (Jun-26/FY26: 10.6/6.6%); E-2W industry volume growth accelerated to ~88% yoy in Jul-26 (2HFY26/May/Jun-26: 23/64/76%), with TVSL #1, followed by BJAUT/Ather. TVSL/BJAUT are yet to report dispatch volumes.

PVs: TMPV leads; MSIL and HMIL report record monthly volumes

TMPV led the pack, with domestic PV dispatches up 58% yoy to ~63k units (total EV volumes up ~114% yoy in Jul-26). MSIL’s total volumes grew ~34% yoy to ~241k units, with domestic sales reaching an all-time high of ~200k units (excluding sales to other OEMs), led by ~49%/42% surge in domestic UVs/cars volume; exports were muted, with ~5% yoy decline. M&M’s domestic PV dispatches were up ~20% yoy to ~60k units. HMIL’s overall volumes were up ~25% yoy reaching highest-ever monthly sales of ~75k units, led by ~23%/31% growth in domestic/export volumes. PV industry retail growth was subdued at 19% yoy (2HFY26/Jun26: 20/32%); E-PV penetration continues to rise to ~7.8% (4.5% in FY26).

CVs: TMCV posted strong dispatch growth; MHCV retail demand rebounds

TMCV clocked 28% yoy growth in domestic CVs to 33.9k units, led by 25/31% yoy growth in MHCVs/LCVs. MHCV retail momentum rebounded, with volumes up ~26% yoy (11%/17% in May/Jun-26). TMCV (~33% yoy) outpaced AL (~21% yoy) in MHCV retails. AL is yet to report dispatch volumes

Tractors: Growth momentum sustained; potential volume moderation ahead

Escorts/M&M saw ~24%/21% yoy growth in domestic dispatches to ~8k/33k units. Escorts expects growth to moderate in coming quarters amid monsoon uncertainty, a delayed festive season in 3Q, rising input cost pressures, and a high base effect.

Our view: Prefer 2Ws and CVs over PVs; SPRL, CAL, JKI, and Pricol in ancillaries

Amid a strong rebound in underlying demand (also seen in Vahan retails for Jul-26), we favor 2W/CV OEMs over PVs, given a similar demand trajectory but better pricing flexibility amid commodity pressures and a limited new-PV-model launch pipeline in FY27 (historically a key growth driver); withing PVs, HMIL seems better placed, given its strong product pipeline over the next 18-24M. In 2Ws, while we favor TVSL/Ather on a structural basis (Yet another mega shift in motion; Ather the frontrunner), BJAUT offers a better risk-reward at 24x FY28E PER vs 33x/27x for TVSL/EIM RE (The best risk-reward within 2Ws; upgrade to BUY). In Ancillaries, we favor Shriram Pistons (Strong Q4; subsidiaries to drive next leg of scale-up), Craftsman Automation (Robust 1Q; firing on all cylinders; reiterate BUY), JK Tyre (Near-term RM headwinds to persist; valuation support emerging), and Pricol (Strong 1Q; demerger paves way for inducting strategic partner)

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