- Mahindra & Mahindra and TVS Motor lead India's auto sector growth
- Mahindra's passenger vehicles sales rose 25% and tractor division grew 29% in March
- TVS Motor gained 25.9% share in electric two-wheeler market with volume up 25%
Following a strong March that saw retail auto sales skyrocket 26%, brokerages have given their verdict on India's auto space, picking out two companies, in particular, that are dominating the trends.
The companies in question are Mahindra & Mahindra Ltd. and TCS Motor Ltd., with both emerging as the premier plays in India's auto sector, which reported resilient growth in March.
Top brokerages such as Morgan Stanley, Macquarie and Citi have already put out selective 'buy' calls to navigate a FY27 that could be clouded by geopolitical uncertainty and rising raw material costs.
M&M has emerged as the favourite across the board, after the company's passenger vehicle sales jumped 25% to 60,272 units, while its tractor division outperformed peers with a growth of 29%. Macquarie and Morgan Stanley have both named M&M as the most preferred stock, citing the company's market share gains in tractors and a robust recovery in commercial vehicles
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On the other hand, TVS Motor is the top pick for those betting on the electric pivot. The company's total volumes rose 25% to over 5 lakh units in March, but what was particularly exciting was the growth in the electric two-wheeler space.
TVS now commands a 25.9% market share in the E2W market, according to Morgan Stanley, with segment penetration jumping nearly 10% this month.
For investors seeking a recovery play, Citi and Morgan Stanley have maintained a bullish call on Maruti Suzuki, India's largest carmaker, which reported a 17% growth in March, selling 2.25 lakh units and beating several estimates. Citi has placed Maruti at the top of its preference order, even ahead of M&M.
However, these recommendations come with a heavy asterisk, especially in the midst of the ongoing Iran War. Jefferies and Citi have warned that gas and chip supply disruptions remain the primary risks heading into the new fiscal year.
The margin pressure is rising and with an 85% international order book concentration in the Middle East for select players, the brokerages suggest the stock picking strategy must now focus on companies with the pricing power to offset this volatile energy crisis.
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