Jefferies backs TVS Motor and Eicher as top auto picks, rates nine stocks Buy
Jefferies sees two-wheelers outperforming on demand and comparatively resilient margins after June-quarter volume growth. It favours TVS Motor and Eicher Motors, remains selective on component makers and is cautious on Tata Motors Passenger Vehicles and Hyundai Motor India.
What happened
Jefferies favours Indian two-wheeler makers TVS Motor and Eicher Motors as stronger demand and relatively resilient margins support earnings. It rates nine auto
Key facts
- Jefferies rates nine Indian auto stocks Buy
- 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 this matters
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
- Monthly Vahan registrations versus wholesale dispatches, especially in rural and semi-urban two-wheeler markets.
- 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.
- Competitive launch response from Hero MotoCorp, Bajaj Auto, Honda and electric two-wheeler brands.
- 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.