Jefferies has issued 'Buy' ratings on nine Indian auto stocks as stronger demand and improving cost conditions begin to separate winners from the rest of the sector. The brokerage's coverage includes TVS Motor, Eicher Motors, Mahindra & Mahindra, Maruti Suzuki, Belrise Industries, Bharat Forge, Samvardhana Motherson International, Sona BLW Precision Forgings, and UNO Minda. According to The Financial Express, Jefferies is more positive on two-wheelers, with TVS Motor and Eicher Motors as its top picks, while remaining cautious on passenger vehicles, particularly Tata Motors Passenger Vehicles and Hyundai Motor India. The preference reflects the June quarter's performance, where two-wheeler volumes across major OEMs grew 26% year-on-year, while EBIT rose 39% year-on-year, demonstrating superior ability to translate top-line growth to EBIT compared to passenger vehicles.
The central argument in Jefferies' report centers on the widening margin advantage of two-wheelers over passenger vehicles. As reported by The Financial Express, two-wheeler EBIT margins declined only 0.5 percentage point quarter-on-quarter in the June quarter, compared with a 3.1 percentage point decline for passenger vehicles. On a year-on-year basis, two-wheeler EBIT margins expanded 0.3 percentage point, while passenger-vehicle margins contracted 2.5 percentage points. This margin performance gave two-wheeler companies greater room to convert volume growth into profit, with Jefferies expecting the earnings advantage to continue despite potential volume growth moderation from September due to a tougher base. The brokerage noted that two-wheeler volumes across Bajaj Auto, Eicher Motors, Hero MotoCorp and TVS Motor grew 26% year-on-year, while passenger-vehicle volumes grew 25%, but EBIT declined 15%, showing a much sharper margin squeeze despite healthy demand. The preference comes on the back of starkly contrasting operational performances during the June quarter, with the two-wheeler space demonstrating effective cost pass-through to customers and disciplined cost controls, allowing operating margins to remain resilient despite elevated raw material costs.
TVS Motor emerges as Jefferies' preferred two-wheeler stock with a 'Buy' rating and strong earnings trajectory. According to The Financial Express, consensus FY27 EPS estimates increased 5% in the September quarter, with Jefferies' FY27 EPS estimate at ₹97 compared with consensus at ₹96. The brokerage's FY28 estimate is ₹122 against consensus of ₹114, while FY29 estimate is ₹149 against ₹133, with TVS Motor gaining 17% CYTD as the market focuses on improving two-wheeler earnings. Eicher Motors is the second top two-wheeler pick with a 'Buy' rating, delivering a 10% CYTD return despite facing margin pressures. Consensus FY27 EPS estimates increased 2% in the September quarter, with Jefferies estimating FY27 EPS at ₹231 compared with consensus of ₹230, and FY28 EPS of ₹274 above consensus of ₹271. Stock performance across the calendar year mirrors this operational divide, with two-wheeler stocks seeing steady gains led by Bajaj Auto, TVS Motor Company, and Eicher Motors, while major four-wheeler stocks like Maruti Suzuki and Tata Motors PV have lagged behind the broader market.
Jefferies maintains caution on passenger vehicles, particularly rating Tata Motors Passenger Vehicles and Hyundai Motor India as 'Underperform' amid rising competition, higher discounts and a weaker earnings outlook. As reported by The Financial Express, Tata Motors Passenger Vehicles saw consensus FY27 EPS estimates cut 16% in the September quarter, with CYTD estimates falling 44%. Hyundai Motor India faced FY27 estimates cut 8% in the September quarter, with CYTD reduction reaching 22%. The divergence from two-wheelers is stark, as passenger-vehicle volumes remain strong but earnings conversion is weaker due to competitive intensity and cost pressures. Maruti Suzuki carries a 'Buy' rating despite facing sharp consensus estimate cuts of 8% in the September quarter, with Jefferies estimating FY27 EPS at ₹466 below consensus of ₹479. The stock has declined 18% CYTD according to the report. Street estimates are rapidly reflecting this two-speed performance, with Four-wheeler earnings estimates seeing continuous downward revisions, with FY27 EPS projections trimmed by about 6% in the September quarter so far, while consensus FY27 earnings per share estimates for two-wheeler makers have risen by an average of 4% following minor cuts earlier in the year.
Auto-component stocks with global exposure have delivered exceptional returns, significantly outperforming major OEMs. According to The Financial Express, Sona BLW leads with a 72% CYTD gain, followed by Bharat Forge at 43%, Samvardhana Motherson at 42%, and *Belrise Industries at 28%. The reversal in global auto-component stocks has been significant after a weak 2025, with both earnings expectations and valuations contributing to the move. Among major two-wheeler OEMs, Bajaj Auto has gained 24%, *TVS Motor 17%, and *Eicher Motors 10%**. Jefferies noted that auto-component companies with global exposure have witnessed a big reversal in stock performance in 2026 after a weak 2025. The distinction between the nine Buy-rated stocks is clear, with TVS Motor, Eicher Motors, and Motherson seeing positive earnings revisions, while Maruti Suzuki and Bharat Forge faced cuts, yet Jefferies continues to rate all as Buy based on business positioning, expected demand, margins, and longer-term earnings path.
