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Channel push ahead of festive to support wholesales as base starts to catch up

* Domestic segmental growth rates for Aug’26 stood at ~5% for ICE 2Ws and ~37% for PVs.

* Strong growth rates for the PV headline numbers was primarily on account of a low base last year due to delay in dispatches due to GST rate cuts. Additionally, increased inventory push during the month ahead of the festive season further boosted volumes. While a delayed festive, strong retails and lean channel inventory would support dispatches for upcoming couple of months, growth rates are expected to moderate as the high base of 2H catches up.

* 2W sales, however, were impacted by lower growth in the motorcycle segment, largely due to declining volumes in the 100cc and 125cc segment on account of shift in consumer preferences.

* In the 2W ICE segment, among the top four players, EIM (+11%), TVSL (+9%), and HMSI (+7%) were able to post growth in Aug’26. HMCL posted a flattish ~2% YoY growth, while BJAUT saw a significant ~13% YoY decline in monthly sales.

* In Aug’26, scooters outperformed motorcycles, with wholesales growing 9.4% YoY. As a result, on a YTD basis as well, scooters have continued to outperform motorcycles with a 16.3% YoY growth. HMCL and Suzuki were the outperformers, posting a 29.3% and ~11% YoY growth, respectively. HMSI continued to underperform, losing market share, with YTD share at 41% (down ~300bp).

* In PVs, while cars posted a healthy 20.4% YoY growth during Aug’26, UV wholesales surged 45.5% YoY. The UV mix currently stands at 67.5% of PVs.

* In PVs, MM (+50%), Kia (+48%) and TMPV (+59%) outperformed during the month. MSIL (+35%) grew largely in line with the industry, while Hyundai (+24%) continued to underperform the industry.

* Our top OEM picks are MSIL, TVSL, MM, and BJAUT. Among auto ancillaries, our top picks are MSWIL, SAMIL, TENNIND, SPRL and HFL.

ICE 2Ws: Scooters drive 2W growth, while motorcycles underperform

* Domestic 2W ICE sales grew ~5% YoY in Aug’26, posting single-digit growth for the first time after strong double-digit growth so far this fiscal.

* Scooters continued to outperform other segments, having recorded a relatively stronger ~9% YoY growth in Aug’26. Motorcycles saw a muted ~2% YoY growth, underperforming the scooters segment. The mopeds segment continued its upward trajectory, growing ~5% YoY during the month. On a YTD basis, scooters/motorcycles/mopeds grew 16.3%/12.6%/26.8%, respectively.

* Among listed players, TVS, EIM, and HMSI were able to post steady growth of 9%/11%/7% YoY in Aug’26, outperforming the broader industry. HMCL underperformed the industry and grew just ~2% YoY. On the other hand, BJAUT posted a 13% decline in volumes.

* Consequently, RE, TVS, and HMSI gained ~80bp/80bp/60bp market share, respectively, while HMCL and BJAUT lost ~80bp/160bp share YoY.

Valuation and view

* Post a strong 2HFY26, wholesales across segments have witnessed strong double-digit growth in FY27’YTD, on the back of lower base, strong retails, which have also seen double-digit growth and lean channel inventory. Due to the low base of 2Q and channel push ahead of festive, volumes so far in 2QFY27 have been strong and is expected to be the same for September on account of strong retails and lean channel inventory (especially for PVs).

* While OEMs and the ancillaries have guided for continued pressure from commodities, the majority impact of the same has already been reflected in 1Q results, and the price hikes taken by OEMs to offset this cost should cushion the blow from 2Q. As a result, we expect margins for the sector to revive gradually from 2Q onwards. Concerns that remain monitorable are the probable impact of El Niño expected in the current year and the escalation of the West Asia crisis again. In this scenario, OEMs with a healthy launch pipeline are likely to be preferred over others. Our top OEM picks are MSIL, TVSL, MM, and BJAUT. Among auto ancillaries, our top picks are HFL, MSWIL, TENNIND, SPRL and SAMIL.

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