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Renewed conflict in West Asia and potential monsoon shortfall remain the key risks

* Domestic segmental growth rates for Jul’26 stood at 17% for ICE 2Ws and 34% for PVs.

* In the 2W ICE segment, among the top four players, EIM (+38%), TVSL (+32%), and HMCL (+19%) were able to post strong double-digit growth in July’26, while BJAUT saw an 8% decline in volume.

* While scooters underperformed motorcycles in 2Ws in July, they still outperformed motorcycles in FY27YTD. Further, the 150cc+ segment is the key growth driver within motorcycles, as rising inflationary pressure owing to delayed monsoons and price hikes across OEMs is hurting consumer sentiment in the entry segments.

* In PVs, both cars and UVs recorded over 30% growth, while the PV segment recorded an aggregate 35% growth in July’26. In PVs, MSIL (+42%) and TMPV (+58%) outperformed during the month, supported by capacity ramp ups and traction from recent launches. Both MM and HMIL, which underperformed the industry, faced partial supply constraints.

* Our top OEM picks are MSIL, TVSL, MM, and BJAUT. Among auto ancillaries, our top picks are UML, MSWIL, SAMIL, and Endurance.

ICE 2Ws: Moped growth continues in July’26 post strong 1Q

* Domestic 2W ICE sales grew ~17% YoY in Jul’26, maintaining the steady doubledigit growth momentum seen since the start of this fiscal.

* Mopeds continued to outperform other segments, having shown a strong ~49% YoY growth in Jul’26, though still making up <3% of total ICE-2W wholesales. ICE Scooters saw a strong 8% YoY growth, underperforming the motorcycle segment, which posted a much faster ~20% YoY growth, driven by faster growth in the premium segment.

* Among listed players, TVS, EIM, and HMCL were able to post strong double-digit growth of 32%/38%/19% YoY in July’26 and outperform the industry. HMSI underperformed the industry and grew just 2% YoY. On the other hand, BJAUT posted an 8% decline in volumes.

* Consequently, RE, TVS, and HMCL gained ~95bp/260bp/70bp market share respectively, while HMSI and BJAUT lost ~390bp/180bp share YoY.

Valuation and view

* Post a strong 2HFY26, wholesales across segments have witnessed a strong double-digit growth in FY27YTD, on the back of strong retails, which have also seen a double-digit growth and lean channel inventory. Due to the low base of 2Q and the build up to festive, volumes in 2QFY27 are also likely to remain strong, while growth rates are bound to taper off in 2H on a high base.

* 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 UML, MSWIL, Endurance, and SAMIL.

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