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The auto pack delivered strong performance in Aug-26, with yoy growth momentum sustaining across segments and players (also reflected in Vahan retail volumes); however, some moderation was visible on mom basis.

Key observations:

1) In 2Ws, BJAUT/TVSL led the pack with ~30%/21% yoy dispatch growth; the 2W industry’s retail momentum remained strong, at 20% yoy (22/22/29% in 2HFY26/Jun/Jul26).

2) PVs saw strong growth across OEMs, led by TMPV (59% yoy domestic growth), healthy momentum at M&M/MSIL (up 50%/29% yoy), and a recovery at HMIL (up 24% yoy).

3) MHCV dispatches were robust, with TMCV/AL logging 49%/38% yoy growth; MHCV industry retail momentum also sustained, with volumes up 25% yoy (30%/17% in Jul/Jun-26).

4) In tractors, Escorts (19% yoy growth) outpaced M&M (5%). Escorts’s management indicated potential industry volume moderation over coming quarters amid a high base effect and rising cost pressures.

5) Retail E-2W penetration was at 10.7% (Jul-26/FY26: 11.2%/6.6%); industry volume growth surged 67% yoy (2HFY26/Jun/Jul-26: 23%/76%/89%), with TVSL leading, followed by BJAUT/Ather; E-3W penetration reached a fresh high of 51%, with BJAUT leading, followed by M&M/TVS; E-PV penetration was stable at 7.5% (Jun/Jul-26: 7.8%/8%), with TMPV leading, followed by M&M/JSW MG.

2Ws: TVSL and BJAUT outpace EIM RE; strong retail momentum continues BJAUT logged ~444k total 2W units (up 30% yoy), on 10/53% yoy growth in domestic/exports. TVSL logged ~591k total 2W units (up 21% yoy), led by 18%/29% growth in domestic/export sales. EIM RE logged ~126k units (up 11% yoy), led by 11%/10% rise in domestic/export volumes. HMCL’s volumes stood at ~568k units (up 2.6% yoy) amid 5% yoy growth in domestic volumes and 25% decline in exports. The 2W industry’s strong retail momentum continued, with volumes up ~20% yoy (2HFY26/Jun/Jul-26: 22%/22%/29%). E-2W penetration was at 10.7% (Jul-26/FY26: 11.2%/6.6%); E-2W industry volume growth grew ~67% yoy in Aug-26 (2HFY26/Jun/Jul-26: 23/76/89%), with TVSL #1, followed by BJAUT and Ather.

PVs: Strong growth across players, with TMPV leading the pack

TMPV led the pack, with total PV dispatches up 56% yoy to ~68k units (total EV volumes up ~94% yoy in Aug-26). MSIL’s total volumes grew ~21% yoy to 219k units (below our estimate due to 3 days of production loss during 15-Aug and Raksha Bandhan festival; to be recovered in Sep-26), led by ~46%/29% surge in domestic UV/car volumes; exports were muted, with ~7% yoy decline. HMIL’s overall volumes were up ~8% yoy, reaching ~66k units, led by ~24% growth in domestic volumes amid 31% decline in exports. M&M’s domestic PV dispatches were up ~50% yoy to ~59k units. PV industry retail growth was subdued at 15% yoy (2HFY26/Jul26: 20/22%); E-PV penetration stood at ~7.5% (4.5% in FY26).

CVs: TMCV/AL posted strong growth; strong MHCV retail demand sustains

TMCV clocked 49% yoy growth in total volumes to 44.4k units, led by 31%/36% yoy growth in domestic MHCVs/LCVs and 227% yoy growth in exports. AL posted ~38% yoy growth in total volumes to ~21k units, led by 55%/25% yoy growth in MHCVs/LCVs amid 1% decline in exports. MHCV retail momentum sustained, with volumes up 25% yoy (17/30% in Jun/Jul-26).

Tractors: Escorts outpaced M&M; potential volume moderation ahead

Escorts/M&M saw ~19%/5% yoy growth in total tractor dispatches to ~10k/29.5k units. Per Escorts’s management, while kharif crop outcomes, reservoir levels, and the deferred festive season are expected to support demand, industry volumes may moderate over the coming quarters amid the high base effect and rising cost pressures.

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

Amid strong momentum in underlying demand (also seen in Vahan retails for Aug-26), we favor 2W (Yet another mega shift in motion; Ather the frontrunner) and CV (India CVs: Reacceleration in motion) 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); within PVs, HMIL seems better placed, given its strong product pipeline over the next 18-24M. In 2Ws, while we favor TVSL (Strong FY26; premiumization and EVs to drive long-term growth) and Ather Energy (Konarc: a decisive move to catalyze EV adoption and leadership) on a structural basis, BJAUT offers a better risk-reward (The best risk-reward within 2Ws; upgrade to BUY) at 24x Sep-28E PER vs 30x/26x for TVSL/EIM RE. In Ancillaries, we favor Craftsman Automation (Robust 1Q; firing on all cylinders; reiterate BUY), JK Tyre (Weak 1Q; demand, margins to progressively improve), and Pricol (Strong 1Q; demerger paves way for inducting strategic partner).

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