Jefferies has issued a positive outlook for the Indian automotive sector, projecting sustained growth momentum through FY28 with specific companies emerging as clear beneficiaries of shifting market dynamics.

Growth Projections and Market Recovery

The brokerage forecasts 6-8% volume compound annual growth rate (CAGR) across automotive segments over FY26-28, supported by multiple favorable factors including underlying economic growth, recent GST reduction, easing liquidity conditions, and anticipated government wage hikes.

The strong recovery in the latter half of FY26 has prompted Jefferies to revise its volume estimates, raising truck projections by 12-14% while trimming two-wheeler estimates by up to 6%. For FY26 wholesales, the brokerage expects 8% growth for passenger vehicles and two-wheelers, with commercial vehicles showing stronger performance at 17-18% growth for both tractors and trucks.

Market Share Dynamics and Preferred Picks

Jefferies identifies TVS Motor, Mahindra & Mahindra, and Eicher Motors as preferred 'buy' calls, citing their rising franchise positions. In the two-wheeler segment, TVS Motor's market share has reached a 22-year high domestically while achieving new highs in exports. Eicher Motors is also gaining domestic market share, contrasting with Hero MotoCorp's declining domestic wholesale share and Bajaj Auto's lost export share.

In passenger vehicles, Mahindra & Mahindra has climbed to the second position in the first half of the fiscal year, while established players Maruti Suzuki and Hyundai face mounting pressure.

Electric Vehicle Transition Trends

The electric vehicle landscape shows significant shifts in market leadership. In electric two-wheelers, Ola's market share has declined sharply from 35% in FY24 to 15% in the first nine months of FY26, with December showing further erosion to 9%. TVS Motor now leads the electric two-wheeler segment at 23%, followed by Bajaj Auto at 20%, while Ather and Hero MotoCorp have gained share during FY26.

In electric passenger vehicles, Tata Motors PV maintains leadership despite its share declining from 71% in FY24 to 39% in the first nine months of FY26, while MG Motor and Mahindra & Mahindra have strengthened their positions to 28% and 21% respectively.

Investment Recommendations and Risks

While acknowledging that valuations are not cheap following the strong 2022-25 rally, Jefferies argues that premium multiples should sustain for rising franchises. The brokerage maintains 'hold' ratings on Maruti Suzuki, Ashok Leyland, and Bajaj Auto, while assigning 'underperform' ratings to Hero MotoCorp, Hyundai, and Tata Motors PV.

For Mahindra & Mahindra specifically, Jefferies flags tightening emission norms while maintaining profitability as a key risk factor. Among auto component companies, the brokerage recommends 'buy' ratings for Belrise, Motherson, and Sona Comstar, while maintaining 'underperform' on Bharat Forge.

The Indian automotive sector demonstrated strong performance in October, with major players reporting significant sales growth. This surge in sales indicates robust demand in the auto market, potentially signaling positive consumer sentiment and economic recovery.

Sales Performance Highlights

Maruti Suzuki, India's largest carmaker, led the pack with impressive double-digit growth, selling 176,318 units in October. This performance underscores the company's strong market position and consumer preference for its diverse product range.

Mahindra & Mahindra and Tata Motors also posted substantial growth, with sales increases of 31% and 27% respectively. Notably, Tata Motors' growth was bolstered by record electric vehicle (EV) sales of 9,286 units, representing a 73% increase. This surge in EV sales highlights the growing acceptance and demand for electric mobility solutions in the Indian market.

Hyundai reported total sales of 69,894 units, while TVS Motor achieved an 11% increase with 543,000 units sold, further contributing to the sector's overall positive performance.

Corporate Developments

In addition to the strong sales figures, several significant corporate developments were reported across various industries:

1. IndusInd International Holdings completed the acquisition of a 60% stake in Invesco Asset Management India, with Invesco retaining the remaining 40%.

2. Hindustan Unilever received a tax notice for Rs 1,986.25 crore related to related-party transactions and depreciation claims for FY 2020-21.

3. BEML and Dredging Corporation of India signed MoUs worth Rs 350.00 crore for maritime equipment supply.

4. Titagarh Rail Systems secured a Rs 2,481.00 crore contract from MMRDA for 132 metro coaches for Mumbai Metro Line 5.

5. RailTel was awarded a Rs 324.00 crore contract from Rajasthan Council of School Education.

6. Lancor Holdings valued its property at Rs 190.00 crore based on internal assessment.

7. AU Small Finance Bank's Deputy CEO Rajeev Yadav resigned after 18 months.

Maruti Suzuki Investor Meeting

According to the latest LODR data, Maruti Suzuki India Limited has scheduled an investor group meeting for November 5. This meeting could provide further insights into the company's performance, strategies, and future outlook, potentially influencing investor sentiment in the coming days.

The robust October sales figures, particularly in the automotive sector, suggest a positive trend in consumer demand. As the industry continues to evolve, with a notable shift towards electric vehicles, investors and market watchers will be keen to see if this growth momentum can be sustained in the coming months.