FY2023 opens on a bright note for auto stocks

The Indian stock market kicked off trade on a strong note on the first day of a new fiscal year. At 59,277, the Sensex closed April 1 with a robust gain of 708 points. Automotive stocks, though not among the prime movers and shakers, were among the key players of the day. As OEMs across vehicle segments revealed their March and FY2022 numbers, it is apparent that some of them have surmounted the challenge-laden year that was. 

Most automakers are tackling supply side challenges, especially the shortage of semiconductors and other key metals like nickel. The sharp increase in fuel prices over the last few days is not helping retail sentiment either.

However, for auto stocks and the sectoral index it was a positive start to the new fiscal. Mahindra & Mahindra, Tata Motors, Maruti Suzuki and Bajaj Auto were amongst the notable winners while Hero MotoCorp saw a huge setback on the bourse.

The BSE Auto Index ended the financial year 10 percent higher but the returns over the three-month period are in the negative zone, down three percent. This trend reflected in the individual stock action too --  most of the key OEMs delivered positive gains year-on-year while returns for just the last quarter or Q4FY2022 ended in the red.

Tata Motors
Tata Motors continues to shine both on the monthly sales charts as well as the stock market. In a fiscal that saw the company emerge as the No.3 carmaker in terms of sales, it also delivered close to 44 percent return for FY2022. While it clocked 67 percent growth in sales for FY2022 at 370,372 vehicles, its continued supremacy and almost three-fold growth in the EV segment stand out.

The company has drawn up aggressive plans to produce over 500,000 cars a year on the back of new launches, additional variants and facelifts later in the year.  It is also close to acquiring Ford’s Sanand plant going by the industry grapevine.

Maruti Suzuki
The auto bellwether continues its leadership in the passenger vehicle segment and even in the stock market it has clocked reasonable gains. While  FY2022 sales were flat at at 1,331,558 cars compared to FY2021 domestic sales of 1,293,840 cars, the stock clocked a strong 10 percent plus return in FY2022.

In intra-day trade, the market responded to the carmaker clocking highest ever exports of 238,376 units in FY2022. Suzuki Motor Corporation, the parent company of Maruti Suzuki signed an MoU with the Gujarat government at the Indo-Japan Economic Forum in New Delhi in mid-March to invest about Rs 10,440 crore to strengthen its global EV foray. CNG is the other big growth driver for the market leader. Maruti announced that sales of its CNG offerings have cumulatively crossed a million units in sales. The company has nine CNG vehicles in the personal and commercial segment which include the Alto, S-Presso, WagonR, Celerio, Dzire, Ertiga, Eeco, Super Carry and Tour-S.

Mahindra & Mahindra
After stellar returns in FY2021, it was a comparative muted FY2022 for the M&M stock. However, it ended the fiscal in the green and the market gave a thumbs up to the stock for maintaining a steady growth in UV sales.  March UV sales clocked  65 percent growth. This is also the fiscal when M&M was in transformation mode by way of new leadership, fresh talent, shedding unviable businesses and confining its focus to SUVs and electric.

TVS Motor
TVS Motor is amongst the big buzzers in the two-wheeler space. The stock clocked 10 percent plus returns in FY2022. Its vision of urban mobility has prompted TVS Motor to acquire two companies based in Switzerland, EGO Movement and Swiss E-Mobility Group (SEMG) in rapid succession. Chairman Venu Srinivasan makes way for Ralf Speth, the former CEO of Jaguar Land Rover, to take charge in the new financial year. The two-wheeler maker is also making steady progress in expanding its EV reach.

Bajaj Auto
It was a rather sombre and a flat FY2022 for Bajaj Auto at the stock exchanges. One of the doyens of India Inc and the former Chairman of Bajaj Auto, Rahul Bajaj passed away in February. The company meanwhile is firming up its electric capabilities and the stage has been set to create an electric two-wheeler hub at Akurdi, Pune. 

Hero MotoCorp
One of the biggest losers in trade on day-1 of FY2023, the two-wheeler major Hero MotoCorp ended FY2022 deep in the red too. The company ended last fiscal, down 24 percent over 12 months. Despite the clarification on the IT-search operations, sentiment was hit in the stock market. Both in terms of sales and profitability, FY2022 hasn’t been encouraging. Hero MotoCorp Chairman & CEO, Pawan Munjal introduced its new brand for electric mobility, Vida, powered by Hero. The first of its electric initiatives will be officially unveiled on July 1, 2022.  

Overall FY2022 has been a year of challenges for the auto industry beginning with the second wave of Covid-19 and going on to the semiconductor shortage and other supply side challenges as a result of the Ukraine-Russia conflict.

Electric and sustainable mobility will be the major driver going forward. The new financial year has begun on a positive note and the companies will be hoping that the momentum sustains.