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Underlying trends improving; EIM and TTMT PVs, outliers

Underlying auto trends picked up pace in the latter part of Sep-25 – highlighted in our extensive festive channel checks (Festive channel checks - 20-25% growth expected in festive) and as seen in Vahan; barring MHCVs) led by recent GST cuts. 2W domestic dispatches were healthy across the pack. Exports momentum remained robust across most players/categories. Key highlights: i) EIM RE lead the pack with >40% growth in dispatches as well as retail share gains (Festive channel checks - EIM RE likely to be sold-out in Festive); TVSL’s exports growth moderated in Sep. ii) PV dispatches for the pack modest, barring TTMT, whose volume grew 45% after several months of muted performance. iii) MHCVs, a mixed bag, with TTMT outpacing across categories; industry retails still weak. iv) Tractors reported robust growth with domestic volume up ~50% for M&M and ESC, benefiting from the early arrival of festivities. v) E-2W penetration rose to 8.1%, with TVSL at the helm; BJAUT rose to #2, with Ather at #3, while Ola fell to #4. vi) E-3Ws continue to grow strongly with penetration levels at a fresh high of 35%; while M&M leads, BJAUT/TVSL are closing the gap rapidly. As underlying trends improved only toward the end of the month, we believe Oct could see a major spillover effect led by Dhanteras and Diwali festivals, reflected in the high customer enquiries, per our checks. However, demand sustenance post-Festive remains a key monitorable.

2Ws – Healthy domestic dispatches; sustained exports growth across players

EIM RE continues to outpace the pack with overall dispatches up 43% YoY, led by >40% growth across domestic as well as exports. TVSL witnessed slight moderation in growth, with domestic/exports volume up 12%/8%. BJAUT reported 5% growth in domestic 2Ws after nearly 11 months of consecutive decline; exports were up 12%. HMCL’s overall volume was up 8% YoY, with domestic volume up 5% YoY along with strong exports growth (95% YoY). 2W industry retails grew 6.5% YoY despite a slower start; E-2W penetration rose to 8.1%. TVSL (22% share) leads in E-2Ws; BJAUT (19%) retracing steps to being #2; Ather (17%) at #3; Ola (13%)/HMCL (12%) down to #4/#5, resp.

PVs – TTMT’s dispatches surge ahead of the pack; M&M’s ICE SUVs still weak

Dispatches for the pack were modest, barring TTMT, whose domestic PV volume grew 45% YoY after almost a year of muted performance. M&M’s dispatch growth moderated to 10% YoY. MSIL’s domestic PV volume fell 6% YoY, dragged by a 21% YoY decline in UVs. Notably, the small car volumes grew 4%, following several months of a muted performance; UV share stood at 26% (Aug-25: 30%). HMCL’s domestic volume was flattish YoY. Notably, export momentum remained robust for the entire pack. PV industry retails picked up pace in the latter half of Sep-25, which saw volume increase by 5% YoY. M&M’s underlying ICE SUV retail volume continued to weaken (down 4% YoY).

CVs – Strong outperformance at TTMT across categories; Retails still weak

MHCVs were a mixed bag, with TTMT outperforming. MHCV volumes for TTMT grew 11% YoY, while AL’s growth was muted at 3% YoY. MHCV truck volume for TTMT and AL grew 9% and 5%, respectively. TTMT also recorded 3% growth in the passenger segment, while AL’s volume declined 9% YoY. Overall, TTMT’s CV volume was up 16% YoY vs 7% growth for AL. MHCV industry retails declined 4.7%; LCVs were up 4%.

Tractors – Robust growth for M&M and ESC; demand outlook strong for H2FY26

M&M as well as Escorts reported strong growth, with domestic dispatches YoY up 50% and 49%, respectively. Per the management, the recent GST cuts have increased festive off-take and the demand outlook remains strong for balance-FY26, ahead of the upcoming Kharif season, buoyed by improvement in sentiment and favorable monsoons.

We favor TVSL/EIM in 2Ws; MSIL in PVs; SPRL, CAL, and CEAT in Ancillaries

We remain positive on 2Ws, led by improved replacement demand visibility (industry volume below the FY19 peak), potential rural recovery after a prolonged softness (aided by recent GST cuts), and sustained rise in exports. While the OEM demand commentary has improved (expect 4-5% growth in FY25 vs SIAM’s earlier estimate of 1-2%), sustenance of demand after the ongoing festive season would be a key monitorable. We see EIM/TVSL outperforming, on strong product actions and disciplined pricing amid sustained growth in domestic/exports. In PVs, we like MSIL (success of the recent ICE SUV launch in Sep-25 and recovery in small cars are key triggers); in ancillaries, we like Shriram Pistons, Craftsman Automation, and CEAT.

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