M&M, Eicher, Maruti Suzuki, TVS Motor top auto picks after September sales data

Brokerages turned positive on auto stocks after healthy September sales data, which were supported by GST rate cuts, pent-up demand and improving festive momentum. Early trends showed entry-level vehicles and compact SUVs leading demand, with expectations that the strength would sustain through Diwali.

Motilal Oswal Financial Services said retail sales were strong across segments in September, with entry-level two-wheelers and passenger vehicles seeing a marked recovery. It expected discounts to taper after the festive season as demand sustained. MOFSL named Maruti Suzuki as its top pick, driven by new launches and strong exports, and also liked Mahindra & Mahindra, citing an uptrend in tractors and steady growth in utility vehicles.

Nirmal Bang Institutional Equities stayed positive on M&M and Eicher Motors among OEMs, while in the auto components space it preferred ASK Automotive and Suprajit Engineering.

Emkay remained positive on two-wheelers, expecting replacement demand, rural recovery and stronger exports to support growth, with Eicher Motors and TVS Motor seen as outperformers. In passenger vehicles, it preferred Maruti Suzuki, while in ancillaries it highlighted Shriram Pistons, Craftsman Automation and CEAT.

Nomura India noted that September wholesale and retail volumes did not fully reflect demand, as shipments were concentrated in the last week of the month. It highlighted strong demand for compact SUVs at Hyundai, Tata Motors and M&M, while Maruti Suzuki reported a 35 per cent year-on-year jump in bookings led by small cars. The two-wheeler segment was slower, with growth in single digits, but Nomura said enquiries were robust and believed the full festive season trend should be assessed over August–October.

Emkay Global pointed out that demand picked up in the latter part of September, with festive channel checks indicating 20–25 per cent growth. It said Royal Enfield led the pack with over 40 per cent growth in dispatches, while TVS Motor’s exports slowed. Passenger vehicle dispatches were modest, except for Tata Motors, which reported 45 per cent growth after several muted months. Tractor sales were robust, with M&M and Escorts both posting around 50 per cent growth. Emkay also noted that electric two-wheeler penetration rose to 8.1 per cent, with TVS leading, followed by Bajaj Auto, Ather and Ola. It added that October could see a spillover of demand into Diwali, though demand sustenance beyond the festive season remained a key monitorable.