Maruti, M&M, Other Auto Stocks Trade Mixed After Brokerage Upgrades

Auto stocks traded mixed on Tuesday morning after target price upgrades from global brokerages Morgan Stanley and Bank of America, across several key players in the sector.

The broader sentiment in the auto sector has been driven by the recent GST rate cut, which has sparked a rally of over 5% in Nifty Auto since the announcement.

Despite this upbeat outlook, individual stock movements remained modest on Tuesday. Maruti Suzuki Ltd. rose to a high of Rs 15,335, up 0.5%, before dipping slightly. Mahindra and Mahindra Ltd. saw a marginal gain of 0.18% at Rs 3,708 but also traded lower during the session. TVS Motor Company Ltd., Hyundai Motor Ltd., Ashok Leyland Ltd., and Eicher Motors Ltd. all showed similar patterns of minor gains and losses, suggesting that while the long-term view is positive, short-term sentiment remains cautious.

Morgan Stanley maintained 'overweight' ratings on Maruti, Hyundai, M&M, Ashok Leyland, and TVS Motor, raising their target prices.

Hero MotoCorp and Eicher Motors were upgraded to 'equal-weight', with their targets also revised upwards.

Bajaj Auto, however, received a downgrade to 'underweight' and a reduced target price, indicating concerns about its relative performance in the evolving market.

BofA echoed the bullish stance, lifting target price for Maruti, M&M, TVS Motor, Hero MotoCorp, Eicher Motors and Bajaj Auto.

BofA's analysis pointed to specific trends within different vehicle segments. The two-wheeler market is transforming into an "upgrader market", a shift from the previous reliance on a recovery in the entry-level segment driven by rural demand. The brokerage noted that for the passenger vehicle segment, the focus is shifting from premiumisation to penetration.