The auto sales have seen an improvement with y-o-y growth of 11.2% in April v/s 0.8% growth in March, driven by government’s fiscal stimulus package, higher disposbale income due to sixth pay commission, and rural demand.
In commercial vehicles (down 13% y-o-y), Tata Motors sales increased nominally (1% y-o-y) while Ashok Leyland sales declined 69% y-o-y.
In passenger vehicles (sales up 9% y-o-y), Maruti and Mahindra & Mahindra both reported 15% y-o-y growth in sales on upbeat demand for A-star and Xylo.
In two-wheelers (sales up 9% y-o-y), Hero Honda registered 30% y-o-y growth, TVS 3% up y-o-y, while Bajaj volumes slipped 24% y-o-y.
The market has already discounted the improvement in volumes, which is reflected in the sharp rise in auto stocks since the last two months.
In the absence of any further triggers, we maintain our UNDERWEIGHT stance on the sector.
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