Auto index soars 25% from April low; Hero Moto, TaMo gain up to 6% on Thurs

Business Standard

15-05-2025

Shares of automobiles companies continued their upward trajectory with the BSE Auto index gaining over 2 per cent on the BSE in Thursday's intra-day trade on positive management commentaries and expectations of stable growth.
At 02:47 PM; the BSE Auto index, the second largest gainer among sectoral indices, was up 2 per cent, as compared to 1.5 per cent rise in the BSE Sensex. The auto index gained 2.2 per cent at the day's high of 53,486 in intra-day trade.
Hero MotoCorp, Tata Motors, Bajaj Auto, TVS Motor Company and Ashok Leyland from the index were up in the range of 2 per cent to 6 per cent. The non-index stocks, SML Isuzu and Force Motors rallied 9 per cent and 7 per cent, respectively.
In the past one week, the BSE Auto index has outperformed the market by surging 9 per cent, as compared to 3.8 per cent rise in the BSE Sensex. The auto index has recovered 25 per cent from its previous month low of 42,834.11 touched on April 7, 2025.
Among individual stocks from the index, Hero MotoCorp has rallied 6 per cent to ₹4,323.25 in intra-day trade as analysts expect recovery in rural demand to be positive for the company, given its robust network.
Looking ahead, the management of Hero MotoCorp said they remain optimistic about the near‐to‐mid‐term outlook as key macroeconomic indicators, including revised income tax slabs, repo rate cuts, a strengthening rural economy, and a favourable monsoon forecast, are expected to support industry growth.
On the back of tailwinds such as favourable monsoon forecast, low inflation and robust marriage season, Hero MotoCorp expects two-wheeler industry to grow at 6-7 per cent in FY26. However, the company expects to outperform industry growth, supported by recovery in rural demand aiding in market share gains in the entry-level segment (Q4FY25 market share at 65 per cent), positive response to new model launches (two new ones in July 2025). Channel inventory stands at normalized levels of 4-5 weeks with the company anticipating further increase before the festival period.
Analysts at Elara Capital reiterated 'Accumulate' rating on Hero MotoCorp with a target price of ₹4,558 based on 16x June 2027E P/E and ~₹173 is ascribed to the Ather stake, led by appreciation in Ather valuation and roll forward to June 2027E.
Meanwhile, Tata Motors said tariffs and related geo-political actions are making the operating environment uncertain and challenging. The global premium luxury segment and Indian domestic markets are expected to weather this relatively better. With most macroeconomic indicators on track, improved fleet utilization and stable sentiment index, the company anticipates sustained growth despite global headwinds for commercial vehicles (CV) segment.
On passenger vehicles (PV) segment, Tata Motors said overall demand growth will be shaped by macroeconomic factors such as consumption growth, inflation, infrastructure spending and global geopolitics. However, industry momentum is expected to be driven by continued innovation in line with evolving customer preferences. SUVs, CNG, and EVs will remain key growth drivers, fueling the industry's expansion.
Share price of Tata Motors was up 4 per cent at ₹727 on the BSE in intra-day trade today. The stock has bounced back 33 per cent from its previous month low of ₹542.55 on April 7, 2025.
Last week, India and the United Kingdom (UK) signed a Free Trade Agreement (FTA). According to media reports, India will cut its automotive tariffs to 10 per cent from its current level of more than 100 per cent.
Most automotive manufacturing plants in the UK are of premium and luxury brands, such as Bentley, BMW, Rolls-Royce, and Aston Martin, said analysts at BNP Paribas India. While among them, Jaguar Land Rover (JLR) could be a key beneficiary, the brokerage firm notes that one of its key models, Defender, is not manufactured in the UK. Also, JLR already uses its India based assembly plant for several models to enjoy the lower duty.
Kunal Vora, Head of India Equity Research at BNP Paribas India said trade deal optimism turns risk-on sentiments for emerging markets. The foreign institutional investors (FIIs) turned positive on most of the emerging markets as news flow on trade and tariffs improved. Markets have reacted positively to the tariff pause, the US-UK trade deal and rollback of recent tariffs between US-China.