TVS Motor, Bajaj Auto Get Emkay Rating Upgrade With Two-Wheeler Exports In Focus

Emkay Global Research upgraded TVS Motor Co. and Bajaj Auto Ltd.'s stock ratings, and maintained its rating on Hero MotoCorp Ltd. The brokerage expects improved exports outlook to drive growth in the two-wheeler industry moving forward.

Though growth in India's domestic two-wheeler industry is moderating, export visibility is improving, according to Emkay Global Research. Key markets like Nigeria, which were affected due to currency pressure, are expected to improve this year.

Consistent healthy growth in Latin America, improved retail performance in the middleweight markets for Royal Enfield, and low penetration levels in African markets continue to act as a long-term growth driver for exports, according to Emkay Global Research.

"We build in 16%/17% 2W export CAGR (FY24-27E) for Bajaj Auto and TVS Motor Co, respectively, implying 1%/4% CAGR from peak levels of FY22."

Due to broader weakness in consumer sentiment and cautiousness among retail financiers, growth momentum in the domestic two-wheeler industry is slowing. Growth in the Vahan registration moderated to 8% on the year during September-December in 2024, compared to 12.6% in the preceding three months, Emkay Global Research said.

Emkay Global Research build-in moderate growth for domestic two-wheeler industry for 7%/8% in FY26E/27E, respectively (12% in FY25E). Two-wheelers remain better placed than four-wheelers, which are struggling with growth despite elevated discounts.