India's automobile sector is witnessing renewed investor interest after major automakers reported resilient FY26 earnings and projected stronger-than-expected demand growth for FY27 across passenger vehicles, SUVs, tractors, and two-wheelers. According to reports from CNBC TV18, auto stocks have remained in focus over the past few sessions, with several companies witnessing a sharp uptick in share prices after reporting better-than-expected March quarter and FY26 earnings. Positive management commentary and stronger-than-anticipated FY27 volume growth guidance have further boosted investor sentiment toward the sector. Market expert Dipan Mehta from Elixir Equities notes that this has been an unusually clean earnings season, with hardly any company disappointing in a serious way, calling it "a great earning season."
The passenger vehicle segment is expected to remain one of the key growth drivers for the industry in FY27. According to the Society of Indian Automobile Manufacturers (SIAM), industry-wide PV growth is expected to be in the range of 5% to 7%. Maruti Suzuki, the country's largest carmaker, expects to outperform industry growth, with management indicating that company growth could exceed 10% in FY27. Mahindra & Mahindra is even more optimistic on the SUV segment, where the company expects growth in the mid- to high-teens range, supported by sustained demand for utility vehicles. Market expert Dipan Mehta specifically highlights auto stocks as a preferred sector for investment, noting that after this earning season, many pharma companies are trading at attractive valuations compared to their growth potential.
In the two-wheeler segment, Hero MotoCorp expects motorcycle and scooter volumes to grow in high single digits during FY27, which is ahead of market expectations. However, Bajaj Auto has flagged signs of moderation after a strong FY26. The company indicated that industry growth could slow to 7% to 9% in the near term after clocking nearly 20% growth in the fourth quarter. According to the company, the moderation is largely due to a high base effect, rising raw material prices, and price hikes taken by manufacturers to offset higher input costs. Market expert Dipan Mehta suggests caution on cable stocks due to valuations, while recommending a basket of quality large-cap specialty chemical stocks for the long term.
On the rural and commercial vehicle front, M&M expects tractor industry growth to remain in the mid-single digits in FY27, which is stronger than earlier expectations of flat growth. The outlook for light commercial vehicles (LCVs) also remains stable, with industry growth expected in the high single digits, broadly in line with Street estimates. TVS Motor Company and Eicher Motors continue to benefit from steady demand trends and improving market sentiment. Market expert Dipan Mehta notes that with Indian companies having expanded capacity significantly and the rupee working in their favour, the advice is to be patient with specialty chemical stocks as they enter an upcycle.
The defence and industrial sectors are witnessing significant momentum, with companies like Bharat Forge leading the charge. According to HDFC SKY, Bharat Forge shares rose to a 52-week high of ₹2,027 after management forecast 25% revenue growth in FY27 driven by strong execution across defence, aerospace and industrial businesses. The company secured new orders worth ₹4,814 crore during FY26, including ₹2,816 crore from the defence business, with the defence order book standing at ₹10,961 crore at the end of FY26. This diversification beyond traditional automotive business continues to benefit companies like Bharat Forge, with defence, aerospace, industrials and energy increasingly contributing to growth. Market expert Dipan Mehta specifically calls out Voltamp's recent correction as a potential entry point, given what he sees as exceptional long-term fundamentals for transformer demand.
