Anand Tandon would avoid two-wheelers altogether. Here’s why

Anand Tandon, Independent Analyst, says “if one has to be in two-wheelers, again, the premiumisation is definitely a longer-term theme. But that said, again, the number of new players that have come in and the new vehicles that are being launched will automatically put a kind of a spoke in the wheel, as it were. It will be a while before the market shares etc. settle down there. Broadly, I am not very bullish on that sector.”

Let us begin by discussing the auto sector because of late it has been doing quite alright for itself. Bajaj Auto management told us how demand has seen a solid pickup from the months of July-August onwards. They are saying demand is fairly broad-based across rural as well as urban India. But within the two-wheeler space itself, what would you go for? Would you go for the mass themes like TVS, Bajaj, Hero or is the premiumisation play at Royal Enfield?
I would not go for two-wheelers in the first place. I think the valuations for most of these companies are 50-60% higher than they were at a time when they were doing very well a few years ago compared to what they are doing today where they are still struggling to achieve growth and where the competition has actually doubled up quite considerably because of technological changes.

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New companies which are unlisted are coming in and becoming significant players, for example, in the EV two-wheelers. So, with a more clouded outlook for the volume, the volume itself being lower than what it used to be and