According to Sunny Agrawal, Head of Fundamental Research, Retail Desk at SBI Securities, weak September auto sales should not be interpreted as a sign of slowing consumer demand. As reported by CNBC TV18, Agrawal expects demand to improve in October and November as the festive season gathers pace. The September sales slowdown was primarily driven by a high base effect from last year and the shift in the festive season calendar, rather than any structural weakness in demand. With Dussehra and Diwali following in October and November, the festival season is well and truly around the corner, a period that has historically coincided with a seasonal pickup in retail participation, consumption-linked stock activity, and festive buying across sectors from jewellery to autos to real estate.
Leading automakers are ramping up production and building dealer inventory to meet strong customer demand as India enters the peak festive buying season. Maruti Suzuki India has 220,000 pending bookings ahead of the festive season, while Hyundai Motor India has built four-five weeks of inventory across its dealer network. According to Maruti Suzuki's Senior Executive Officer Partho Banerjee, the company had 12 days of stock at the beginning of the financial year, but current bookings pendency translates to 16 days of stock before the festive season. The company has commissioned two new production lines, adding 500,000 capacity in total, with production being ramped up gradually and expected to fully stabilise by year-end.
Among two-wheeler manufacturers, TVS Motor is Agrawal's preferred stock, expecting the company to report 18-19% sales growth. According to the SBI Securities analysis, he also sees value emerging in Bajaj Auto, noting that while domestic sales have softened, exports continue to remain strong. While tractors may remain under pressure due to weak monsoon conditions and high base effects, Agrawal remains constructive on the broader automobile sector. The upcoming Diwali Laxmi Pujan on Sunday, November 8, when the NSE and BSE will hold a special Muhurat Trading session marking the start of the new Samvat year, is expected to provide additional momentum to the festive season demand.
Commenting on the Cabinet-approved PM Developing Harmony and Accelerating Renewable Energy Access (DHARA) scheme for renewable power transmission, Agrawal prefers to play the opportunity through transformer manufacturers and cable & wire companies. As reported by CNBC TV18, despite increased competition after UltraTech entered the wires and cables segment, he believes established players will continue to benefit as demand shifts from the unorganised market. Polycab remains his preferred pick in this segment, with UltraTech currently competing in only about 30% of Polycab's product portfolio.
Regarding technology listings, Agrawal noted that while the opportunity size is humongous, valuations are not comfortable at the current juncture. As reported by CNBC TV18, he would rather gain exposure to data centre and semiconductor themes through power ancillary companies instead. The analyst expects further traction in demand environment, especially in two-wheeler, passenger vehicle and commercial vehicle space, with opportunities also emerging in power transmission equipment companies following the PM DHARA scheme.
