Tata Motors PV, M&M, TVS: CLSA cuts target prices, sees 15% correction a possibility
During the first Covid wave, over a 40-day period, Indian auto OEMs generally corrected in a range of 30-45 per cent, driven by fears of prolonged demand and production disruption, CLSA said.
- Mar 20, 2026,
- Updated Mar 20, 2026 1:50 PM IST
CLSA on Friday said Tata Motors Passenger Vehicles Ltd (Tata Motors PV), Mahindra & Mahindra Ltd (M&M), Bajaj Auto Ltd, TVS Motor Ltd and Ashok Leyland Ltd are its top picks in the auto OEM space, even as it trimmed earnings estimates and target prices for stocks under its coverage and flagged a potential 15 per cent downside in the sector.
The foreign brokerage noted that India's Auto index has corrected 15 per cent over the past 20 days due to concerns around potential production disruptions arising from supply-chain hurdles linked to the West Asia crisis, along with steep inflation in the commodity basket driven by the same geopolitical issues.
"We believe that if the current situation persists-resulting in continued supply-chain disruptions and elevated commodity prices for the next two to three months-there is a possibility of 30-40 per cent cuts to FY27 earnings," it said.
During the first Covid wave, over a 40-day period, Indian auto OEMs generally corrected in a range of 30-45 per cent, driven by fears of prolonged demand and production disruption, it noted adding that another 15 per cent correction in the current environment cannot be ruled out.
"Beyond such a correction, margin recovery in FY28, supported by a reversal in commodity prices or adequate price hikes through FY27, should be reflected in valuations," It said.
CLSA said an additional 10-15 per cent correction in the sector, driven by rising Brent crude prices and supply-chain concerns, would present an attractive opportunity for long-term investors.
"Our top picks within the India auto OEM space are M&M, BJAUT, TVSL, TMPV and AL," it said.
In the case of Tata Motors Passenger Vehicles, CLSA cut FY27 and FY28 EPS estimates by 11-12 per cent and maintained outperform, with a revised target price of Rs 440, down from Rs 450, implying 1.8 times and 14 times EV and Ebitda for JLR and India PV for FY28CL.
For Ashok Leyland, it suggested a target price of Rs 216, down from Rs 227 earlier, implying 14 times EV and Ebitda for FY28CL.
In the case of Bajaj Auto, CLSA cut FY27 and FY28 EPS estimates by 4-5 per cent and maintained outperform, with a revised target price of Rs 10,707, down from Rs 11,410, implying 22 times FY28CL core EPS.
For M&M, it reduced cut FY27 and FY28 EPS by 5-6 per cent and maintained outperform, with a revised target price of Rs 4,448, down from Rs 4,702, implying 22 times and 25 times FY28CL tractor and auto EPS.
In the case of TVS Motor, the target is revised to Rs 3,846 from Rs 4,146.
CLSA cut Eicher Motors' FY27 and FY28 EPS estimates by 6-8 per cent and maintained outperform, with a revised target price of Rs 7,454, down from Rs 8,066, implying 26 times FY28CL core EPS. For Escorts Kubota, CLSA cut FY27 and FY28 EPS by 8-13 per cent and maintained outperform, with a revised target price of Rs 3,752, down from Rs 4,313, implying 27 times FY28 earnings.
CLSA revised Hyundai Motor India target price to Rs 2,652 from Rs 2,853. It suggested a target of Rs 15,961 for Maruti Suzuki from Rs 17,743 earlier. For Tata Motors, a revised target price of Rs 648 is given, down from Rs 673. Hero MotoCorp's target is revised to Rs 5,437 from Rs 5,913.
CLSA on Friday said Tata Motors Passenger Vehicles Ltd (Tata Motors PV), Mahindra & Mahindra Ltd (M&M), Bajaj Auto Ltd, TVS Motor Ltd and Ashok Leyland Ltd are its top picks in the auto OEM space, even as it trimmed earnings estimates and target prices for stocks under its coverage and flagged a potential 15 per cent downside in the sector.
The foreign brokerage noted that India's Auto index has corrected 15 per cent over the past 20 days due to concerns around potential production disruptions arising from supply-chain hurdles linked to the West Asia crisis, along with steep inflation in the commodity basket driven by the same geopolitical issues.
"We believe that if the current situation persists-resulting in continued supply-chain disruptions and elevated commodity prices for the next two to three months-there is a possibility of 30-40 per cent cuts to FY27 earnings," it said.
During the first Covid wave, over a 40-day period, Indian auto OEMs generally corrected in a range of 30-45 per cent, driven by fears of prolonged demand and production disruption, it noted adding that another 15 per cent correction in the current environment cannot be ruled out.
"Beyond such a correction, margin recovery in FY28, supported by a reversal in commodity prices or adequate price hikes through FY27, should be reflected in valuations," It said.
CLSA said an additional 10-15 per cent correction in the sector, driven by rising Brent crude prices and supply-chain concerns, would present an attractive opportunity for long-term investors.
"Our top picks within the India auto OEM space are M&M, BJAUT, TVSL, TMPV and AL," it said.
In the case of Tata Motors Passenger Vehicles, CLSA cut FY27 and FY28 EPS estimates by 11-12 per cent and maintained outperform, with a revised target price of Rs 440, down from Rs 450, implying 1.8 times and 14 times EV and Ebitda for JLR and India PV for FY28CL.
For Ashok Leyland, it suggested a target price of Rs 216, down from Rs 227 earlier, implying 14 times EV and Ebitda for FY28CL.
In the case of Bajaj Auto, CLSA cut FY27 and FY28 EPS estimates by 4-5 per cent and maintained outperform, with a revised target price of Rs 10,707, down from Rs 11,410, implying 22 times FY28CL core EPS.
For M&M, it reduced cut FY27 and FY28 EPS by 5-6 per cent and maintained outperform, with a revised target price of Rs 4,448, down from Rs 4,702, implying 22 times and 25 times FY28CL tractor and auto EPS.
In the case of TVS Motor, the target is revised to Rs 3,846 from Rs 4,146.
CLSA cut Eicher Motors' FY27 and FY28 EPS estimates by 6-8 per cent and maintained outperform, with a revised target price of Rs 7,454, down from Rs 8,066, implying 26 times FY28CL core EPS. For Escorts Kubota, CLSA cut FY27 and FY28 EPS by 8-13 per cent and maintained outperform, with a revised target price of Rs 3,752, down from Rs 4,313, implying 27 times FY28 earnings.
CLSA revised Hyundai Motor India target price to Rs 2,652 from Rs 2,853. It suggested a target of Rs 15,961 for Maruti Suzuki from Rs 17,743 earlier. For Tata Motors, a revised target price of Rs 648 is given, down from Rs 673. Hero MotoCorp's target is revised to Rs 5,437 from Rs 5,913.