Auto stocks to buy: Analysts back Maruti, TVS, M&M, TaMo after May sales

May 2026 auto sales show strong PV and tractor demand but softer 2W and CV trends. Analysts favour Maruti Suzuki, TVS Motor, M&M and Tata Motors

The automobile sector delivered another month of healthy growth in May 2026, though analysts noted that the industry's performance is becoming increasingly "fragmented," with passenger vehicles and tractors continuing to outperform while two-wheelers and commercial vehicles show early signs of moderation. 

"Retail demand momentum remained steady in May for passenger vehicles and tractors, while two-wheelers and commercial vehicles saw signs of slowdown," analysts at Motilal Oswal Financial Services said in a sector note. 

Passenger vehicle wholesales, the brokerage added, continued to benefit from lean channel inventories and healthy retail demand, while commercial vehicle growth was affected by disruptions linked to the West Asia conflict. 

 

Echoing a similar view, Emkay Global Financial Services said that while the auto pack delivered a steady performance in May 2026, "growth moderation was visible across segments" with two-wheelers and medium and heavy commercial vehicles (MHCVs) witnessing softer retail momentum. 

As demand sustainability remains a key monitorable amid the ongoing geopolitical uncertainties, analysts advises investors to remain selective and favour companies that show strong market-share gains, enjoy pricing power and have execution capabilities. 

On the bourses, the Nifty Auto index rose 1.3 per cent intraday on the NSE. The index was up 0.45 per cent at 11:35 Am as against 0.02-per cent dip in the Nifty50 index.

May 2026 auto sales trends

Passenger vehicle manufacturers delivered the strongest performance in May. 

Maruti Suzuki led the segment with a 34.8 per cent year-on-year (Y-o-Y) increase in sales to 242,688 units, while Tata Motors Passenger Vehicles reported an even stronger 42.2 per cent growth to nearly 60,000 units. Hyundai Motor India posted a modest 4.1 per cent increase, while Mahindra & Mahindra's utility vehicle sales grew 10.7 per cent amid supply constraints. 

Analysts attributed Maruti Suzuki's strong performance to lean channel inventories, healthy order backlogs and capacity additions at its Kharkhoda facility, while Tata Motors Passenger Vehicles’ sales were driven by the ramp-up of recently launched models and continued traction in electric vehicles. Hyundai and M&M’s growth, meanwhile, were constrained by supply-side challenges, they said. 

The two-wheeler segment, meanwhile, saw healthy wholesale growth, but analysts pointed to softer retail trends. Among them, TVS Motor posted a 31.4 per cent rise in volumes to 566,585 units, while Hero MotoCorp reported 12.3 per cent growth, Bajaj Auto registered nearly 20 per cent growth, and Royal Enfield (Eicher Motors) recorded a 15.4 per cent increase. 

That said, one encouraging trend was the continued acceleration in electric mobility. 

Emkay Global noted that electric two-wheeler penetration increased to 9.2 per cent in May 2026 from 6.6 per cent in FY26, with industry volumes surging 63 per cent year-on-year.

Commercial vehicles lose momentum

In the commercial vehicle segment, demand remained under pressure during the month with MHCV retail growth slowing to 8 per cent on year from 23 per cent in the second half of FY26 (H2FY26), indicating a moderation in fleet replacement demand. 

Individually, Tata Motors Commercial Vehicles reported 16.7 per cent growth in sales to 32,850 units, outperforming peers, while Ashok Leyland reported a 3.6 per cent decline in volumes.

Tractors benefit from rural strength

In the tractor segment, which got a boost from healthy rural demand, Mahindra's tractor sales increased 22 per cent Y-o-Y to nearly 50,000 units, while Escorts Kubota posted 18.9 per cent growth. 

Motilal Oswal attributed the strong performance to adequate reservoir levels, improved rural liquidity and favourable minimum support prices. However, it warned that "the possibility of a weak monsoon due to the El Niño effect remains a key monitorable." 

Analysts also said the current geo-political situation, near-term headwinds, increasing input costs, and softer prices for select cash crops may moderate farmer affordability and near-term demand sentiment.

Auto stock to buy: Where should investors invest?

In this backdrop, analysts at JM Financial said while the structural positives from GST rationalisation and formation of 8th Pay Commission remain in place, investors need to track near-term challenges due to ongoing geopolitical tensions, including export disruptions. 

"Additionally, price hikes due to rising commodity prices warrant close monitoring from a demand standpoint. For CVs, a prolonged geopolitical overhang and rising diesel prices could weigh on demand," it said. 

Motilal Oswal prefers Maruti Suzuki, TVS Motor Company, and Mahindra & Mahindra as its preferred OEM picks, while Emkay Global favours two-wheelers and commercial vehicles OEMs over passenger vehicles due to better pricing flexibility amid commodity pressures. It prefers TVS Motor, Bajaj Auto, and Tata Motors.  ==============================  Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.