Tata Motors PV, Maruti Suzuki, Hyundai, M&M: 35 new launches in 5 years! Top auto stock picks

Competition in passenger vehicles (PV) segment is likely to remain intense over the next 4-5 years as the top four original equipment makers (OEMs) collectively plan 35 new nameplates, including 15 by Mahindra & Mahindra Ltd (M&M) and 6-7 each by Maruti Suzuki India Ltd and Hyundai Motor India Ltd, and Tata Motors Passenger Vehicles Ltd (Tata Motors PV).

Jefferies said this sustained product cadence is likely to keep competitive pressures elevated, especially in the SUV segment. The foreign brokerage said  PVs offer a bigger long-term growth opportunity given lower penetration, but the competitive landscape is materially more favorable for two-wheelers.

Within four-wheeler stocks, Jefferies prefers M&M, followed by Maruti Suzuki. It remained 'Underperform' on TMPV and Hyundai. In 2Ws, entry-level motorcycles face limited growth headroom, but premium motorcycles and scooters (including EVs) have good long-term growth potential, said Jefferies as it prefers TVS Motor  and Eicher Motors.

Unlike PVs, Jefferies said the two-wheeler market has remained relatively disciplined, with OEMs prioritising profitability alongside growth. This was particularly evident in the June quarter, when OEMs demonstrated superior capability to translate top-line growth to EBIT than PV players, amid opposing forces of strong demand and intense cost pressures.

"Combined volumes for our two-wheeler coverage (Bajaj Auto, Eicher Motors, HMCL & TVS Motor) grew 26 per cent YoY and EBIT rose 39 per cent YoY in June quarter. In contrast, combined volumes for our PV coverage (Hyundai, MSIL, M&M and TMPV) grew 25 per cent YoY but EBIT declined 15 per cent YoY," Jefferies said.