GST rate cut, income tax relief, wedding season demand, expectations of the 8th pay commission announcement, and rural-focused government budgets may improve rural sentiments in the coming months.
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Axis Securities Report
We expect positive earnings with improvement across certain companies, due to an increase in domestic demand, supported by the GST rate cut and the festive season.
We also anticipate the tractor segment to perform better than the two-wheeler/passenger vehicle/commercial vehicle, supported by favourable monsoon and higher water reservoir levels, leading to a revival in rural demand.
Additionally, export volume recovery is supporting earnings visibility in FY26 and beyond. PV sales are expected to improve on a high base, while new product launches from certain OEMs in the SUV segment are anticipated to drive growth.
Demand for entry-level vehicles is expected to improve further on account of the current GST rate cut.
We anticipate mid-single-digit growth for CVs, and two-wheelers/tractors may witness high single-digit to low double-digit growth in the near term.
GST rate cut, income tax relief, wedding season demand, expectations of the 8th pay commission announcement, and rural-focused government budgets may improve rural sentiments in the coming months.
Given these factors, we remain selective in our approach towards OEMs under our coverage.
For Q2 FY26, our top earnings plays are:
Auto OEMs: TVS Motors, Eicher Motors, Hero MotoCorp. (M&M - Non-Coverage)
Auto Ancillary: Sansera Engineering, Endurance Technology, Minda Corporation.
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