Market Analysis of Major Two-Wheeler Companies
In a recent trading session on September 30, the shares of India’s top two-wheeler manufacturers, Hero MotoCorp and Bajaj Auto, experienced a notable decline of up to 4%. This downward trend, primarily attributed to the early onset of the festive season and the ongoing Shraddha Paksha from September 17 to October 2, has raised concerns among investors. Global brokerage firm UBS has issued a ‘Sell’ rating for Hero MotoCorp, citing a decline in its market share and a shift in consumer preferences that may impact these companies’ performance.
Hero MotoCorp’s Market Position
As of September 30, Hero MotoCorp’s market share has fallen to 23.2%, pushing the company into the second position in the domestic two-wheeler market. On that day, Hero MotoCorp shares witnessed a drop of 4.4%, reaching a low of Rs. 5691 on the Bombay Stock Exchange (BSE). Despite this decline, the company’s stock has shown impressive growth, with an 87% increase over the past year. Analysts at UBS note that the stock currently trades at 26 times the estimated earnings for FY2026, indicating potential overvaluation amidst a challenging market environment.
Bajaj Auto Also Faces Challenges
In line with the trends affecting Hero MotoCorp, UBS has also rated Bajaj Auto shares as a ‘Sell’. The stock saw a dip of 3% on the same day, hitting a low of Rs. 12313. Nevertheless, Bajaj Auto shares have surged an impressive 144% over the past year and have gained 84% year-to-date in 2024. Investors are urged to analyze market conditions closely, as external factors could influence future performance.
Comparative Performance and Outlook
| Company | Current Share Price | 1-Year Gain (%) | Rating |
|---|---|---|---|
| Hero MotoCorp | Rs. 5691 | 87% | Sell |
| Bajaj Auto | Rs. 12313 | 144% | Sell |
Positive Outlook for TVS and Eicher Motors
Conversely, UBS has assigned ‘Buy’ ratings to TVS Motor and Eicher Motors, highlighting their growing market shares as a positive trend. On September 30, shares of TVS Motor and Eicher Motors fell by 3% and 1%, respectively, but their long-term outlook remains optimistic. UBS notes that while TVS is capitalizing on market opportunities, Hero MotoCorp continues to lose ground.
Jefferies’ Growth Expectations
Further insights from the international brokerage firm Jefferies show expectations for a 10-13% growth rate in Bajaj Auto and TVS, while forecasting a modest 3-6% growth for Hero MotoCorp, Mahindra & Mahindra, and Maruti Suzuki. Jefferies anticipates a decline of 3-8% for competitors like Eicher Motors, Tata Motors, and Ashok Leyland. Amidst these projections, TVS and Mahindra & Mahindra have been highlighted as the preferred choices within the auto sector.
Market Volatility and Investor Sentiment
Overall, the market landscape for two-wheeler manufacturers is currently characterized by volatility, driven by changing consumer trends, festive buying behaviors, and market dynamics. Investors are encouraged to stay informed and align their strategies accordingly, as both external conditions and internal company performances play crucial roles in determining the future trajectory of these stocks.
