Maruti, M&M top Motilal Oswal picks; auto ancillaries see split sentiments

Tariff uncertainty, analysts believe, continues to cloud the outlook for auto ancillaries, affecting CV components and non-auto exports.

Motilal Oswal on Auto Stocks: Brokerage firm Motilal Oswal Financial Services (MOFSL) remains upbeat on Maruti Suzuki India (MSIL) among passenger vehicle (PV) original equipment manufacturers (OEMs), citing strong export momentum and a robust pipeline of new launches expected to drive earnings growth.

 

Within the utility vehicle (UV) segment, Mahindra & Mahindra (M&M) is MOFSL’s preferred pick, supported by rising tractor volumes and sustained UV growth. In the auto ancillary space, MOFSL maintains a positive stance on Endurance Technologies and Happy Forgings.

 

“Auto demand has improved across segments following the GST rate cuts, aided partly by pent-up demand. Entry-level vehicles — both in two-wheelers and passenger vehicles — are witnessing a marked pickup,” MOFSL said in a research note. The brokerage expects discounts to gradually taper off after the festive season.

 

Asia roadshow: cautious optimism among FIIs

During a three-day Singapore roadshow, MOFSL analysts met around 15 foreign institutional investors (FIIs), most of whom turned positive on the Indian automobile sector following GST cuts. FIIs, however, were keen to see whether demand will sustain beyond the festive season and whether entry-level vehicle demand will continue.

 

MSIL, analysts said, emerged as a consensus buy, while feedback on other OEMs was mixed. On auto ancillaries, investors acknowledged ongoing tariff uncertainty but showed interest in Bharat Forge, Sona Comstar, Bosch, Sandhar Technologies, and Motherson Sumi Wiring, beyond MOFSL’s top picks of Endurance and Happy Forgings.  ALSO READ | HUL Q2: Analysts see near-term GST drag, recovery in H2; buy or sell?

Investor sentiment: PVs remain the focus

According to the brokerage, investors are closely monitoring whether PV demand will hold post-festive season. While wholesales are expected to remain strong until December 2025, sustainability of demand in CY26 remains uncertain, as current growth has been largely discount-driven.

 

Concerns were also raised regarding M&M and Tata Motors amid BYD’s potential entry into India. “While MSIL remains the most preferred pick within PV OEMs, sentiment is divided between M&M and Hyundai, with a few suggesting Tata Motors PV could be considered after its recent correction,” MOFSL added.

Two-wheelers: cautious stance amid valuation concerns

Investors, analysts said, are monitoring early signs of a pickup in entry-level two-wheeler demand. Hero MotoCorp sees some hesitancy post-rally, while TVS Motor is viewed as a long-term structural play despite elevated valuations. For Eicher Motors, FIIs sought clarity on the sustainability of recent Royal Enfield volume growth. Bajaj Auto faces concerns over domestic and export market share.  ALSO READ | Double whammy hits Colgate: GST cuts, competition weigh on Q2 sales

Commercial vehicles and auto ancillaries

FIIs inquired about early signs of commercial vehicle demand revival and the impact of the Dedicated Freight Corridor. While pricing discipline and healthy balance sheets are noted, broader revival is awaited, the analysts said. Tariff uncertainty continues to cloud the outlook for auto ancillaries, affecting CV components and non-auto exports.

 

MOFSL’s top picks, Endurance Technologies and Happy Forgings, received minimal pushback, while Bharat Forge, Sona Comstar, Bosch, Sandhar Technologies, and Motherson Sumi Wiring drew strong investor attention.