Auto Stocks Surge on Strong Q4 Results and Positive Outlook

Auto Stocks Surge on Strong Q4 Results and Positive Outlook

The Indian auto sector witnessed a surge on Thursday, defying the overall market weakness. The S&P BSE Auto index hit a new high of 52,236 during intraday trade, driven by strong quarterly results and positive guidance from leading players like TVS Motor Company and Hero MotoCorp.

The positive sentiment was further fueled by healthy retail sales figures for April 2024, released by the Federation of Automobile Dealers Associations (FADA). The data showed a 27% year-on-year increase in auto sales, with two-wheeler sales jumping 33%, three-wheeler sales growing 9%, and passenger vehicle and commercial vehicle sales rising 16% and 2% respectively.

Hero MotoCorp and TVS Motor Lead the Rally

Hero MotoCorp and TVS Motor Company, both of which reported strong Q4 results and optimistic guidance for FY25, were the star performers of the day. Their stocks surged by 6% each on the BSE. Hero MotoCorp's management expects double-digit revenue growth in FY25 with blended margins in the range of 14-16%. TVS Motor, on the other hand, plans to launch multiple new models, including variants of its iQube electric scooter and a much-awaited 3W EV.

Analysts Remain Bullish on the Sector

Analysts at ICICI Securities and Motilal Oswal Financial Services remain bullish on the auto sector, citing factors such as stable commodity prices, expectations of normal monsoons, and increased government spending. They expect Hero MotoCorp and TVS Motor to deliver strong volume growth and margin expansion in the coming years.

Overall, the Indian auto sector is poised for continued growth, driven by strong demand, new product launches, and a supportive macroeconomic environment.