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Two-wheeler market rising: Good time to invest?

Snapshot: Two wheeler manufacturers are posting in healthy numbers and their investments in the country seem quite optimistic. This surely is good news for shareholders in two wheeler companies and also the ones who are planing to get some. Here's a hint why buying or retaining stocks definitely is a fruitful decision.

It will be smooth sailing ahead for those who own shares in two wheeler companies as sales are on a rise and cost component prices are dropping lower. Increasing two wheeler demands across urban and rural markets have pushed manufacturers to increase their production capacity. Also falling component costs like steel, rubber and plastics means manufacturing costs fall as well allowing manufacturers to keep sales prices fairly competitive. Brands like Hero Motocorp, TVS Motor, Bajaj Auto, Eicher Motors (Royal Enfield) and Mahindra Two Wheelers have become healthy and prominent in the global markets too.

Automobile sales have been slow for the past couple of years but they have picked up presently and are expected to keep rising. Looks like a good time to hold on to those shares, or just pick a few up if you haven’t because the two wheeler industry will soon pick up a lot of pace. Domestic manufacturers are posting in positive sales figures regularly. And most of them have international operations too which means exports are showing flying colours as well. Another recent surprise is the growing sales in the scooter segment that is expected to swell even more. A lot of bright signs can be noticed in the Indian two wheeler industry.

International manufacturers have shown their eager interest to set up base in India and with massive manufacturing units being set-up they are bound to have high hopes from Indian market. Two wheeler companies alone have made investments of nearly Rs 8500 crore in the past year for increasing their production capacities. All auto manufacturers, mass or niche, invest based on careful and long term projections thus indicating their optimism from the Indian market. Expanding dealership network has also been a sign of flourishing sales with manufacturers venturing in Tier 3 and 4 cities extensively.

Hero Motocorp

BSE: 500182        NSE: HEROMOTOCO

Market Cap: Rs 59,121.25Cr        

Hero has always stood as the sales juggernaut in the Indian two wheeler industry be it metropolitan, semi-urban or rural sales. The company’s brand portfolio contains scooters, motorcycles and advanced mobility concepts. For May 2016 the company posted a 15% growth with 612739 two wheeler sales. Growth has been steady with 13.6% in February 2016 and 14% in March.

TVS Motor

BSE: 532343        NSE: TVSMOTOR

Market Cap: Rs 14,126.72Cr

TVS Motor announced a revenue growth of 15% pushing from Rs 2443crore year end March 2015 to Rs 2815crore year end March 2016. Strong products like Jupiter and Victor will now be joined by 200cc RTR 4V stepping up the game in semi-urban sector. The company’s recent tie up with BMW Motorrad too will surely prove a fruitful alliance.

Bajaj Auto

BSE: 532977        NSE: BAJAJ-AUTO

Market Cap: Rs 72,486.44Cr

Bajaj Auto was able to shift 291898 motorcycles registering a 2% growth till April 2016. The company was also able to stir up the commuter segment with its newest offering, Bajaj V15. This 150cc commuter has brought about a shift in customers from usual 100/110/125cc engine motorcycles to a 150cc everyday commuter. The new Avenger too was able to garner a lot of interest in the cruiser segment. Also Bajaj Auto’s global presence with Pulsars and KTMs are promising indicators for growth.

Eicher Motors (Royal Enfield)

BSE: 505200        NSE: EICHERMOT

Market Cap: Rs 54,275.58Cr

Royal Enfield announced a healthy 42% growth figure with 48197 motorcycles as domestic wholesales and exports combined. Separately domestic growth flourished by 42% and exports bumped by 45%. The recent launch of the completely new Himalayan was able to further strengthen Royal Enfield’s product portfolio.

M&M (Mahindra Two Wheelers)

BSE: 500520        NSE: M&M

Market Cap: Rs 83,897.16Cr

Mahindra might not be able to post healthy sales numbers, but their products are at par with others in the industry and they have a diverse product portfolio. Gusto has been a great product for sales and has been appreciated by a wide audience. M&Ms strong passenger car and commercial vehicle presence means they have enough technical know-how to keep making newer products in the two wheeler space as well.

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