As the automotive industry awaits the release of September and Q2 FY27 auto sales data, leading brokerages are projecting strong performance across several segments. Analysts from Nomura, Motilal Oswal Financial Services (MOFSL), and Choice Institutional Equities foresee a robust period, driven by a confluence of favorable market conditions.
Strong Growth Expected Across Key Segments
Dealer checks conducted by brokerages indicate a healthy surge in retail auto sales for September. Passenger vehicles (PVs) and medium and heavy commercial vehicles (M&HCVs) are expected to register over 20 percent sales growth. While electric vehicles (EVs) are experiencing short supply, demand remains high. Two-wheeler sales are projected to see single-digit growth, though tractor sales are anticipated to decline by over 20 percent.
MOFSL highlights that volumes throughout Q2 FY27 have been strong, attributed to a low base from the previous year's Q2 and strategic channel pushes ahead of the festive season. This momentum is expected to continue through September, supported by lean channel inventory, especially for PVs.
Top Auto Stock Picks from Leading Brokerages
Ahead of the official data, several OEMs have emerged as preferred investment choices:
- Nomura's Picks: The brokerage favors Mahindra & Mahindra Ltd (M&M), Hyundai Motor India Ltd, Ather Energy Ltd, and TVS Motor Company Ltd. Nomura has set target prices for Ather Energy at Rs 1,926, Hyundai Motor at Rs 2,498, M&M at Rs 4,875, and TVS Motor at Rs 4,594.
- MOFSL's Picks: Focusing on OEMs with healthy launch pipelines, MOFSL recommends Maruti Suzuki (MSIL), TVS Motor, M&M, and Bajaj Auto. Among auto ancillaries, their top picks include HFL, MSWIL, and SAMIL.
Factors Driving Optimism and Potential Risks
The positive outlook for Q2 FY27 is underpinned by several factors. A significant contributor is the lower base from July-September 2025, particularly September 2025, when buyers deferred purchases awaiting revised GST rates. Other drivers include steady consumer sentiment, recent model launches, strong EV adoption, softer interest rates, and improved affordability following GST rationalization.
Regarding margins, MOFSL believes that the majority of the impact from commodity price pressures was reflected in Q1 results. Price hikes implemented by OEMs are expected to cushion the blow, leading to a gradual revival of sector margins from Q2 onwards.
However, analysts are monitoring potential headwinds. Key concerns include the probable impact of El Niño in the current year and any escalation of the West Asia crisis, which could affect supply chains and consumer spending.