Auto Sector Enters Premium Growth Cycle Says MOFSL
ECONOMY & POLICY

Auto Sector Enters Premium Growth Cycle Says MOFSL

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.

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.

Related Stories

Gold Stories

Next Story
Resources

Schindler named among Forbes’ World’s Best Employers 2026

Schindler has been named among Forbes’ World’s Best Employers 2026, a global ranking recognising companies for their workplace environments.Compiled by Forbes in partnership with Statista, the ranking is based on independent employee feedback, including whether employees would recommend their organisation to friends and family.The company said the recognition reflected its focus on creating a workplace where employees can develop their expertise and build careers. ..

Next Story
Infrastructure Urban

India needs an export-execution mindset: Vishesh Jain

Interview with Vishesh Jain, Founder & CEO, EximpleWhat gaps in India’s global trade ecosystem led you to build Eximple, and what problem did you see businesses struggling with most?Eximple came out of a problem that all three founders had seen from different choke points in the trade ecosystem. India has millions of MSMEs and manufacturers, and many of them can make products that are genuinely competitive on quality. Yet only a small fraction is able to build meaningful international businesses. In our experience, the gap is usually not manufacturing capability; it is the ability to exe..

Next Story
Building Material

Nuvoco reports 13.5% revenue growth in Q2 FY27

Nuvoco Vistas Corp. Ltd. reported consolidated revenue of Rs 27.9 billion for Q2 FY27, up 13.5% year on year. Cement sales volume rose 9% to 4.7 million tonnes (MMT), while EBITDA increased 11% to Rs 4.11 billion.The company said it began its cement operations in 2014 with a 2.3 MMT per annum (MMTPA) operation at Nimbol. It now aims to reach 35 MMTPA of cement capacity by FY28, nearly 15 times its initial capacity. Its portfolio spans cement, ready-mix concrete and modern building materials.On sustainability and cost efficiency, Nuvoco partnered with CleanMax for a 46.4 MW wind-solar hybrid re..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code