The two-wheeler industry is showing signs of improvement after three consecutive years of volume decline. The retail volumes in the recent months imply annualized volumes of 15-16 mn, which if maintained, would result in 12-19% wholesale volume growth in FY23, according to 5Paisa.
The two-wheeler industry saw a sharp decline in the demand around the Covid Wave and in the subsequent months. The volumes have fallen by 36% from the FY19 peak.
A sharp rise in commodity prices due to the Russia Ukraine conflict had created a scare for 2 wheeler industry margins as they have high exposure to aluminium and precious metals. However, they said that though there would be some margin pressure, it might not be alarming.
As the economy normalises, they expect the income growth to outpace the vehicle price increase and drive up affordability. They expect the industry to bounce back from the current lows and forecast a 15% CAGR over FY 22-24.
Here are a few two-wheeler stocks recommended by 5Paisa for a duration of one year:
Eicher Motors Limited
- Rating: Buy
- Current Market Price: ₹ 2631.90
- Target Price: ₹ 3,120
- Upside: 18.54 %
Eicher Motors reported a 25% increase in sales YoY in march 2022
Hero Motors Limited
- Rating: Buy
- Current Market Price: ₹2499.00
- Target Price: ₹ 3,200
- Upside: 28.05%
Hero Motors reported a 21% decline in sales YoY in march 2022
TVS Motors Limited
- Rating: Buy
- Current Market Price: ₹ 658
- Target Price: ₹ 725
- Upside: 10.18%
TVS Motors reported a 4.55% decline in sales YoY in march 2022
Bajaj Auto Limited
- Rating: Add
- Current Market Price: ₹ 3734.90
- Target Price: ₹ 4,000
- Upside: 7.09%
Bajaj Auto reported a 22% decline in sales YoY in march 2022
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The views and investment tips expressed by 5paisa on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
