Auto sector rides on GST 2.0, festive demand; Nirmal Bang names top picks

Domestic brokerage Nirmal Bang has reiterated its constructive view on the Indian automobile sector after what it termed a strong November 2025 performance across passenger vehicles (PVs), two-wheelers (2Ws), commercial vehicles (CVs) and tractors. The brokerage said most major OEMs reported double-digit year-on-year volume growth, aided by festive spillover, GST 2.0–led affordability, improved rural sentiment and robust export demand.

 

“India’s auto sector delivered strong performance in Nov-25 across passenger vehicles, two-wheelers, commercial vehicles and tractors, with most major OEMs achieving double-digit Y-o-Y growth supported by festive spillover, GST 2.0-driven affordability improvements, strengthening rural sentiment, and aided further by healthy export traction,” the brokerage noted in its report.

Top stock picks

Yash Agrawal, research analyst at Nirmal Bang, retained Mahindra & Mahindra (M&M) and Maruti Suzuki India as top picks in the four-wheeler space. In two-wheelers, he prefers Eimco Elecon (India) and Hero MotoCorp. Among auto-component makers, ASK Automotive remains the brokerage’s preferred idea, while CEAT is its top bet in the tyre segment.

 

The brokerage highlighted broad-based momentum in the domestic market, with MHCVs and tractors leading the uptrend, rising 31.3 per cent Y-o-Y and 29 per cent Y-o-Y, respectively. LCVs, 2Ws and 4Ws also posted healthy growth of 23.4 per cent, 20.4 per cent and 17.8 per cent Y-o-Y, respectively. Exports across segments remained strong.   

Source: Nirmal Bang

                                                                

                        EV retail trends strengthen

Citing Vahan data, Nirmal Bang said TVS reclaimed the No. 1 position in e-2W retail in November on the back of strong demand for the iQube and Orbiter models. Bajaj followed, while Ather ranked third. Hero overtook Ola, which saw a sharp Y-o-Y decline. November was the second-strongest EV retail month of 2025, with year-to-date volumes up nearly 10 per cent Y-o-Y.

 

In electric PVs, Tata Motors continues to lead, though competitive intensity is rising as Mahindra and other OEMs scale up their EV portfolios. Global unlisted players such as Vinfast, Tesla and BYD are also accelerating their push in India. “Bearing this in mind, our top recommendations are M&M and Maruti in 4Ws and EIM and Hero in 2Ws. ASK Automotive and CEAT continue to be our favoured choice in auto components and the tyre space, respectively,” the brokerage added.

Two-wheelers: demand stays firm

Two-wheeler demand remained buoyant in November, aided by post-festive and wedding-season buying, improved rural liquidity and GST 2.0–driven affordability, particularly in the commuter segment. Retail traction was strong across regions, with exports performing well in Asia, Africa and Latin America.

 

Scooters continued to gain share on the back of new ICE and EV launches, while the premium motorcycle segment held firm despite softer demand in the above 350cc category after higher GST rates. Nirmal Bang expects 8–10 per cent Y-o-Y industry growth in FY26E.

PVs supported by GST reforms

Passenger vehicle sales remained robust, driven by wedding-season demand, GST 2.0 benefits and elevated discounting. The shift of small cars into the 18 per cent GST slab has improved mass-market affordability. The brokerage expects 6–8 per cent PV industry growth in FY26E.

CVs rebound; tractor outlook lifted

CV wholesales across LCV and MHCV categories posted solid Y-o-Y gains, supported by freight availability, rural logistics, infrastructure activity and the 10 per cent GST reduction. Nirmal Bang forecasts 5–7 per cent CV industry growth in FY26E.

 

Tractor volumes also stayed strong, aided by healthy rural incomes, favourable monsoon patterns, a better crop outlook, higher MSPs and the GST cut to 5 per cent. The brokerage has revised its FY26E tractor growth outlook to 9–11 per cent, citing both structural and cyclical tailwinds.  (Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)