According to reports from CNBC TV18, Elara Capital's Jay Kale has identified specific stock picks for the current market environment. The brokerage favours TVS Motor and Eicher Motors in the two-wheeler segment, while Maruti Suzuki and Mahindra & Mahindra are the top picks for passenger vehicles. Kale expects passenger vehicle and two-wheeler sales to grow 7-10% during the September-November festive period, significantly slower than the 18-22% growth the industry achieved between April and August. As reported by Elara Capital, the brokerage has broken the next seven months into two halves, with the festive stretch expected to hold up reasonably well, but what comes after represents the real test.
As reported by CNBC TV18, Kale noted that the market is pricing in appropriate caution given the current environment. Passenger vehicle OEM stocks have fallen 5-10% over the past month, alongside a broader decline in the auto index. The brokerage expects the festive season to deliver 7-10% growth, working out to roughly a 12% CAGR over two years. However, if festive demand comes in stronger than expected, OEMs are reportedly targeting double-digit growth, which could act as a trigger for the stocks. The market appears to already be pricing in some of this caution, with Kale pointing out that passenger vehicle OEM stocks have fallen 5-10% over the past month.
According to CNBC TV18, FADA data for August revealed a significant shift in the fuel mix for passenger vehicles that hadn't happened before - alternate fuel vehicles (CNG, hybrid and EV combined) outsold petrol and ethanol vehicles for the first time. CNG made up 25.3% of retail sales, hybrids 9%, and EVs close to 7.5-8%, adding up to about 42% of the mix versus 41% for petrol and ethanol. As reported by Mint, the market share of petrol passenger vehicles fell to 40.85% in August 2026 from 49.97% in April 2025, while diesel-run vehicle sales saw a minor dip. However, a more granular analysis by JATO Dynamics covering 3,62,763 passenger-vehicle registrations in August reveals that when including petrol hybrids and strong hybrids, petrol-powered cars still account for approximately 50% of the market. The market share of petrol passenger vehicles fell to 40.8% in August 2026 from 49.97% in April 2025, while diesel-run vehicle sales saw a minor dip. One key factor driving CNG adoption is its lower total cost of ownership compared to petrol-run vehicles, with rising sales of CNG cabs helping raise their share. Kale expects this trend to accelerate, with the alternative fuel mix expected to go above 50% over the next two to three years.
As reported by CNBC TV18, given the expectation of slower growth ahead, Elara is favouring companies gaining market share and those with strong export exposure, since two-wheeler exports have held up well. The shift toward alternate fuels is being driven by buyers rather than regulatory pressure, with most EV variants across two-wheelers and passenger vehicles currently having waiting periods. Kale noted that capacity is more of a problem right now than demand, which represents a positive development for the industry. On whether other states might follow Delhi's stricter EV policy, Kale said that isn't part of Elara's base case, though he didn't rule it out given the government's consistent push on alternate fuels. The rollout of CAFE 3 norms and BS-VII standards is expected to push carmakers away from diesel, though diesel technology has evolved to meet BS-VI norms and remains popular among large SUV buyers.
