Nifty Auto index plunges: ₹7 lakh crore market cap lost since September; Tata Motors, Bajaj Auto top losers

Indian auto stocks have been among the biggest casualties of the sustained market sell-off, with once-favourite Dalal Street stocks now at the forefront of the decline, shedding significant market capitalisation as weak demand, margin pressures, and global economic uncertainties weigh on the sector.

The recent Union Budget 2025, which shifted its focus from capital expenditure (capex) to consumption by reducing the income tax exemption limit, along with the RBI’s repo rate cut, has not helped auto stocks recover from their slump.

Additionally, auto sales for January remained mixed, and reports of Tesla’s entry into India have further dampened investor sentiment, leading to one of the most prolonged selling phases for auto stocks in recent times.

Meanwhile, the Donald Trump administration has been announcing a series of tariffs on imported goods, with its latest move proposing a 25% tariff on automobile imports. Although India has limited automobile exports to the U.S., concerns over potential reciprocal tariffs on Indian goods are rising, adding to trade uncertainty and market volatility.

Adding to the challenges, weak demand in Europe and muted sales in China are also impacting some passenger vehicle (PV) stocks, such as Tata Motors, which relies heavily on sales from its Jaguar Land Rover (JLR) segment.

Reports also suggest that FY25 is likely to be a muted year for the Indian auto industry amid a slowing economy. Weak urban consumer demand, which accounts for the majority of PV sales, remains a concern, as rising inflation and falling wages have forced many consumers to postpone their vehicle purchases.

Consequently, the Nifty Auto index has tumbled 20% since October and is down 21.25% from its all-time high of 27,696. The index ended four out of the last five months in the red (including February). All 15 constituents of the index are currently trading below their 1-year highs, with Tata Motors leading the declines with a 42.24% drop, followed by Exide Industries, which has fallen 41.32%.

Other stocks, including Samvardhana Motherson, Bharat Forge, Hero MotoCorp, Bajaj Auto, Bosch, and Apollo Tyres, are currently down between 30% and 41.32% from their recent peaks.

Nifty Auto's m-cap slips below ₹20 lakh crore

Shares of Tata Motors, which consistently hit record highs between March 2023 and July 2024, are now becoming less appealing to investors, having declined for six consecutive months. The selling pressure has extended into the current month, with the stock hitting a 14-month low of ₹667 per share in mid-February, declining 5% so far.

Since reaching an all-time high of ₹1,176 per share in July 2024, the stock has corrected by 42.24%. This correction has wiped out ₹1.83 lakh crore in market capitalization, bringing it down from ₹4.32 lakh crore to ₹2.5 lakh crore.

Similarly, Bajaj Auto's market capitalization touched ₹3.56 lakh crore when its stock hit a record high of ₹12,774 per share in late September. However, the stock has failed to sustain its momentum and is now trading 33.62% lower from that peak, leading to a loss of ₹1.19 lakh crore in market value.

Maruti Suzuki India has also followed a similar trend, with its market capitalization declining from ₹4.3 lakh crore to ₹3.98 lakh crore, marking an erosion of ₹31,000 crore.

Overall, the combined market capitalization of all Nifty Auto companies has fallen from a peak of ₹26.74 lakh crore in September to the current level of ₹19.92 lakh crore, marking a decline of ₹6.82 lakh crore.

Meanwhile, in the December quarter, the auto sector posted a mixed performance, with domestic volumes (excluding tractors) growing at a modest 3% YoY. While festive season discounts and new product launches provided a temporary boost, profitability remained under pressure due to rising marketing expenses, forex volatility, and higher discounts.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.