Synopsis : India’s auto sector saw strong August demand, with truck sales jumping 43% YoY and EV penetration continuing to rise. Nomura and Jefferies remain positive on select auto stocks, with Mahindra & Mahindra, TVS Motor, Eicher Motors and Tata Motors’ commercial vehicle business among the key names to watch.
Auto stocks are in focus as August demand remains strong across key segments. Nomura and Jefferies highlight rising electric vehicle adoption, strong commercial vehicle sales and their preferred auto stocks, while warning of a tougher comparison base ahead.
Book an electric scooter today, and you might not ride it home for another two months. Book a popular electric hatchback, and the wait could stretch to six. At the same time, some major automakers still managed to miss their sales estimates last month.
So, is auto demand actually strong, or are some parts of the market starting to slow?
Two major brokerages, Nomura and Jefferies, have analysed August sales data and highlighted where they see the strongest opportunities in India’s auto sector.
August demand remains strong
Nomura said demand remained firm across most auto categories in August, with medium and heavy commercial vehicles and tractors performing better than expected.
Passenger vehicle volumes increased 36% year-on-year, compared with Nomura’s estimate of 41%. Two-wheeler volumes rose 10%, while tractor volumes increased 9%.
The biggest surprise came from medium and heavy commercial vehicles, where volumes jumped 35%, well ahead of Nomura’s 25% estimate.
“Strong demand momentum across auto segments” was the key takeaway from Nomura’s assessment.
However, not every automaker fully captured this demand.
Maruti Suzuki India, Hyundai Motor India and TVS Motor Company reported volumes below expectations. Nomura attributed this largely to supply and logistics issues rather than a sudden deterioration in demand.
Trucks steal the show
Commercial vehicles emerged as one of the strongest parts of the market.
Jefferies estimates that truck industry wholesales increased around 43% year-on-year in August, while registrations rose 29%.
Several manufacturers recorded strong growth. Tata Motors Commercial Vehicles posted 56% growth, while Ashok Leyland, Mahindra & Mahindra, Bajaj Auto, Maruti Suzuki India and TVS Motor Company recorded growth ranging from 21% to 38%.
Two-wheelers also remained strong. Industry wholesales increased around 11%, while registrations jumped 24%.
Tractors, however, showed early signs of moderation. Industry wholesales rose around 9%, while registrations increased only 3%.
Electric vehicles are changing the game
Electric vehicle adoption is becoming another major driver for the sector.
Nomura said EV penetration reached 7.2% in passenger vehicles and 10.7% in two-wheelers during August. In three-wheelers, EV penetration crossed 50%.
“EV penetration continues to rise, supported by new model launches, improving charging infrastructure and increasing capacities,” Nomura said.
Jefferies also expects EV adoption to remain an important growth driver.
Tata Motors Passenger Vehicles continued to lead India's passenger EV market in August, with a 43% market share, according to Jefferies.
The combination of new launches, expanding charging infrastructure and increasing manufacturing capacity could provide further support to EV volumes.
Nomura’s preferred auto stocks
Nomura continues to prefer Mahindra & Mahindra, Hyundai Motor India, Tata Motors Commercial Vehicles, TVS Motor Company and Sona Comstar.
The brokerage expects companies exposed to EV adoption and new model launches to perform better as overall industry growth eventually normalises.
Its preference reflects the expectation that companies with stronger product portfolios, EV exposure and structural growth opportunities could continue to outperform.
Jefferies’ top OEM picks
Jefferies has a slightly different preference.
Its preferred original equipment manufacturers are Eicher Motors and TVS Motor Company, followed by Mahindra & Mahindra.
At the other end, Jefferies has an ‘Underperform’ rating on Hyundai Motor India and Tata Motors Passenger Vehicles.
The divergence between the two brokerages highlights that strong industry-wide demand does not necessarily translate into equal gains for every automaker.
The big risk: a tougher comparison base
The biggest question now is whether August’s strong growth can continue.
Jefferies warned that the industry is “Entering a high base”, which could make year-on-year growth appear weaker in the coming months, particularly from October onwards.
Commodity prices are another factor to watch.
While prices have eased from their peaks, they remain elevated. Commercial vehicle manufacturers have largely passed these costs on to customers, while passenger vehicle companies have taken comparatively smaller price increases.
Nomura warned that further price hikes could test demand, particularly in the mass-market segment.
As Jefferies noted, “the sustainability of volume growth over the next few months would be crucial as the industry enters a high base.”
What investors should watch
India’s auto sector enters the next few months with strong demand momentum, particularly in commercial vehicles, two-wheelers and electric vehicles.
However, supply constraints, commodity costs and a tougher comparison base could determine whether this momentum translates into sustained earnings growth.
For now, Nomura favours Mahindra & Mahindra, Hyundai Motor India, Tata Motors Commercial Vehicles, TVS Motor Company and Sona Comstar, while Jefferies prefers Eicher Motors and TVS Motor Company, followed by Mahindra & Mahindra.
The key question is no longer whether August was strong. It is whether automakers can maintain that momentum as the base gets tougher.
Disclaimer :This article is based on research reports from one or more brokerage firms. The views, ratings, target prices, estimates and recommendations mentioned are those of the respective brokerages and do not represent the views of Financial Express. This article is for informational and journalistic purposes only and should not be construed as investment advice or a recommendation to buy, sell or hold any security. Investors should conduct their own independent research and consult a SEBI-registered financial adviser before making investment decisions.
.jpg)