The auto sector stocks are in focus after the announcement of the monthly sales numbers. The street is particularly keen to understand the impact of the GST cut on demand. Domestic brokerage house Motilal Oswal has shared its list of top auto sector stocks. According to the brokerage, September turned out to be an unusual month for the auto industry, shaped by GST rate cuts, the Shradh period lull, and a late festive push.
Motilal Oswal on Auto: Buy, Sell and Neutral recommendations
Motilal Oswal believes GST cuts and rural strength are setting the stage for a broader revival in auto demand through FY26. The firm has raised its growth estimates across categories – Two-wheelers, passenger vehicles, CVs, and tractors while highlighting its top stock picks.
“The GST Council has provided a much-needed booster shot to the auto sector by reducing the tax rates on the majority of auto segments,” the brokerage said.
Here is where the firm stands on key stocks –
Buy: Maruti Suzuki and Mahindra & Mahindra remain top picks, with new launches, rural sentiment, and exports expected to drive double-digit earnings growth. Hyundai, Hero MotoCorp, and Ashok Leyland are also in the positive basket.
Sell: Eicher Motors is the only stock on which the brokerage maintains a bearish stance.
Neutral: Tata Motors, Bajaj Auto, and TVS Motor are seen as steady performers with limited near-term triggers.
Let’s take a look at what is the brokerage say on this sector and which are its top pick
Motilal Oswal on Auto: Why September was a tricky month for autos
As per the brokerage report, September did not follow the usual script for auto demand. For the first three weeks, both passenger vehicles (PVs) and two-wheelers (2Ws) faced sluggish demand. Many buyers chose to wait, hoping to benefit from GST rate cuts that became effective on September 22, while the Shradh period further held back purchases.
“Sep’25 auto sales are expected to see interesting trends. For both PVs and 2Ws, demand remained weak for almost three weeks as customers postponed their purchases to take advantage of GST rate cuts, effective 22nd Sep, and also due to the Shradh period ahead of the Navratri festival,” Motilal Oswal noted.
The brokerage house pointed out that it was not until Navratri that demand revived sharply, with pent-up buying and fresh discounts giving a much-needed lift to showrooms.
Motilal Oswal on Auto: Passenger vehicles – Discounts and pent-up demand
The brokerage highlighted that passenger vehicle sales bounced back strongly after Navratri. This was supported by higher discounts and price cuts in some segments.
“Players like Maruti Suzuki have cut prices of entry-level vehicles even below GST rates in a bid to revive demand in the segment,” the report noted.
According to Motilal Oswal, wholesale dispatches in PVs are expected to post around 6% year-on-year growth for September.
Motilal Oswal on Auto: Two-wheelers – Stronger festive recovery
According to the brokerage house report, the two-wheeler demand had already been improving in July and August. The festive push only strengthened that trend. .
Interestingly, discounting was less aggressive in two-wheelers compared to PVs, showing that demand recovery was led more by sentiment and affordability than price cuts.
Motilal Oswal on Auto: CVs and tractors – Mixed signals
The commercial vehicle (CV) space showed a split trend. While GST cuts benefited smaller segments like SCVs (small commercial vehicles), larger fleet buyers who already claim input tax credit (ITC) saw limited impact.
“The benefit of GST rate cuts is the highest for low-tonnage segments,” the brokerage added, noting that September CV sales could grow around 3% year-on-year.
Tractors, however, remained the star performer. Supported by normal monsoon, healthy crop cycles, and improved MSPs, rural demand kept volumes buoyant. The GST cut to 5% on tractors and their components added to the tailwinds.
Outlook: Festive season could change the game
Looking ahead, Motilal Oswal expects the festive quarter to be a turning point for autos, with GST cuts, easing interest rates, and rural demand likely to provide strong tailwinds.
“We have now raised our FY26/FY27 volume growth estimates for 2Ws to 4%/7.5%, PVs to 3%/8%, CVs to 5%/7%, and tractors to 10%/6%,” the brokerage added.