IGI Logo

Despite multiple OEMs showing strong growth in the festive season so far, Oct’26 retails for all segments, except for tractors, are expected to see a double-digit decline due to the high base of last year on account of festive season demand and pent-up demand getting released in October. Wholesales, however, are expected to report stronger headline growth as OEMs ramp up dispatches to replenish dealer inventory ahead of the festive season. In PVs, the four listed OEMs are expected to report aggregate wholesale growth of ~5% YoY in Oct’26, led by TMPV and HMIL. Strong EV sales are expected to support growth for TMPV, while strong export recovery is expected to support growth for HMIL. In 2Ws, the four listed OEMs are expected to deliver aggregate volume growth of 7.5% YoY, with TVS likely to continue to outperform the rest of the pack. CV demand remains robust, supported by healthy freight activity and rates, with the top three OEMs expected to report aggregate volume growth of ~31%. In contrast, tractors face significant headwinds from a high base and the El Niño effect, with wholesales of the two listed players expected to decline ~48% YoY. Our top OEM picks are MSIL, TVSL and MM. Among auto ancillaries, our top picks are HFL, SPRL and TENNIND.

* PVs: Retail demand remains healthy, although Oct’26 registrations will see a double-digit decline on a high base and a later festive calendar. Despite the softer retail trend, OEM wholesales are expected to benefit from festive-season channel stocking and a recovery in exports. We expect the four listed PV OEMs to report aggregate wholesale growth of ~5% YoY in Oct’26. TMPV and HMIL are expected to outperform, supported by new launches ahead of the festive season and healthy order books, strong traction for EVs and recovery in export volumes. On the other hand, MSIL and MM are expected to underperform the market due to capacity constraints.

* 2Ws: We expect the four listed 2W OEMs to report aggregate wholesale growth of ~7.5% YoY in Oct’26, supported by healthy underlying demand, festive-season sales and export momentum. TVS is the only player that would outperform the market owing to strong growth in both the domestic and export markets. Growth for Royal Enfield is likely to remain constrained by capacity limitations, while we expect HMCL to underperform the industry, with volumes declining due to a high base and inventory levels already at eight weeks. Bajaj would underperform the industry marginally as the subdued domestic volumes would be compensated by strong volumes from exports.

* CVs: CVs remain the strongest segment, supported by healthy freight movement, firm freight rates and stable infrastructure-led demand. We expect the top three listed CV OEMs to report aggregate wholesale growth of ~31% YoY for the month.

* Tractors: While the tractor segment has seen healthy growth momentum in 1HFY27 after GST rate cuts, aided by a low base, a high base, monsoon deficit with drought-like situation in few states and channel inventory of close to four weeks would weigh on volumes. 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. 2Q margins are expected to be under pressure on account of commodity inflation, though price hikes, stronger exports mix and expectations of RM normalization after US mid-term elections should support margin recovery for OEMs in FY27. Our top OEM picks are MSIL, TVSL, and MM. Among auto ancillaries, our top picks are HFL, SPRL, and TENNIND.

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412