Auto stocks to 'Buy' before March sales data release; analysts see up to 49% upside

Ahead of monthly sales data for March, Nomura suggested ‘Buy’ on six auto and auto ancillary stocks, with target prices implying up to 49 per cent upside. The foreign brokerage said steep commodity price pressures during September-March 2026 could necessitate further price hikes to sustain margins. Nomura preferred Mahindra and Mahindra Ltd, Hyundai Motor India Ltd, TVS Motor Company Ltd, Ather Energy, Sona BLW Precision Forgings and UNO Minda Ltd.

While there have been concerns that the Iran-US war could impact consumer sentiment, so far there is negligible impact visible, Nomura said following its dealer surveys. 

"We also do not expect any significant production impact in March-26 due to gas shortage, but this can have impact in the future in the scenario of prolonged supply shortage. The early onset of the festive season (Navratri from 19 March to 27 March 2026 vs 30 March to 7 April 2025) has also supported demand this month," it said.

This, it said, could impact entry-segment demand. 

"We would monitor the demand impact over the next two months as OEMs will likely raise vehicle prices in April (0.5-1.5 per cent) and fuel prices could increase in May after state elections. Any rise in fuel prices can shift consumer sentiment toward EVs," it said.

Nomura said commodity costs for passenger vehicle (PVs) and two-wheelers have risen by 200 basis points and 300 basis points between September 2025 and February 2026, driven by precious metals and steel. "We expect much of this impact to flow through in April-June 2026. We believe OEMs will need to take steep price hikes to protect margins. This could impact demand, especially in entry segments," it said.

March sales: Expectations 
Nomura expects wholesales for the passenger vehicle (PV) industry at 10 per cent YoY, while PV retail volumes in March-26 are also expected to grow at 10 per cent YoY, with M&M outperforming the industry. Nomura said Tata Motors Passenger Vehicles Ltd
announced a price hike of 0.5 per cent from April, and it expects more OEMs to raise prices. 

Nomura estimates two-wheeler retails to grow 17 per cent YoY in March. It sees medium and heavy commercial vehicle (MHCV) wholesales likely to grow at 12 per cent YoY. It estimated MHCV retails will grow 20 per cent YoY in March, indicating signs that the CV upcycle trend is ongoing. 

For tractors, Nomura expects wholesales to be up 11 per cent in March 2026. "Demand indicators remain positive, but we will need to monitor El Niño risk in 2026 as weaker monsoon rainfall can affect demand," it said.

EV push
Nomura said a parliamentary committee recently recommended providing further support to electrification by extending subsidies on e-2Ws and introducing subsidies on e-PVs. This may gain prominence considering current energy shortage may push the policy toward faster reduction of dependence on fossil fuels, it said.