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Maruti Suzuki, Hyundai, and TVS Motor are HSBC's preferred auto sector picks
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HSBC hiked share price targets for Maruti Suzuki, Hyundai, M&M, and TVS Motor
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HSBC raised fiscal 2027-28 earnings estimates by 4-14% for automakers
Maruti Suzuki India Ltd., Hyundai Motor India Ltd., and TVS Motor Co. are the preferred auto sector picks for global multinational investment firm HSBC.
Analysts have factored in 200-300 basis points higher CAGR over the next four to five years across the auto segments due to demand boost after the GST-driven price cuts.
They noted a surge in the share price of automakers by 6-17% since the GST revisions announced by Prime Minister Narendra Modi on Aug. 15. Growth could be front-end loaded, leading them to lift their fiscal 2027 and FY28 earnings estimates by 4-14% across companies.
"Recent GST revisions should lead to increased auto demand as prices come off by 3-9% across categories. Overall, lower prices mean better affordability, an increase in first-time buyer numbers and higher replacement demand," HSBC said in a note.
Tailwinds
In the passenger vehicle segment, cars are likely to see price reductions of Rs 40,000 to Rs 1.5 lakh, with the highest cost reductions on Rs 10 lakh to Rs 15 lakh-priced vehicles.
"The top beneficiary will be compact UVs, followed by large diesel SUVs, then entry-level cars. Tata's PV portfolio is set to see the highest price reductions across its portfolio, followed by Maruti, Hyundai, then M&M," the HSBC note said.
Analysts said price cut, festive season, and buoyant rural demand are key tailwinds for the two-wheeler segment.
"While the GST cut may push premiumisation from economy to executive vehicles, it will also attract first-time buyers as the on-road price of entry-level motorcycles will fall from Rs 70,000 to Rs 63,000. However, e2W penetration might stagnate in the near term due to dilution of the value proposition," the note said.
Check HSBC's Share Price Targets
Maruti Suzuki – Maintain Buy; Hike target to Rs 17,000 from Rs 14,000
Hyundai Motor India– Maintain Buy; Hike target to Rs 2,800 from Rs 2,300
M&M – Maintain Buy; Hike target to Rs 4,000 from Rs 3,570
Tata Motors – Maintain Hold; Hike target to Rs 770 from Rs 730
Ashok Leyland – Maintain Hold; Hike target to Rs 145 from Rs 130
Escorts Kubota– Maintain Reduce; Hike target to Rs 3,400 from Rs 3,000
Bajaj Auto – Maintain Hold; Hike target to Rs 10,000 from Rs 9,700
Eicher Motor – Maintain hold; Hike target to Rs 7,000 from Rs 5,800
TVS Motor – Maintain Buy; Hike target to Rs 4,000 from Rs 3,500
Ola Electric Mobility – Maintain Hold; Hike target to Rs 55 from Rs 49
Ather Energy – Maintain Buy; Hike target to Rs 600 from Rs 450
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