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Jefferies backs TVS Motor and Eicher as top auto picks, rates nine stocks Buy

Our read

India two-wheelers sustain a relative earnings and margin advantage over passenger vehicles, making TVS Motor and Eicher the clearest beneficiaries unless discounting or input costs accelerate.

For operators

Two-wheeler retailers should prioritize TVS Motor and Eicher inventory and local activation as stronger demand and margin resilience signal healthier sell-through potential.

Watch

Monthly Vahan registrations versus wholesale dispatches, especially in rural and semi-urban two-wheeler markets.

The report,

Jefferies favours Indian two-wheeler makers TVS Motor and Eicher Motors as stronger demand and relatively resilient margins support earnings. It rates nine auto names Buy, remains selective on globally exposed component suppliers, and is cautious on Tata Motors Passenger Vehicles and Hyundai Motor India.

Newer report , , Business Today : TVS Motor targets 50,000+ electric scooters a month within three months

Read next

  1. TVS sees buyers trading up as premium motorcycle demand outpaces industry growth, , Business Standard
  2. Tata, Mahindra and TVS flag informal yards as hurdle to formal vehicle scrappage, , The Hindu BusinessLine
  • wudhomes: +Rs 2.5 crore pre-seed
  • DealShare: -95% vs peak valuation

Reported figures

From the report. Source details below

Two-wheeler volumes rose 26% YoY in the June quarter; EBIT rose 39% YoY
Passenger-vehicle volumes rose 25% YoY, while EBIT fell 15% YoY
Two-wheeler EBIT margins declined 0.5 percentage point QoQ; passenger-vehicle margins declined 3.1 percentage points
TVS Motor FY27E EPS: Rs 97 versus consensus Rs 96
Eicher Motors FY27E EPS: Rs 231 versus consensus Rs 230
Sona BLW gained 72% CYTD; Bharat Forge 43%; Motherson 42%; Belrise 28%
Tata Motors Passenger Vehicles FY27 consensus EPS fell 44% CYTD; Hyundai Motor India fell 22%

Why it matters to operators and investors

Auto businesses seeking partnerships or portfolio exposure should favor two-wheeler-led opportunities and be selective on components and passenger vehicles amid diverging profitability trends.

What to watch next

  • Festival-season bookings, dealer inventory days and cancellation rates.
  • TVS Motor and Eicher quarterly gross margin, EBIT margin and premium-model mix.
  • Commodity prices, especially steel, aluminum, rubber and precious metals, plus INR movements affecting imported components.
  • Auto-loan approval rates, interest-rate changes and lender delinquency trends.
  • Passenger-vehicle discount levels, inventory accumulation and utilization commentary from Tata Motors Passenger Vehicles and Hyundai Motor India.
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  • Competitive launch response from Hero MotoCorp, Bajaj Auto, Honda and electric two-wheeler brands.

Likely next moves

Our read of what comes next — analysis, not reported by the source.

  • Increase allocation toward two-wheeler OEMs with premiumization, export and rural-demand exposure, particularly TVS Motor and Eicher Motors.
  • Favor suppliers tied to two-wheelers, premium motorcycles, electronics and replacement demand over broad passenger-vehicle component exposure.
  • Monitor dealer inventory and retail registration data before assuming wholesale volume growth converts fully into sustainable demand.
  • Expect competing OEMs to raise product-launch cadence, expand financing offers and intensify festival-season marketing, which could increase customer-acquisition costs.
  • Watch for passenger-vehicle discounting to spill into adjacent retail categories such as auto finance, insurance, accessories and used vehicles.

The counter-case

The case against this reading — not reported by the source.

The two-wheeler earnings rebound may already be reflected in TVS Motor and Eicher valuations, leaving limited upside if volume growth normalises after a strong base-effect quarter. A 26% volume increase does not guarantee sustained margin expansion: commodity inflation, higher promotions, EV investment, model-launch costs and competitive pricing could compress EBIT. Passenger-vehicle weakness may also be cyclical rather than structural; if discounting eases, input costs fall or premium-SUV demand improves, the currently cautious view on Tata Motors Passenger Vehicles and Hyundai could prove too negative.

The source

Source Read the source at Financial Express

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