Emkay names TVS Motor, Ather, Maruti as preferred auto plays; here's why

Emkay on automobiles sector: India’s automobile industry closed calendar year 2025 on a strong note, with December volumes underscoring a broad-based recovery across segments, aided by sustained post-festive demand and momentum from GST cuts, Emkay Global Financial Services said, in a note dated January 4, 2026. 

 

The brokerage said underlying trends across two-wheelers (2Ws), passenger vehicles (PVs), commercial vehicles (CVs) and tractors were materially stronger than last year, prompting it to reiterate its preference for select names across the auto and auto ancillary space.

 

Emkay analysts Chirag Jain, Nandan Pradhan, Marazbaan Dastur and Maulik Shah noted that two-wheelers delivered a standout performance in December, with domestic dispatches (excluding Bajaj Auto) rising more than 30 per cent year-on-year (Y-o-Y), alongside healthy export momentum. Industry retails for 2Ws grew 10 per cent, while electric two-wheeler (E-2W) penetration showed early signs of recovery, rising to 7.4 per cent in December from 4.6 per cent in October-November, after being temporarily impacted by a surge in ICE demand driven by GST cuts and festive buying.

 

Passenger vehicles also surprised on the upside, analysts said. Despite December typically being a lean month, PV volumes (excluding Hyundai Motor India) recorded sustained growth, led by Maruti Suzuki India (MSIL). Maruti’s domestic PV volumes surged 36 per cent Y-o-Y, supported by strong growth in both cars and utility vehicles. Mahindra & Mahindra and Tata Motors’ PV arm also posted healthy growth of 23 per cent and 13 per cent, respectively. PV retails rose sharply by 26 per cent Y-o-Y, reflecting robust underlying demand.  CATCH STOCK MARKET LIVE UPDATES TODAY

 

The momentum was not limited to retail-focused segments, the brokerage noted. The medium and heavy commercial vehicle (MHCV) industry showed clear signs of revival after a prolonged 15-month downturn. Retail volumes rose about 23.5 per cent in November and 28.1 per cent in December, with Tata Motors CV and Ashok Leyland each reporting around 25 per cent growth. Tractors, too, remained a bright spot, aided by favourable rural macros and GST-led demand improvement, with Mahindra & Mahindra and Escorts Kubota reporting domestic dispatch growth of over 35 per cent Y-o-Y.

 

Within two-wheelers, Emkay highlighted TVS Motor Company as a major outperformer. TVS posted a sharp 50 per cent Y-o-Y volume growth in December, driven by strong traction across motorcycles and scooters, as well as a 35 per cent rise in exports. Hero MotoCorp also delivered robust growth of 41 per cent, led by strong scooter volumes, while Royal Enfield’s volumes rose 30 per cent despite a decline in exports. Bajaj Auto reported overall volume growth of 14 per cent, supported by steady performance in both two- and three-wheelers.

 

Electric mobility trends also improved meaningfully. TVS Motor emerged as the leader in E-2Ws with a 26 per cent market share, followed by Bajaj Auto at 19 per cent and Ather Energy at 18 per cent. Electric three-wheeler penetration climbed to an all-time high of about 37 per cent in December, reflecting accelerating adoption across key players.

 

In passenger vehicles, Emkay flagged Hyundai Motor India as a relative laggard, with domestic volumes largely flat Y-o-Y in December and down around 6 per cent on a year-to-date (Y-T-D) basis, pointing to ongoing market-share and demand challenges. Contrastingly, Maruti Suzuki’s strong domestic momentum, despite weak exports, reinforced its leadership position.

 

Amid these trends, Emkay reiterated a constructive stance on the sector. In two-wheelers, the brokerage prefers TVS Motor and Ather, on the back of improving replacement demand, rural recovery after a prolonged slowdown, sustained export traction and industry volumes still below the FY19 peak. In passenger vehicles, Maruti Suzuki remains Emkay’s top pick, supported by its upcoming SUV-led product cycle, including the Victoris, and early signs of recovery in the small-car segment following the GST reduction.

 

Emkay also sees emerging upside in MHCVs as the cycle turns after extended weakness, which could support estimates going forward. In auto ancillaries, the brokerage continues to favour Shriram Pistons & Rings (SPRL) for sustained industry outperformance, Castrol India (CAL) for attractive valuations and re-rating potential, and JK Lakshmi Cement-linked JKI.

 

Therefore, Emkay believes the strong close to 2025 highlights improving demand visibility across the auto value chain, with select stocks best positioned to benefit as volume momentum sustains into the new year.

   

Disclaimer: The views or 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.