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Auto stocks extend fall after RBI hikes repo rate 25 bps to 5.50%; TVS Motor, Bajaj Auto, Hero MotoCorp among top losers
TVS Motor fell nearly 3 per cent to Rs 3,870.80 on Wednesday, after the RBI's first hike in nearly four years. Analysts see festive demand picking up in October and November, but higher financing costs, a weak monsoon and rising input costs could temper it.
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The numbers
Figures from Business Today,
| Hero MotoCorp intraday decline: | more than 2.25 per cent |
|---|---|
| Bajaj Auto fall in last one month: | 17 per cent |
| Monsoon shortfall versus normal: | 12.6 per cent below |
| Crude oil price level: | near $100 |
Why it matters to operators and investors
Higher borrowing costs, a monsoon 12.6% below normal and crude near $100 pressure auto-retail valuations, so any dealer or financing deals should be priced on a cautious festive demand case.
What to watch next
- October and November monthly dispatch and retail registration numbers from TVS Motor, Bajaj Auto and Hero MotoCorp
- Lenders' announced vehicle loan rate increases and any changes in festive financing schemes
- Whether the monsoon deficit of 12.6% narrows or widens in the remaining rainfall data
- Crude oil moving away from, or staying near, $100
- The next RBI policy statement and its guidance after the move to 5.50%
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Banks and NBFCs are likely to pass the 25 bps repo hike through to vehicle loan rates over the coming weeks, with a lag for existing borrowers.
- TVS Motor, Bajaj Auto and Hero MotoCorp are likely to lean on festive financing schemes, low-EMI offers and dealer incentives to protect October and November volumes rather than cut list prices.
- Rural and entry-level buyers are likely to postpone or downsize purchases if the monsoon shortfall of 12.6% keeps hurting farm incomes.
- Analysts may trim near-term volume and margin estimates for two-wheeler makers if crude stays near $100 and financing costs rise.
- The RBI is likely to keep its stance data-dependent and may signal further tightening if inflation pressure from crude persists.
The source
Published
First seen