Auto stocks on the path to recovery

The pandemic has hit different industries in different ways, while many witnessed a pickup in demand as the economy opened up, Auto sector had for long grappled to show signs of recovery.

Semiconductor shortage, supply chain disruption, and minuscule demand on account of limited mobility were some of the woes snarling at the Auto sector. And to add to the woes, soaring inflation has been a spoiler as the cost of production soared while demand failed to pick up. However, recent developments look promising for the sector as Government cuts excise duty on petrol and diesel and duties on iron and steel.

The auto sales number for May 2022 are being released by auto players. Compared to May 2021, the sales for most players have grown exponentially given the low base of the Pandemic hit May 2021. Let us have a look at the recent development in the auto stocks and how they are faring at the bourses.

Hero Motocorp, the world’s largest manufacturer of motorcycles and scooters, sold 486,704 units in May 2022 which has grown by 1.66X compared to the same period last year due to lower base. However, sequentially it witnessed a growth of 16%, given April sales stood at 418,622 units. Cumulatively, the two months of FY23 have clocked sales of 844,873 units The shares of Hero MotoCorp have gained ~11% on the bourses in the last one month. At 9.40 am the stock was quoting at Rs 2672.90, down 3.07% or Rs 84.70.

Eicher Motors also released its monthly sales figure for May 2022. Royal Enfield sales came in at 63,643 which was up by 133% YoY and 2.5% sequentially. YTD sales for FY23 stood at 1,25,798 which grew by 56% as compared to April- May 2022 sales. At 9.45 am, the shares of Eicher motors were quoting at Rs 2751.70 down 0.71% or Rs 19.75 per share.

Atul Auto released its monthly sales figures towards the market close in yesterday’s session and the share touched its intraday high of Rs 186 on the back of the strong numbers. Sales for three-wheeler manufacturers grew exponentially by 17X at 1,794 compared to only 100 on April 21. Total sales for April and May combined stood at 3,387 up by 233.7%. In the morning session, the shares Atul Auto are trading at Rs 175.95, a loss of 2.55% over its previous close.

Maruti Suzuki released its production figures for May 2022 last evening. Production of passenger vehicles stood at 1,60,459 vis a vis 40,628 in May 2021. 4,400 Light commercial vehicles were produced in May 2022 compared to 296 in May 2021. The huge jump in production is on account of a low base as May 2021 was significantly affected by Covid. In the morning session, the shares of Maruti Suzuki are trading at Rs 7953.75 a gain of 0.2% over its previous close.

Ashok Leyland was yesterday’s biggest gainer in the auto sector after it announced its sales figure for May 2022. Total sales of trucks, bus and LCV ( export + domestic ) stood at 13,273 which has grown by 3.15X or 315% from May 21 sales of 3199. At the time of writing, shares of Ashok Leyland were trading at Rs 139.75, down by 0.18% 0.25 per share.