Hero Moto, TVS Motor shares see sharpest fall in 2 years on Bajaj Auto's Q2 miss

KEI Industries shares fall 14% in 2 days as margins contract in September quarter

Mirroring the downward trajectory of Bajaj Auto, shares of Hero MotoCorp, TVS Motor company fell as much as 5 percent in the morning, their biggest single-day drop in 2 years. Meanwhile, Royal Enfield maker Eicher Motors also traded lower, albeit marginally.

The plunge comes after Bajaj Auto trimmed the growth outlook for two-wheeler sales in India to a modest 5 percent, at the lower end of its earlier estimate of 5-8 percent. This cautious forecast comes from a slower-than-expected festival season fueled by Shradha Paksha and weak demand for entry-level motorcycles.

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Bajaj Auto's net profit rose 9 percent to Rs 2,005 crore for the second quarter of FY2024-25, falling well below brokerage estimates polled by Moneycontrol. Following the results and management conference call Citi, Macquarie, and HDFC Securities issued negative calls on the counter.

Also read: Bajaj Auto tanks 10% on weak Q2, guidance cut keeps brokerages cautious

For instance, HDFC said "We expect higher advertisement spending for promoting new launches, and slower recovery in key export markets to weigh on margins in the near term. Rural recovery remains a key monitorable in the second half of FY25.

Citi, with a 'sell' call, believes that the company's Q2 performance was marginally below estimates due to a slight miss in average selling prices (ASPs) and gross margins. Citi was also slightly surprised by the outlook on festive demand, though Vahan data suggests that registrations are up almost 12 percent year-on-year.

Macquarie has maintained its neutral rating on Bajaj Auto, with a target price of Rs 11,200 per share. While the company's Q2 performance was in line with expectations, gross margins were underwhelming due to a higher proportion of new products. Additionally, Macquarie pointed out a muted festive outlook that fell short of its expectations.

At about 11 am, shares of Hero MotoCorp were trading at Rs 5,178, down 4 percent from the last close on the NSE. Meanwhile, TVS Motor Co shares slipped over 4 percent at Rs 2,656. Eicher Motors shares were down 2 percent at Rs 4,600. Bajaj Auto, the top loser on the Nifty, nosedived 11 percent at Rs 10,370.

The Nifty Auto index was the worst performer, slipping 3 percent at 25,148.

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