The auto sector has been in focus after the announcement of Q2 numbers by a host of index majors like M&M and Maruti. International brokerage house Nomura has picked three auto stocks this week on the back of key drivers, including demand for SUVs, a festive boost to sales, and new launches. The brokerage maintained its ‘Buy’ on the two stocks and retained a ‘Neutral’ call on Mauti Suzuki. The brokerage firm sees as much as 22% in one of these auto stocks.
Nomura on Mahindra & Mahindra: Top OEM pick
Nomura reiterated that its top OEM pick is Mahindra & Mahindra. The brokerage estimates M&M’s SUV growth to continue outperforming the industry at 18% for FY26, 11% for FY27, and 7% for FY28, driven by premiumisation and a strong model cycle.
Going forward, M&M will launch more BEVs, ICE models, and possibly Hybrids over the next two years. PLI approval for BEVs will give M&M a strategic advantage over its peers. Also, the company’s new Bolero has received a strong response. Moreover, the initial festive season demand has been strong.
The brokerage has raised the target price to Rs 4,355 from Rs 4,066, implying a 22% upside from the current levels.
Nomura on Hyundai Motor India: New Venue to unlock growth in H2
Nomura stated that the new Venue could be a key catalyst in Hyundai’s growth in the compact SUV market. The margins are also likely to be better on the new Venue. “Our estimates imply 12% YoY growth in 5M FY26 (vs 3% YoY till October 2025). While near-term margins may face some pressure from the ramp-up of the new Pune plant, higher exports and mix improvement should support overall profitability,” it said.
Hyundai Motor launched the second-generation Venue at an introductory price of Rs 7.90 lakhs. While the new Venue will span 4 meters in length (same as the previous generation), it will be
slightly taller and wider. “The new Venue should act as a key catalyst for Hyundai’s H2 FY26 growth, aided by firm export traction.
SUVs form 71% of Hyundai’s volumes, led by Venue and Exter, and the refreshed model should help sustain share gains through FY26–27.
The brokerage maintained a ‘Buy’ rating on the stock, with a target price of Rs 2,833, implying an upside of 18.3%.
Nomura on Maruti Suzuki: Expect improved hatchback demand in short term
On to Maruti Suzuki, Nomura is factoring in 5% higher Average Selling Prices (ASPs), driven by a better mix (likely CNG and parts). However, the brokerage expects that the guidance of 6% industry growth seems conservative.
“We revise Maruti Suzuki’s FY26 domestic volumes by -3% to +3% YoY (implying a 10% growth in H2 FY26). We factor in domestic growth of 8% for FY27 and 5% for FY28. We raise export volumes by 4% to 432k +30%,” said Nomura.
According to Nomura, the margins are likely to rise in H2 on lower discounts and operating leverage. The brokerage believes the strong pent-up demand and aggressive pricing by Maruti Suzuki will improve the outlook for hatches in the near term.
However, over the medium term, SUV growth is likely to remain higher, which could keep market share under pressure. The brokerage has maintained its Neutral rating on Maruti Suzuki, with a target price of Rs 16,956, implying an upside of 4.8%.