Two-Wheeler Stocks: A Segment in High Gear
The two-wheeler segment has been a high-performing space in the Indian stock market, with stocks delivering excellent returns and seeing the highest growth of around 11% in the past year. The expectations ahead are that the demand recovery coupled with supportive government policies will continue to provide the necessary fuel to keep the growth momentum going.
The latter half of the year showed a sharp turnaround, aided by GST 2.0 rate rationalisation, which reduced taxes on mass-market vehicles, reviving demand across passenger and commercial mobility categories. While other segments were somewhat sluggish in the first half of the year, the 2W segment continued to perform well.
Valuation Analysis: Which Stock Is The Cheapest?
On the valuation front, it would seem like Hero MotoCorp is the cheapest, while TVS Motor is the most expensive. Bajaj Auto is trading around the Industry PE average and has shown a strong rebound in price action compared to the first half (-6% to 14%), while all the others have built on good gains made in the first half already. From that angle, Bajaj Auto should be worth a look as the market seems to have found something positive about it.
Checking out a relative performance graph, we can note that the four stocks are plotted against the Cnx Auto, not exactly the perfect match because that index also includes PV and CV manufacturers. But you get the same answers if you plot the four stocks against one another too.
Relative Performance: Eicher Motors Leads The Pack
The Auto index has hit all-time new highs as we all know and within that, the best relative performer is Eicher Motors with TVS Motor a close second. Hero MotoCorp is third and Bajaj Auto is a lowly fourth. Here is another chart of individual stocks for the last couple of years.
Barring Bajaj Auto, the other three have seen brisk upward price actions. Hero MotoCorp has seen the max movements, falling around 45% into the March 2025 low and recovering 90% since then. Bajaj Auto, on the other hand, has also fallen 40% into March 2025 low but has so far managed to recover just 28% from that low. Evidently, bulls are slow to react when it comes to Bajaj Auto.
Chart Analysis: Impulse vs Corrective Moves
The moves on the charts, barring Bajaj Auto, look to be Impulses while that on Bajaj Auto smacks of one being a corrective. This is a discouraging discovery for those that are building bullish cases for Bajaj Auto.
While the Q2 results for Bajaj Auto did show some good turnaround, the others were no slouch either. The market seems happy to give the highest valuation for TVS Motor, perhaps since they have topped in the eV category as well, while also making strides in the 3W segment. But at 68x PE, it does seem difficult to justify new buys in TVS Motor at the moment. Eicher Motors’ valuations (40x) appear more attractive and the price action too is quite robust. So between the two, I would rather choose Eicher Motors if I have to.
Short-Term Outlook: Hero MotoCorp and Bajaj Auto
In the very short term, Hero MotoCorp has already signalled a short-term high, but Bajaj Auto seems to be still in a mood to continue its rally. Perhaps the possibility that it has room to play catch up with the other three may be inviting some punting action into the stock. Such a pullback may have a possible target zone till around 10,000 levels or so, leaving some 5% to the upside (or a bit more if market trends are supportive) and, therefore, it seems only like a tradable bet among the two-wheeler stocks.
Some profit taking appears to be emerging in TVS Motor and Hero MotoCorp but no evidence of that seen as yet in Eicher Motors, which continues to power its way higher. Thus, Eicher Motors seems to be the best bet yet among the lot.
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