Indian 2W sector: Margins supported by INR depreciation and operating leverage

Research evidence excerpt

Indian 2W sector: Margins supported by INR depreciation and operating leverage

22 July 2026

Indian 2W sector EquitiesAutomobiles

Margins supported by INR depreciation and operating

leverage India

◆ BJAUT and TVS reported strong 1QFY27 results, reflecting Yogesh Aggarwal*

domestic pricing discipline and a robust export business HeadHSBC ofSecuritiesResearch,andIndiaCapital Markets (India) Private Limited

yogeshaggarwal@hsbc.co.in

◆ Domestic business steady now, though high base and rising +91 22 2268 1246

prices may slow the industry from 3Q onwards Vipul Agrawal*, CFA

Analyst, India Automotive

HSBC Securities and Capital Markets (India) Private Limited

◆ Valuations leave limited scope of upside, driving our Hold vipul.agrawal@hsbc.co.in

ratings on BJAUT and TVS; raise TPs by 4-5% +91 97690 51842

Ayush Jhunjhunwala*

Analyst, Autos and Auto Ancillary

1Q results and impact on 2W investment thesis: Strength of a well-diversified HSBC Securities and Capital Markets (India) Private Limited ayush.jhunjhunwala@hsbc.co.in

business was visible in the margin resilience of both Bajaj and TVS. Despite a steep +91 22 40891378

commodity headwind, both hardly reported margin deterioration, thanks to currency

tailwind in exports and overall pricing discipline in the 2W industry. For Bajaj in particular, * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

export recovery has been significant and a positive surprise. In our view, consensus

is building in sustained export strength in FY27 and then 10% growth in FY28, which

leaves little scope of upside earnings surprise. On the other hand, domestic

consensus volume expectations are already punchy. Valuation is reasonable at 23x