By Siddhant Mishra
Auto stocks fell on Friday, taking the S&P BSE auto index down by 1.3%, after the wholesale despatches data for November disappointed the Street. Maruti Suzuki and Mahindra & Mahindra (M&M) were among the biggest drags on the sectoral gauge. The M&M stock lost 2.6% while the Maruti stock gave up 2.3%. Among two-wheeler stocks, Eicher Motors fell 3.2%, while Bajaj Auto was down 1.8%.
“Overall, we see signs of demand moderation and expect industry growth to slow down,” analysts at Nomura wrote. For PVs, growth is tipped to slow from 25% this year to 6%, while for two-wheelers, growth is expected to drop from 20% to 10% next year. For M&HCVs, the growth is estimated to slow from 42% in FY23 to 10% in FY24.
On a month-on-month basis, wholesale desptaches in November were subdued, showing a double-digit drop across two- and three-wheelers and commercial vehicles.
Passenger vehicles (PVs) saw a single-digit fall. While the November volumes were expected to be smaller than for October, since the latter is a festive month, analysts noted the build-up of volumes, especially for entry-level passenger vehicles and two-wheelers, was worrying.
Analysts at ICICI Securities wrote that while retail sales were strong, suggesting an improvement in rural demand, the wholesale despatches of mass-market two-wheelers were impacted by destocking of inventory.
Although car manufacturers have announced price hikes, some of which will kick in early next year, some analysts believe that could impact volumes, especially for the entry-level segment.