India's auto sector delivered exceptional Q4 FY26 results, with revenue of auto OEMs, excluding Tata Motors Passenger Vehicles, growing 24.1% YoY driven by strong volume growth across multiple segments. According to Kotak Institutional Equities, the sector benefited from more than 20% YoY increase in tractors, LCV, two-wheelers and MHCV segments' volumes, along with teens growth in PV and LCV segments' volumes. EBITDA of auto OEMs, excluding Tata Motors PV, grew 26.1% YoY, with aggregate EBITDA margin increasing 30 bps YoY to 15.7%. The strong performance was supported by price hikes across most OEMs to offset commodity headwinds and lower discounts, demonstrating the sector's ability to manage cost pressures effectively.
India's auto sector delivered exceptional performance in May 2026, with Maruti Suzuki India achieving its highest-ever monthly sales at 1,93,535 units, marking a significant milestone in the company's growth trajectory. Kia India reported a 23.6% year-on-year growth in wholesales at 27,586 units in May 2026, compared to 22,315 units in May 2025, achieving its "highest-ever sales in May" since market entry. Hyundai Motor India Limited registered a 9.1% year-on-year growth in domestic sales, moving 47,837 units in May 2026, while Mahindra & Mahindra Limited announced overall auto sales of 58,021 vehicles, marking an 11% growth including exports. Toyota Kirloskar Motor's domestic sales stood at 30,574 units in the reported month against 29,280 units in the same month a year ago, registering a 4% YoY growth. The industry continues to benefit from rising incomes, easier financing, premiumisation and improving rural demand, with India sold a record 4.3 million passenger vehicles in FY25 and SUVs continuing to gain market share across the sector.
India's electric vehicle market witnessed exceptional growth in May 2026, with electric passenger vehicle registrations rising 79% year-on-year to 26,319 units, according to latest industry data. Electric cars now account for 6.4% of total passenger vehicle registrations, up from 5.9% in April, reflecting strengthening demand for battery-powered vehicles. Tata Motors retained its leadership position with 10,236 electric cars (39% market share), followed by Mahindra & Mahindra with 6,133 units (23% share) and JSW MG Motor India with 4,936 units (19% share). Notably, Maruti Suzuki made its mark in the electric segment following the launch of eVitara, registering 1,577 electric vehicles in May and becoming the fourth-largest player despite entering only a few months ago. Industry executives expect electric vehicle penetration to reach 8% by March 2027, compared to 4.2%-4.5% previously, with potential annual sales approaching 400,000 units if overall passenger vehicle sales reach 4.9-5 million units. Elara Capital notes that EV demand has improved significantly in recent months, with some companies already facing capacity constraints, and earlier expectations for EV penetration by 2029-30 (FY30) now appear more realistic given the recent demand trend.
Despite rising fuel prices affecting demand, carmakers demonstrated resilience with Maruti Suzuki achieving fantastic growth in 'mini' and compact segments with an overall 42% rise in passenger cars. Sales of mini cars, comprising the Alto and S-Presso, rose to 16,275 units last month from 6,776 units in May 2025, while sales of compact cars, including Baleno, Celerio, Dzire, Ignis, Swift and WagonR, rose to 81,555 units against 61,960 units in May 2025. As reported by PTI, bookings of the company's all-electric e-VITARA have doubled to over 4,000 units after the petrol price hikes, while CNG vehicle bookings have also gone up by 1.4 times. Tata Motors Passenger Vehicles sales in the domestic market stood at 59,090 units last month as against 41,557 units in the year-ago period, a growth of 42%, according to a regulatory filing. However, industry executives acknowledge that if fuel prices keep going up, it will surely have an impact on the auto industry. Elara Capital's analysis shows that demand trends were strong until the recent fuel price hikes, with May sales also supported by pre-buying ahead of vehicle price increases.
