Shares of Bharat Forge slipped 9.5 per cent to Rs 526 per share, also hitting its 52-week low on the BSE on back of heavy volumes, on concerns of near-term demand challenges persisting for domestic commercial vehicles (CV) due to emerging concerns on tighter liquidity. The stock of a leading auto ancillary metal forging company was trading at its lowest level since May 24, 2017. READ MORE
Ashok Leyland also fell as much as 3.8 per cent to Rs 103 on the National Stock Exchange (NSE) as it's sales of medium and heavy commercial vehicles (M&HCVs) fell 18 per cent in November. The numbers were much below analysts’ estimates.
While some fleet operators postponed purchases on account of low consumer sentiment, other reasons for the muted sales were higher interest rates, rising fuel costs, and most importantly the tightening of liquidity, analysts say. Higher axle load norms also contributed to the fall in volumes. Analysts at Nomura expect the weak trends to continue.
"Sales across company/segments were weak in November and/or lower-than-expected. Passenger vehicle (PVs) industry continues to decline. While the two-wheeler (2W) industry saw a mixed trend, most original equipment manufacturers (OEMs) have indicated sluggish retails. The big negative surprise is the sharp fall in the MHCVs segment," wrote Joseph George and Suraj Chheda of IIFL in a recent sector report.
Adding: "Overall auto demand outlook remains challenging, given low consumer sentiment, rise in vehicle prices and financing issue. The only silver lining is the sharp reversal in crude price and resultant relief in fuel prices. Based on YTD trend and asking-rate, we see the highest risk (3-5%) to our FY19 volumes assumptions in case of Hero, Eicher and Ashok Layland."
Top losers in Nifty Auto index at 11:21 IST