2-wheelers and tractors are poised for significant growth between FY24-FY26: Report – Times of India

NEW DELHI: The auto sector is projected to experience 8 per cent year-on-year (YoY) growth in revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the second quarter of FY25, according to the Nuvama report.
Companies specialising in 2Ws and tractors are poised for significant growth, with volumes expected to increase in high single digits over the fiscal years 2024 to 2026.
This contrasts with the low single-digit growth anticipated for passenger vehicles (PVs) and commercial vehicles (CVs). Top picks identified in the report include Mahindra & Mahindra (MM), Escorts, TVS Motor Company (TVSL), and Uno Minda, all of which have strong exposure to the 2W and tractor markets.
Domestic two-wheeler volumes are estimated to grow by approximately 15 per cent YoY in Q2FY25, driven by improved rural demand, continued urban interest, and accessible financing options.
Notable revenue growth figures are projected for major players, including Bajaj Auto (BJAUT) at 25 per cent, TVS Motor at 16 per cent, EIM-RE at 9 per cent, and Hero MotoCorp (HMCL) at 7 per cent.
In the tractor segment, domestic volumes are expected to rise by around 2 per cent YoY, buoyed by positive rural sentiment following a surplus monsoon.
Revenue growth estimates stand at 19 per cent for Escorts and 6 per cent for MM’s farm division, with Escorts benefiting from its merger with Kubota Agri Machinery and the establishment of Escorts Kubota India.
In stark contrast, the domestic passenger vehicle industry is projected to see a slight decline, with volumes expected to fall by about 1 per cent YoY. MM’s auto division is an exception, anticipated to achieve robust revenue growth of 12 per cent, while Tata Motors’ PV division and Maruti Suzuki India Limited (MSIL) are expected to report declines of 3 per cent and 1 per cent, respectively.
The commercial vehicle segment faces a more challenging landscape, with volumes expected to dip by around 11 per cent YoY due to a high base effect in cargo vehicles.
Nuvama forecasts a revenue decline of 16 per cent for Tata Motors’ India CV division and 12 per cent for Ashok Leyland (AL).
For Tata Motors as a whole, the report predicts consolidated revenue to remain flat YoY due to subdued volume performance across various divisions, although an expansion in EBITDA margin by 120 basis points is expected due to improvements in Jaguar Land Rover, India CV, and India PV divisions.
In the ancillaries sector, the report suggests a positive revenue outlook across the board. Companies such as SAMIL, Uno Minda, and SONA are expected to outperform with YoY growth rates of 16 per cent, 13 per cent, and 12 per cent, respectively.
The EBITDA performance for Q2FY25, indicates a mixed bag due to higher YoY commodity costs, despite favorable currency movements for many companies.
The depreciation of the Indian Rupee against the British Pound and Euro is anticipated to provide translation gains for Tata Motors-JLR, SAMIL, APTY, and BIL. Conversely, the appreciation of the Japanese Yen against the Rupee poses challenges for MSIL and HMCL.