Kotak Equities remains selective in the automobile sector, with its top picks being Mahindra & Mahindra and TVS Motor Company. According to Kotak Institutional Equities, profitability trends were ahead of expectations, driven by cost control measures, despite commodity headwinds. The brokerage expects demand trends across most segments to remain steady in the near term, but profitability trends are likely to worsen during the first half of FY27. Elara Capital's Jay Kale prefers Eicher Motors, TVS Motor Company, Maruti Suzuki and Mahindra & Mahindra among auto stocks, saying companies that gain market share during a slowdown are likely to outperform. Among auto ancillary companies, his preferred picks are Gabriel India, Minda Corporation, Uno Minda and Sona BLW Precision Forgings. Within the sector, Kale prefers passenger vehicles and two-wheelers over commercial vehicles, as CV demand is more cyclical and vulnerable to rising diesel prices. Even in a worst-case scenario, downside risks appear lower for passenger vehicle and two-wheeler stocks compared to CV makers, with the risk-reward remaining more favourable in these segments.
Hyundai Motor India is entering a fresh product and capacity cycle at a time when the broader passenger vehicle industry is slowing, planning to launch two new models in FY27. As reported by The Financial Express, the company is expanding production capacity with total installed capacity expected to rise to around 1.14 million units (6% CAGR over FY25-31) vs 1.08 earlier. The March 2026 quarter showed early recovery signs with Q4FY26 revenue rising 5.4% YoY driven by 8.7% volume growth, while domestic market share improved sequentially. In the first two months (April and May) of FY27, HMIL witnessed domestic sales rise by 13% to 99,739 units, compared to 88,235 units in the same period of FY26. The growth is particularly significant as it comes amid changing customer preferences and evolving regulatory requirements, with SUVs now accounting for a growing share of passenger vehicle sales as Indian consumers increasingly favor larger, feature-rich vehicles. The company's ability to serve multiple customer segments through its diversified product portfolio ranging from entry-level hatchbacks to premium SUVs helps reduce dependence on any single segment and capture demand from a broader customer base.
Mahindra & Mahindra demonstrated strong performance across multiple segments in May 2026, with domestic commercial vehicle sales standing at 24,079 units, growing by 19% and exports climbing 37% to 5,000 vehicles. The utility vehicles segment showed robust growth with 58,021 vehicles sold in the domestic market, reflecting an 11% increase, and 59,573 vehicles globally when factoring in exports. Mahindra's Farm Equipment Business reported a 23% YoY growth by selling 47,845 tractors in the domestic market, with total tractor sales for May 2026 standing at 49,695 units. The strongest gains came from Mahindra's three-wheeler business, including electric vehicles, where sales nearly doubled from a year earlier. The company attributed the growth to timely Rabi harvesting and favorable farm economics, factors that have helped support tractor demand despite uneven consumption trends in urban India. However, the company noted that growth remained partially constrained by supply chain disruptions linked to manpower shortages among certain suppliers.
Eicher Motors has managed to turn a motorcycle brand into a lifestyle franchise with Royal Enfield dominating the mid-size motorcycle segment with nearly 87% market share. According to The Financial Express, domestic motorcycle volumes grew 14% YoY in Q4FY26, supported by healthy bookings and dealer inventory of less than seven days. The company plans to expand annual production capacity to 2 million units from 1.6 million units through a brownfield expansion over FY28, with planned investments of around ₹9.6 billion. The stock currently trades at 36.6x earnings, slightly above its five-year median PE of 34.7x.
TVS Motor Company is transforming into a premium mobility play with FY26 revenue growing 30.4%, aided by 24% volume growth and strong momentum in exports, scooters and EVs. According to The Financial Express, scooters, including EVs, now contribute nearly 38% of sales with management expecting this to cross 40%. The company plans to add around 1.5 million units of annual capacity over the next year, taking total capacity to nearly 8.3 million units. The stock trades at 54x earnings, in line with its five-year median valuation.
Ashok Leyland is entering the next CV cycle from a stronger position, having reduced dependence on trucks by building businesses across buses, LCVs, exports, aftermarket, defence and power solutions. As reported by The Financial Express, 9MFY26 domestic MHCV volumes grew 9.8% YoY, ahead of industry growth, helping the company gain market share. The replacement cycle is visible with average fleet age in India rising to nearly 10-10.5 years from 7-7.5 years earlier. The stock currently trades at 26.6x earnings, slightly below its five-year median PE of 27.5x.
