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Auto Stocks in India Saw Significant Gains

While overall sales were down, the BSE Auto Index ended March 31, 2021 107 percent higher than April 1, 2020.

It is the beginning of a new fiscal year in India. For most players, it has not been a particularly noteworthy fiscal year in terms of automotive sales. None of the segments, from passenger vehicles to commercial operators, are completely out of the woods. However, in terms of stock market performance, auto stocks have had a relatively smooth ride this fiscal year. The BSE Auto Index closed at 22,252.21 on March 31, 2021, up more than 107 percent from April 1, 2020.

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  • Tata Motors stock value increased over 300 percent in FY2021
  • Maruti Suzuki stock fell 8 percent in the last quarter, but gained nearly 60 percent in the fiscal
  • Eicher (Royal Enfield), Bajaj, Hero and TVS stock also post significant gains

Passenger vehicles and two-wheeler stocks were among the top gainers in the fourth quarter of FY2021, with Tata Motors up nearly 62 percent and Mahindra and Mahindra up 12.44 percent. Maruti Suzuki, on the other hand, has underperformed in the same time period, falling 8%. In the last quarter of FY2021, TVS Motor increased its market share by 18%, while Bajaj Auto and Eicher Motors increased their market share by 7%.

Tata Motors is a company that produces automobiles

Tata Motors is a company that produces automobiles
Tata Motors is a company that produces automobiles

Tata Motors is one of Dalal Street’s shining stars in terms of individual stock performance, with gains of more than 300 percent this fiscal year. The stock market’s performance mirrors the retail performance of the bellwether auto stock. Sales of passenger vehicles have soared to an eight-year high, marking a remarkable turnaround for the company.

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Mahindra & Mahindra (Mahindra & Mahindra) is a company

Mahindra & Mahindra (Mahindra & Mahindra) is a company
Mahindra & Mahindra (Mahindra & Mahindra) is a company

Mahindra & Mahindra gained nearly 180 percent this fiscal year, closing at Rs 795.25 per share on March 31. It’s down 16.48% from its 52-week high of Rs 952.05 per share. The new Thar is gaining market traction and has been named our Car of the Year for 2021. Overall, Mahindra & Mahindra is in third place, with 1,38,887 units sold in the first 11 months of FY2021 and a 15.38 percent market share, down from 19 percent a year ago. This fiscal year also marked the end of Dr Pawan Goenka’s 27-year reign as CEO of M&M.

Maruti Suzuki India is a company based in India

Maruti Suzuki India is a company based in India
Maruti Suzuki India is a company based in India

Maruti Suzuki’s market share has not been impacted by the stock market’s underperformance in the fourth quarter of FY2021. With 2,02,927 units sold between April 2020 and February 2021 and a 22.47 percent market share, the market leader in the passenger vehicle segment has also maintained its lead in the utility vehicle segment. Despite exiting the diesel engine market in the previous year, the company is only 9.16 percent behind its year-ago sales of 2,23,394 units, which is commendable. Maruti Suzuki’s stock has returned nearly 60% in the last year and is only 18.34% away from its 52-week high of Rs 8,329/share.

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Eicher Motors is a company that manufactures automobiles

Eicher Motors is a company that manufactures automobiles
Eicher Motors is a company that manufactures automobiles

Royal Enfield is undoubtedly making waves in the two-wheeler world, with the Meteor 350 winning our Bike of the Year award for 2021. While the Meteor is one of the top ten selling bikes in India, the bike maker saw a 6 percent increase in February sales year over year, and the parent company, Eicher Motors, is trading at a premium on D-street. It has gained nearly 100% this fiscal year and is only 14.26% away from its 52-week high of Rs 3,037/share. It has been one of the best-performing stocks in the market, not just in the auto sector.

TVS Motor Company is a company that manufactures automobiles

TVS Motor Company is a company that manufactures automobiles
TVS Motor Company is a company that manufactures automobiles

TVS Motor, the other big buzzer among the two-wheelers, has seen over 130 percent growth in FY2021, backed by strong fundamentals and nearly 7% compounded annual net profit growth in the last three years. In March 2021, the country’s two-wheeler exports totaled 1,00,000 units. This fiscal year also saw TVS Motor acquire Norton, a 123-year-old British motorcycle manufacturer. The construction of Norton’s new factory in Solihull is nearing completion, and it is expected to open in the second quarter of this year.

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Hero MotoCorp is a motorcycle manufacturer

Hero MotoCorp is a motorcycle manufacturer
Hero MotoCorp is a motorcycle manufacturer

The stock market cheered as Hero MotoCorp maintained its lead as the market leader in motorcycles and scooters. In what has been a busy fiscal year for the bike maker, the stock is up nearly 83 percent. In the last twelve months, it has not only reached the 100 million cumulative production milestone, but has also restructured its leadership team and finalised its partnership with Harley-Davidson. The stock is currently trading at Rs 3,629.05/share, which is 19.71 percent below its 52-week high.

Bajaj Auto is a manufacturer of automobiles

Bajaj Auto is a manufacturer of automobiles
Bajaj Auto is a manufacturer of automobiles

In FY2021, Bajaj Auto also saw a stock market gain of more than 80%. This mid-cap momentum stock is about 15% off its 52-week high of Rs 4,361.40/share, while the Bajaj Pulsar remains one of India’s top five selling motorcycles. Despite the fact that Bajaj Auto has been affected by the semiconductor shortage, the company has sold 19,79,936 two-wheelers in the domestic market (-18%) and exported 17,56,656 units (-6%) in the first 11 months of this Covid-affected fiscal.

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Overall, the auto stocks on Dalal Street have had a great year. A lot of the price movement has been driven by improving fundamental triggers. All eyes are on the new fiscal year, FY2022, to see how it goes. With the recent increase in the number of people affected by COVID-19, as well as some restrictions in select auto hubs and ongoing supply chain bottlenecks, it’s best to wait and see for the time being.

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