Motilal Oswal Financial Services said the auto sector has entered a premium growth cycle driven by premiumisation, electrification and rising technology content. Consumer demand is shifting towards feature-rich utility vehicles, premium motorcycles, connected mobility solutions and electric vehicles, prompting manufacturers to broaden product portfolios and invest in advanced manufacturing capabilities. Capacity additions across vehicle assembly, battery manufacturing and component plants are accelerating, supported by government initiatives that promote domestic manufacturing and localisation. Near-term risks are centred on rainfall distribution, rural income trends, crude oil prices and geopolitical developments, which could influence commodity costs and consumer sentiment. Entry-level demand remains relatively sensitive to inflationary pressures, while intermittent supply disruptions in specific components could affect production schedules. Improving inventory discipline, healthier dealer networks and a robust pipeline of new product launches are expected to mitigate these risks and support medium-term prospects. Maruti Suzuki is a top pick with a target price of Rs17,059 and is positioned to regain market share as capacity ramps up at its Kharkhoda and Gujarat plants. A healthy launch pipeline, a revival in small-car demand and lean dealer inventory underpin the outlook. The company plans to launch seven new SUVs by 2031 and to expand exports to 750–800 thousand units by FY31. Market share recovery gained momentum in 1QFY27 as capacity constraints eased, while exports rose 28 per cent year on year. TVS Motor is another recommended stock with a target price of Rs4,470 and is said to be sustaining outperformance through consistent market share gains in domestic and export markets, a strong premium product pipeline, electric vehicle momentum and capacity expansion. It delivered record sales of one point six three million (mn) units in 1QFY27, with revenue up 37.8 per cent year on year and an EBITDA margin of 12.8 per cent. Analysts expect double-digit domestic industry growth and resilient export demand, supporting elevated medium-term earnings growth.