Emkay Global remains optimistic about the two-wheeler sector despite the steep correction of 24% from its recent peak, driven by weak sentiment and macro challenges. The brokerage believes the decline is overdone, particularly for Hero MotoCorp (HMCL) and Bajaj Auto (BJAUT), which have seen the steepest declines of 33% and 30%, respectively.
Key Highlights:
- Unwarranted Correction:
- A sector-wide decline of 24%, with sharper declines in HMCL and BJAUT, is viewed as excessive given the sector’s improving fundamentals.
- Export Recovery:
- The outlook on exports is improving significantly.
- In Nigeria, one of the key export markets, macroeconomic challenges are now largely resolved, paving the way for recovery.
- Latin America is witnessing sustained growth, further bolstering the export prospects for Indian two-wheeler manufacturers.
- Sector View:
- Emkay anticipates a sharp recovery in two-wheeler exports, supported by stabilization in global markets and easing macro headwinds.
Conclusion:
The brokerage remains constructive on the two-wheeler sector, highlighting the export-led recovery and dismissing the steep correction as an overreaction. Emkay believes the sector is poised for a rebound driven by improving export dynamics and easing global pressures.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Please consult a qualified financial advisor before making investment decisions.
