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Retail demand momentum remained strong across all segments in Sept’26, with all segments expected to report double-digit growth, supported by a low retail base of last year. While tractor retails are expected to witness double-digit growth, dispatches are expected to witness a decline in volumes, owing to a high base post the GST 2.0 implementation. In PVs, while we expect the four listed PV OEMs to deliver an aggregate ~18% wholesale growth in Sept’26, domestic growth is expected to be much stronger, supported by robust retail demand and channel filling ahead of the festive season. Within PVs, we expect all OEMs to post double-digit growth, except for HMIL, which is still facing export headwinds from the ongoing West Asia crisis. In 2Ws, we expect volume growth for the four listed OEMs to remain flat for Sept’26, largely due to a high base and capacity constraints. CV retail demand remains strong, alongside healthy freight activity and rates. Accordingly, we expect the top three CV OEMs to post ~25% aggregate volume growth for the month. Our top OEM picks are MSIL, TVSL, and MM. Among auto ancillaries, our top picks are HFL, MSWIL, SAMIL, SPRL, and TENNIND.

* PVs: Demand in Sept’26 remains healthy, with retails for the month expected to record ~20% growth. The base remains moderated, as GST rate cuts came into effect toward the end of Sept’25. Additionally, with the festive season around the corner, we expect increased channel stocking by OEMs to build inventory, while exports are likely to remain constrained by ongoing freight challenges. Hence, we expect the four listed PV OEMs to post a combined 18.2% YoY growth in Sept’26. We expect MSIL and TMPV to outperform the industry with doubledigit growth, given a healthy order backlog and lean channel inventory. For TMPV, the recently launched Sierra and strong demand from the EV portfolio are expected to continue to boost wholesales. MSIL’s wholesale volume growth is expected to be supported by a healthy order backlog, low channel inventory, the ramp-up of incremental capacity at Kharkhoda and Gujarat, and the recently launched Brezza upgrade. MM is expected to underperform the industry, primarily due to capacity constraints, despite strong retails and healthy waiting periods. For HMIL, wholesale is likely to be muted relative to peers on account of weak retails and lower exports, driven by higher Middle East exposure. HMIL volumes are expected to pick up in 2H as the third line at its Pune plant comes live and two new products are launched.

* 2Ws: Despite strong double-digit retail growth in Sept’26, we expect wholesales to remain flat YoY, owing to a high base of Sept’25 and capacity constraints across majority of the players. TVS is expected to be the clear outperformer, with double-digit growth driven by strong export volumes. RE’s volume growth is likely to remain constrained by capacity limitations. For BJAUT, volume growth would be driven largely by sustained momentum in exports, with capacity constraints limiting growth. We expect HMCL to underperform the industry, with volumes declining due to a high base and inventory levels already at ~6 weeks.

* CVs: Despite the West Asia crisis uncertainty, freight activity has remained strong, reflected in healthy CV retail growth, which is expected to be ~30% in Sept’26. TMCV continues to outperform the market, with the three players expected to post a ~25% growth in dispatches in Sept’26 despite a higher base.

* Tractors: While the tractor segment has seen healthy growth momentum post GST rate cuts, aided by a low base, we expect growth rates to taper off as the base catches up from Sept’26. Additionally, erratic rainfall amid the ongoing El Nino could further weigh on growth in 2H, particularly against a higher base. Overall, we expect tractor wholesales for the two listed players to decline 31.4% YoY for the month.

* Valuation and view:

As the high base from the post-GST 2.0 era catches up, growth rates are expected to taper off in 2H. While commodity inflation is expected to hamper near-term earnings, necessary price hikes, normalization of RM costs in 2H, and sustained volumes are expected to sustain investor interest, given the recent correction across OEMs. Our top OEM picks are MSIL, TVSL, and MM. Among auto ancillaries, our top picks are HFL, MSWIL, SAMIL, SPRL, and TENNIND.

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