🏍️ Riding Ahead: Quality Insights into India’s 2/3 Wheelers Industry (H1 & Q2 FY26)

📊 Industry Snapshot

• Market Cap (Total): ₹7.68 lakh Cr

• H1 FY26 Sales Growth: +14.4%

• H1 FY26 Profit Growth: +36.8%

• Q2 FY26 Sales Growth: +21.4%

• Q2 FY26 Profit Growth: +47.1%

👉 The industry is showing broad-based demand strength, with profits outpacing sales growth, signaling pricing power and operating leverage.

🏆 Company Comparisons

🔹 Bajaj Auto (₹2.48 lakh Cr, 32% weight)

• Sales Growth: +15% (H1), +19% (Q2)

• Profit Growth: +30% (H1), +53% (Q2)

• Margins: Expanding (H1 +1.8 pp, Q2 +3 pp)
  ✅ Quality leader – consistent profitability, strong leverage, and market dominance.

🔹 Eicher Motors (₹1.93 lakh Cr, 25% weight)

• Sales Growth: +30% (H1), +45% (Q2)

• Profit Growth: +17% (H1), +24% (Q2)

• Margins: Highest in industry (22–23%) but compressing
  ⚖️ Premium brand strength, but margin normalization needs monitoring.

🔹 TVS Motor (₹1.62 lakh Cr, 21% weight)

• Sales Growth: +22% (H1), +25% (Q2)

• Profit Growth: +38% (H1), +42% (Q2)

• Margins: Low base (~6%) but improving steadily
  📈 Emerging compounder, attractive if margin trajectory sustains.

🔹 Hero MotoCorp (₹1.20 lakh Cr, 16% weight)

• Sales Growth: +6% (H1), +17% (Q2)

• Profit Growth: +44% (H1), +24% (Q2)

• Margins: Expanding strongly in H1 (+3.6 pp)
  🔄 Recovery play, stabilizer in portfolio positioning.

⚡ EV Segment (Ather & Ola Electric, ~6% combined weight)

• Ather Energy: Revenue scaling (+63% H1, +54% Q2) but still loss-making.

• Ola Electric: Declining sales (-47% H1, -43% Q2), deep losses.
  ❌ Drag on industry profitability – optional exposure only.

🥇 Quality Ranking

1. ⭐ Bajaj Auto – Best blend of scale, profit acceleration, and margin expansion.

2. ⭐ Eicher Motors – Premium leader, high margins but normalization risk.

3. ⭐ TVS Motor – Strong compounding, improving quality trajectory.

4. ⭐ Hero MotoCorp – Profit recovery, stabilizer.

5. ⚡ Ather Energy – Speculative optionality.

6. ⚡ Ola Electric – Weak fundamentals, avoid for quality mandates.

🎯 Portfolio Implications

• Core Overweight: Bajaj Auto – resilient earnings, quality leader.

• Selective Overweight: Eicher Motors & TVS Motor – premium + compounding blend.

• Measured Exposure: Hero MotoCorp – recovery alpha.

• Minimal Optionality: EVs – monitor unit economics, keep sizing small.

📌 Investor Takeaway

The 2/3 wheelers industry is in a strong profit cycle, with legacy leaders driving quality returns. Bajaj Auto stands out as the best investment candidate, supported by scale, margin expansion, and accelerating profits. TVS and Eicher complement the portfolio with growth and premium positioning, while Hero adds recovery stability. EVs remain speculative, requiring cautious exposure.

Report Created By: Kinjal Bhatt

Disclosure:
This update is provided solely for informational purposes.
It does not constitute investment advice.
Readers should conduct their own research before making any investment decisions.