A good monsoon boosts rural income by improving crop yields, especially for Kharif crops like rice, pulses, and cotton. This rise in agricultural activity leads to greater land under cultivation, increasing farmers’ earnings and confidence. As rural cash flows strengthen, so does demand for vehicles especially two-wheelers and tractors, which are key to rural mobility and farming efficiency.
Tractors in High Demand During Sowing Season
Higher Kharif sowing means more land must be ploughed and prepared, driving the need for mechanised solutions like tractors. Farmers turn to tractors for faster and cost-effective land preparation, particularly in areas with labour shortages.
With government subsidies, easier access to loans, and a favourable crop outlook, farmers are more inclined to invest in tractors, making the monsoon season a crucial sales period for auto companies targeting rural markets.
Effect on auto stocks’ share prices
Historical data reveals a clear correlation between above-normal monsoons and strong stock market performance for key auto companies, particularly those with significant rural exposure.
In 2020, which witnessed surplus rainfall, Mahindra & Mahindra rose 66%, Maruti Suzuki 28%, Tata Motors an impressive 180%, Hero MotoCorp 43%, TVS Motor 70%, and Bajaj Auto 34%.
A similar pattern emerged in 2024, another year of above-normal monsoon, with M&M again climbing 66%, Maruti up 52%, Tata Motors gaining 135%, Hero MotoCorp jumping 101%, TVS Motor increasing 99%, and Bajaj Auto surging 135%. These rallies reflect the boost in rural income and sentiment, which typically drive demand for two-wheelers, tractors, and entry-level passenger vehicles.
In contrast, 2022, a year with a normal monsoon, saw much more muted stock performance. M&M inched up just 1%, Maruti 10%, Tata Motors 43%, and TVS Motor 6%, while Hero MotoCorp declined 21% and Bajaj Auto was nearly flat at -0.5%.
The disparity across these years highlights how heavily rural demand, influenced by monsoon quality, impacts auto sales and, in turn, stock valuations. Above-normal rainfall tends to lift kharif sowing and agricultural income, translating into stronger vehicle demand and bullish sentiment around auto stocks.
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Top Tractor Manufacturers in india
Mahindra & Mahindra continues to dominate India’s tractor market with a massive 46.33% share, followed by TAFE Group (17.40%), Sonalika (11.98%), and Escorts Kubota (9.80%).
As rural activity picks up, demand is set to rise for top-performing models like M&M’s rugged Swaraj and Oja, Escorts’ powerful Classic and Powermaxx, and Sonalika’s reliable Power Plus. With the monsoon season boosting agricultural activity, these tractors are gearing up for a strong sales run.
Effect on Profits & Sales
Revenue and profit growth for key passenger and commercial vehicle makers show a clear recovery trend, though at varying paces. M&M’s revenue rose 48.4% in 2020, 34.5% in 2022, and slowed to 14% in 2024. Maruti saw consistent growth at 26%, 34.3%, and 20% across the same years. Tata Motors improved from a -14% drop in 2020 to 11% in 2022 and 27% in 2024. Ashok Leyland recovered from -34% in 2020 to 35% in 2022 and 10% in 2024.
Profit trends were more volatile. M&M’s profit jumped 263% in 2022 before settling at 10% in 2024. Maruti swung from a 98% drop in 2020 to a 64% rise in 2024. Tata Motors, after losses in 2020 and 2022, posted a massive 1201% gain in 2024.
Ashok Leyland followed a similar path, rebounding from -84% in 2020 to 100% profit growth in 2024. The data highlights a strong recovery cycle, especially after COVID-led disruptions.
2025 Monsoon: What Will It Look Like?
The monsoon season plays a pivotal role in shaping rural demand and, by extension, the fortunes of India’s tractor and auto industry. A good monsoon not only lifts agricultural output but also boosts rural incomes, directly translating into higher tractor sales and improved sentiment for auto stocks.
Historical trends show a strong link between above-normal rainfall and outperformance in auto companies with deep rural exposure like Mahindra & Mahindra, Hero MotoCorp, and Tata Motors.
With leading players such as M&M, Sonalika, and Escorts gearing up with in-demand models, the industry stands poised for robust growth if the 2025 monsoon turns out favourable. All eyes now remain on this year’s rainfall forecast, which could once again steer the direction of rural spending, tractor sales, and auto stock performance.
Written By Fazal Ul Vahab C H
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