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Retail demand trends in Jul’26 appear strong and broad-based, with all segments expected to record double-digit growth. Strong retails, lean channel inventory, capacity expansion by OEMs and the recent launches should support healthy wholesale volume growth in Jul’26 across segments. In PVs, we expect the four listed PV OEMs to deliver an aggregate 25% wholesale growth. Within PVs, we expect TMPV and MSIL to outperform the market, while HMIL is expected to post low-single-digit growth. We also expect M&M to gradually revive its production with the normalization of supply chain issues. In 2Ws, we expect the four listed OEMs to report 20% volume growth in Jul’26, largely led by strong exports and healthy demand in the premium segment. Further, CV retails seem to have picked up well and hence we expect the top three CV OEMs to post ~23% aggregate volume growth for the month. In addition, tractors continue to witness healthy demand in the month. Accordingly, we expect the top two tractor OEMs to post about 26% YoY growth in wholesales for July. Given the stable demand momentum and easing input cost pressure, we expect renewed investor interest in the sector over the coming quarters. Our top OEM picks are MSIL, TVSL and MM. Among auto ancillaries, our top picks are Unominda, MSWIL, SAMIL and Endurance.

* PVs: Demand remains healthy in July, with retails likely to grow 19% YoY during the month. As such, the channel inventory remains lean for most OEMs. We expect MSIL and TMPV to outperform industry growth with strong double-digit growth, given a healthy order backlog. For TMPV, the recently launched Sierra, Sierra EV and Punch EV 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. We also expect MM to post steady volume growth, led by the normalization of supply issues. For HMIL, wholesale is likely to be muted on account of weak retails and lower exports, driven by higher Middle East exposure. Overall, for July, we expect the four listed PV players to post aggregate growth of 25% YoY in dispatches, largely driven by MSIL and TMPV.

* 2Ws: July retails are expected to remain healthy at ~17% growth. For July, we expect 20% volume growth in dispatches for the four listed companies, aided by inventory normalization and steady retail. Growth is expected to be led by TVSL, BJAUT and RE. For BJAUT, healthy double-digit volume growth would be largely driven by stable momentum in exports. We expect HMCL to underperform the industry with single-digit volume growth, as demand for up-to-125cc motorcycles continues to underperform the premium segment demand.

* CVs: After the de-escalation in the West Asia conflict, CV retails seem to have recovered and are expected to record 20%+ volume growth in July. According to current trends in Vahan, TMCV continues to outperform peers, with healthy double-digit growth. Overall, we expect the top three players in this segment to post ~23% YoY growth in dispatches in July, largely over a low base of last year.

* Tractors: This segment continues to witness healthy demand trends even in FY27, led by positive terms of trade for farmers and healthy reservoir levels. Tractor retails are seeing robust growth in Vahan so far. Demand momentum is likely to remain healthy in the tractor segment, at least in 1H. Overall, we expect the two listed players in this segment to post healthy 26% YoY volume growth in July in dispatches.

* Valuation and view:

The demand momentum has remained healthy for all segments in July. Overall, 1Q is likely to witness cost pressure, though it is expected to subside in the coming quarters. Given the sustained demand momentum and easing input cost pressure, we expect renewed investor interest in the sector over the coming quarters. Our top OEM picks are MSIL, TVSL and MM. Among auto ancillaries, our top picks are Unominda, MSWIL, SAMIL and Endurance.

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