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

* Domestic segmental growth rates for 1QFY27 stood at 17% for ICE 2Ws, ~26% for PVs, and ~19% for CVs.

* In the 2W ICE segment, among the top four players, TVSL (+20.5%), HMCL (+18.4%), and EIM (+31.6%) were able to post strong double-digit growth in 1Q.

* Scooters continued to outperform motorcycles in 2Ws. 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 are growing in healthy double digits in 1QFY27.

* In PVs, MSIL (+34%) and TMPV (+45%) outperformed during the quarter. Both MM and HMIL, which underperformed the industry, faced supply constraints.

* Within CVs, TMCV is experiencing market share revival across all key CV segments for the first time after many quarters. AL has lost ~100bp share to TMCV while other peers have largely maintained their share in 1QFY27. ? While wholesales have seen double-digit growth across segments in 1Q, it is only PVs and tractors that have experienced double-digit growth in retails as well.

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

ICE 2Ws: Mopeds outperform other segments after many years in 1Q

* Domestic 2W ICE sales grew ~14% YoY in Jun’26, maintaining the steady doubledigit growth momentum seen since the start of this fiscal. For 1QFY27, the segment posted a healthy growth of 17.1% YoY, albeit on a low base.

* Surprisingly, in 1QFY27, mopeds outperformed the other segments, having shown a strong ~29% YoY growth, though still making up <3% of total ICE-2W wholesales. ICE Scooters saw a strong 22.4% YoY growth, outperforming the motorcycle segment, which posted a relatively slower ~14% YoY growth.

* Among listed players, TVS and EIM were able to post strong double-digit growth of 20.5%/31.6% YoY in 1QFY27. On the other hand, HMCL and HMSI delivered 18.0%/15.1% YoY growth. BJAUT underperformed the industry with just 1.2% YoY growth in 1QFY27.

* Consequently, TVS gained ~60bp market share, closing the quarter at 19.4%, while HMCL gained ~30bp YoY to end up at 29% market share.

* On the other hand, HMSI lost ~50bp share to end the quarter at 27%, while BJAUT lost ~140bp share to end at 9%.

Valuation and view

* Post a strong H2FY26, wholesales for the sector across most segments have seen double-digit growth in 1Q given the lean inventory in the system. However, retail demand has not been as uniform across segments. It is only the PV and tractor segments that have seen double-digit growth in retails in 1Q, while 2Ws and CVs are experiencing single-digit growth.

* Further, while crude is again surging gradually and remains a key concern, input costs seem to have peaked out in 1Q. 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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