Elara Capital, a prominent domestic brokerage, has released its top stock recommendations for the automobile and auto ancillary sectors, highlighting several companies with significant upside potential. The selections come as original equipment manufacturers (OEMs) reported robust wholesale volume growth in Q2 FY27 across passenger vehicles, two-wheelers, and commercial vehicles.
Elara's Top Auto Sector Picks and Targets
Elara Capital maintains a 'Buy' rating on all its top four automobile stock picks, indicating strong confidence in their future performance. Here are the specific recommendations and their target prices:
- Mahindra & Mahindra (M&M): Target price of Rs 4,578, suggesting an impressive upside potential of 60.4 per cent from the brokerage's assessed market price.
- Maruti Suzuki: Target price of Rs 17,298, with an upside potential of 48.8 per cent.
- Eicher Motors: Target price of Rs 9,424, implying an upside potential of 33.7 per cent.
- TVS Motor: Target price of Rs 4,668, indicating an upside potential of 17.3 per cent.
Strong Q2 FY27 Volume Growth Fuels Optimism
Elara's positive outlook is underpinned by strong wholesale volume growth witnessed in Q2 FY27. Passenger vehicles (PVs) saw approximately 30 per cent year-on-year (YoY) growth, two-wheelers (2Ws) grew by 19 per cent, and commercial vehicles (CVs) expanded by 31 per cent. Tractors, however, showed relatively weaker performance during the quarter.
According to Elara, automobile demand remained healthy in Q2 FY27, largely supported by improved affordability and festive demand. Despite this robust performance, the brokerage anticipates that a high base effect could moderate headline growth to single digits in the second half of FY27.
Key Auto Ancillary Recommendations
Beyond the primary auto manufacturers, Elara Capital has also identified top picks within the auto ancillary segment, all with 'Buy' ratings:
- Minda Corporation: Target price of Rs 926, hinting at an upside potential of 40.4 per cent.
- Uno Minda: Target price of Rs 1,476, indicating an upside potential of 31.8 per cent.
- Gabriel India: Target price of Rs 1,664, implying an upside potential of 23 per cent.
- Sona BLW Forgings: Target price of Rs 919, indicating an upside potential of 12 per cent.
Elara projects that revenue across its covered auto ancillary universe will grow around 24 per cent YoY and 6 per cent quarter-on-quarter (QoQ) in Q2 FY27, driven by healthy underlying production and content growth in the automotive sector.