Tractor, PV sales to grow in February while 2Ws, CVs may struggle, says Nuvama Institutional Equities

The Nifty Auto index has tanked 18 percent in the last six months.

India’s automobile sector is expected to deliver a mixed performance in February 2025, with strong growth in tractors and passenger vehicles (PVs) offset by weakness in two-wheelers (2Ws) and commercial vehicles (CVs), according to Nuvama Institutional Equities.

Tractor sales are projected to see double-digit growth of around 10 percent year-on-year, driven by positive farmer sentiment, better Rabi sowing, and a favourable base effect. Mahindra & Mahindra (MM) is expected to outperform, with an 11 percent rise in volumes to 24,000 units, while Escorts (including Kubota) may see 5 percent growth to 8,100 units, lagging due to lower exposure in western and southern markets.

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The PV segment is set to maintain its momentum, growing at around 5 percent YoY, led by strong demand in northern and western India. MM-Auto is likely to see a 14 percent rise in volumes to 83,000 units, while Maruti Suzuki (MSIL) may post a 4 percent increase to 205,000 units. Hyundai is forecast to grow 2 percent to 62,000 units, but Tata Motors' PV sales may decline 2 percent to 50,200 units.

Meanwhile, CV sales are expected to remain flat, as improved freight availability—reflected in higher E-way bill generation—is offset by selective financing and stable fleet utilization levels. Among key players, Eicher Motors (EIM-VECV) may see an 8 percent increase to 8,050 units, Ashok Leyland (AL) could rise 3 percent to 18,000 units, but Tata Motors' CV sales may slip 1 percent to 34,600 units.

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The 2W segment is expected to contract by 2 percent YoY, affected by a high base and financing challenges. However, exports to Latin America and Africa are expected to grow in double digits. Among key brands, Eicher Motors' Royal Enfield (EIM-RE) is set to surge 13 percent to 86,000 units, TVS Motor (TVSL) may grow 6 percent to 390,000 units, and Bajaj Auto (BJAUT) could post a 4 percent increase to 360,000 units. In contrast, Hero MotoCorp (HMCL) is likely to see a 3 percent decline to 455,000 units.

Analysts remain constructive on the tractor and two-wheeler segments, forecasting high single-digit growth in these categories over FY25–27, outpacing PVs and CVs. Top stock picks include TVS Motor, Mahindra & Mahindra, Eicher Motors (RE), Samvardhana Motherson (SAMIL), and Uno Minda.

The Nifty Auto index closed at 21,335, lower by 1.5 percent from the last close. Maruti Suzuki, M&M, Tata Motors, Bajaj Auto, and Hyundai Motor India were the top losers on the index. The Nifty Auto index has tanked 18 percent in the last six months.

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