Ashok Leyland, TMPV, M&M, Hero MotoCorp, other auto stocks slump; what brokerages say

Shares of automobile and auto ancillary companies fell sharply on Thursday amid broad-based selling triggered by rising crude oil prices and escalating tensions around the US-Iran conflict. Brent crude spiked to trade around $115 per barrel.

At close, all 15 constituents of the Nifty Auto index recorded heavy selling pressure. Ashok Leyland Ltd and Bharat Forge Ltd tumbled 4.95 per cent each. Mahindra & Mahindra Ltd (M&M), Samvardhana Motherson International Ltd, Tata Motors Passenger Vehicles Ltd (TMPV), Bajaj Auto Ltd and Hero MotoCorp Ltd slumped 4.82 per cent, 4.65 per cent, 4.48 per cent, 4.11 per cent and 4.07 per cent, respectively.

Maruti Suzuki India Ltd (MSIL) tanked 3.43 per cent. Eicher Motors Ltd slipped 2.88 per cent and TVS Motor Company Ltd fell 2.68 per cent. Uno Minda Ltd, Sona BLW Precision Forgings Ltd and Bosch Ltd declined 2.76 per cent, 2.36 per cent and 2.27 per cent, respectively. Exide Industries Ltd fell 1.96 per cent, while Tube Investments of India Ltd settled 0.65 per cent lower.

Axis Securities said that investors should closely monitor geopolitical developments and their potential impact on energy prices and supply chains. Any escalation in tensions affecting key shipping routes such as the Strait of Hormuz could disrupt energy supplies and push up global logistics costs, thereby increasing cost pressures for automobile manufacturers.

"Potential disruptions in OEM production schedules, supplier operations and broader supply chain stability, along with any slowdown in vehicle demand due to elevated energy costs or economic uncertainty, will be critical factors shaping the near-term outlook for the sector," the brokerage said.

Axis Securities retains Eicher Motors and TVS Motor Company as its top picks among auto original equipment manufacturers (OEMs), while Minda Corporation remains its preferred play in the auto ancillary space.

Separately, Nomura recently noted that a sharp acceleration in EV adoption in could benefit OEMs such as TMPV and M&M. In the auto ancillary segment, faster EV penetration will be a key positive for Sona BLW and Uno Minda.