2W stocks under pressure: Bajaj Auto, Hero MotoCorp, and 2 others drop up to 42% from recent highs | Stock Market News

Shares of two-wheeler majors have been under severe pressure in recent months, underperforming the market and sliding to levels not seen in a long time. This has raised investor concerns about a potential rebound in these stocks, as some are now trading at discounts of up to 42% from their peaks.

Bajaj Auto, one of the leading 2- and 3-wheeler manufacturers, saw its shares tumble 42% from a peak of ₹12,774 per share to a 13-month low of ₹7,301 during Wednesday’s trading session. The significant decline has also brought valuations back to historical averages, with the stock now trading at 21 times earnings, in line with its five-year average.

Similarly, Hero MotoCorp, the world’s largest two-wheeler manufacturer, is now trading 41.6% below its September peak of ₹6,246 per share, currently at ₹3,648, bringing its one-year forward P/E to 17.6 times. TVS Motor and Eicher Motors have also declined 22% and 8.6%, respectively, from their one-year highs.

What’s driving stock prices down?

The ongoing decline in these stocks, fueled by weak wholesale numbers and reports of sluggish retail sales amid soft demand, continues to weigh on their share prices.

The rise in household expenses has been prompting consumers to hold back on their two-wheeler purchases, especially in the rural segment, which accounts for the majority of sales. While exports remain strong, they are still below peak levels.

Despite the drop in entry-level motorcycle sales, premium motorcycles with engine capacities exceeding 250cc are seeing strong demand, particularly in rural areas. This trend is supporting Eicher Motors in posting healthy numbers, which has also attracted other players to shift their focus on this segment.

In February 2025, 2W OEMs reported an overall decline (domestic + exports) of 2% YoY. While the domestic volumes declined, exports continued the growth momentum with strong double-digit YoY growth.

Hero MotoCorp, Bajaj Auto, TVS Motor, and Royal Enfield reported YoY domestic wholesale sales of -20%, -14%, +3%, and +19%, respectively. Two-wheeler exports, on the other hand, saw strong double-digit growth in February 2025. On a YoY basis, export volumes increased by 33% for Hero MotoCorp, 23% for Bajaj Auto, 28% for TVS Motor, and 23% for Royal Enfield.

Despite the recovery, industry experts said that overall exports remain below peak levels due to macroeconomic challenges in key markets and are expected to grow gradually.

Nomura sees weaker 2W sales growth in FY26

For FY26, Japanese brokerage firm Nomura expects weak sales, estimating 7% YoY, which is slightly lower than the OEMs’ estimate of 8%. “Our dealer surveys indicate weaker near-term demand for 2Ws as well. Vehicle financers have turned cautious, which we believe is affecting the entry segment in particular. However, there will be pockets of stronger growth, including premium bikes, scooters, and EVs, while the entry segment may disappoint. We prefer TVS among 2W OEMs,” it said.

India is one of the top two-wheeler manufacturers globally, with around 2.1 crore units produced in FY24, as per the recent estimates. The industry reached its peak production of 2.5 crore units in FY19 but faced a significant decline in FY20 and FY21 due to the COVID-19 pandemic. Although there has been healthy volume growth in the past two years, sales remain below the peak levels of FY19.

Going ahead, upside triggers for domestic 2W demand include, as per the experts, a rural uptick, new model launches, and the government’s push on consumption (tax relief for the middle class).

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.