India’s auto and auto ancillary industry is experiencing robust growth, driven by rising incomes, urbanization, and increasing aspirations of the middle class. As one of the world’s largest automotive markets, India benefits from growing domestic demand for passenger and commercial vehicles, along with exports of components.
The government’s initiatives, such as the PLI (Production Linked Incentive) scheme, are boosting manufacturing and R&D in electric vehicles (EVs) and hybrid technologies. Rising purchasing power and accessibility to financing options are fueling vehicle sales, especially in rural areas.
Additionally, India’s strong position as a global hub for auto components manufacturing, backed by cost competitiveness and skilled labor, is attracting investments. The shift to EVs and green mobility solutions also presents significant growth opportunities for this sector.
2 Stocks with BUY recommendations are:
TVS Motor (Jefferies)
Target Price: 3,270
CMP: 2,526
Potential Upside: 30%
Jefferies has given a “BUY” rating on TVS Motor Company, citing strong growth prospects and market leadership. The brokerage highlights that TVS is trading at 35 times FY26 P/E, the highest among covered original equipment manufacturers (OEMs), reflecting its premium valuation. TVS is expected to deliver the highest EPS CAGR of 30% over FY24-27, driven by robust earnings growth.
As of November, the company holds a 16% market share in the two-wheeler segment, showcasing its strong position in the domestic market. Additionally, TVS is making significant strides in the electric two-wheeler segment, capitalizing on the growing shift towards EVs. This combination of market leadership, innovation, and growth potential makes it an attractive investment choice.
CEAT (Emkay Global)
Target Price: 4,000
CMP: 3,182
Potential Upside: 26%
Emkay Global has given a “BUY” rating on CEAT and raised its target price to ₹4,000, implying a 26% potential upside from the previous close. The revised target price reflects the company’s strategic acquisition, which aligns with its focus on premium products, off-highway tyres, and exports. CEAT aims to increase its off-highway tyres and exports mix to 25% each, up from current levels of around 15% and 19-20%, respectively.
CEAT’s Camso acquisition strengthens its presence in the U.S. and Europe, where it holds a double-digit market share. Management expects synergies in distribution and client relationships to drive market share gains. Other segments like agriculture, power sports, and harvesters offer additional growth opportunities. The stock is valued at 18 times the estimated FY26 P/E ratio.
Written By: Dipangshu Kundu
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