Global brokerage Nomura has maintained its positive outlook on the automobile sector, with meaningful upside potential across select auto names. According to reports from ET Now, the brokerage expects potential gains of up to 51% from current levels across its recommended stocks. Among passenger vehicle makers, Nomura continues to maintain Buy ratings on Mahindra & Mahindra and Hyundai Motor India, with target prices of ₹4,662 and ₹2,698 respectively, representing upside potential of ~51% and ~47%. The brokerage has also maintained Buy ratings on TVS Motor Company with a target price of ₹4,159 and upside potential of ~19%, and Ather Energy with a target of ₹1,111 and upside of ~22%. Additionally, Nomura recommends Sona BLW Precision Forgings at ₹623 with ~7% upside and UNO Minda at ₹1,513 with ~33% upside potential.
The Nifty Auto index rose nearly 1% on Monday, April 27, reflecting improved investor confidence in auto stocks for the day. As reported by ET Now, despite this gain, the sector has shown some weakness in the near term, with the index slipping across shorter timeframes such as one week (-2.34%), three months (-2.45%), and six months (-4.99%). However, the longer-term trend remains firmly positive, with the index delivering consistent gains over one-year (17.77%), three-year (98.15%), and five-year (166.81%) periods, highlighting the sector's strong structural growth story despite short-term volatility.
According to Nomura's analysis reported by ET Now, the SUV mix increased further in the fourth quarter, led by strong demand for large SUVs. The brokerage expects this trend to continue, supported by shifting consumer preferences and the ongoing electrification of the passenger vehicle segment. Based on recent dealer checks in Uttar Pradesh, Nomura found strong demand for both passenger vehicles and two-wheelers, with no visible impact on consumer sentiment from the West Asia conflict. The brokerage also observed significantly higher consumer interest in owning electric vehicles. Nomura noted that both industry growth and the evolving product mix remain broadly in line with its expectations following the GST cuts.
On the auto component side, Nomura believes the rising electric vehicle mix will be a key positive for Sona BLW Precision Forgings, while higher vehicle content per unit is expected to benefit UNO Minda. As reported by ET Now, looking ahead, Nomura expects SUV penetration to continue rising, though it cautioned that cost pressures and the impact of price hikes are likely to become more visible in Q1 and Q2 of FY27. Among segments, commercial vehicles and two-wheelers are seen as better positioned to pass on rising costs, while passenger vehicle makers may face higher competitive intensity.
Beyond the top picks, Nomura maintains Buy ratings on TVS Motor Company with a target price of ₹4,159 and upside potential of ~19%. The brokerage also recommends Ather Energy with a target of ₹1,111 and upside of ~22%, Sona BLW Precision Forgings at ₹623 with ~7% upside, and UNO Minda at ₹1,513 with ~33% upside potential. These recommendations reflect Nomura's confidence in the automobile sector's structural growth story despite short-term volatility and recent sector weakness.
