The brokerage firm Jefferies has placed its top bets in the Autos & Auto Parts sector on Mahindra & Mahindra and TVS Motor, followed by Maruti Suzuki and Eicher Motors. In its latest report, the brokerage noted that registration growth has begun to pick up in August, with tractors up 32% and two-wheelers and trucks rising 6-7%. However, passenger vehicles have remained soft, inching up just 1% month-to-date.
Let’s take a look at what the brokerage says about auto sector stocks –
Jefferies on Autos & Auto Parts: GST cut hopes
The brokerage house in its report noted that, “The GST rate rationalization appears to be on track for the festive season, given an enthusiastic response from the state governments, and we see no significant legal or parliamentary procedure requirements to impede a smooth rollout.”
Furthermore, the report highlights that the planned cuts, that is, slashing GST from 28% to 18% and 12% to 5% in select categories are likely to be funded by restructuring the GST cess. The biggest winners, according to the brokerage, will be two-wheelers and small cars.
As Jefferies notes, “Lower taxes should provide a significant demand boost, especially in 2Ws and small PVs.”
Jefferies on Autos & Auto Parts: Winners in market share – TVS and M&M
TVS Motor and Eicher Motors (Royal Enfield) are quietly but steadily gaining ground in the two-wheeler space. Jefferies notes that “TVSL’s 2W registration market share has risen from 15% in FY21-22 to 19% in YTD-FY26 (Aug: 20%).”
On the other hand, Hero MotoCorp has been steadily losing ground. “HMCL, conversely, has declined from 35% in FY22 to 28% in YTD-FY26 (Aug: 26%),” the report added.
Eicher Motors has also inched ahead, lifting its share to 5.2% this August.
In passenger vehicles, the standout gainer has been Mahindra & Mahindra. “MM’s registration market share has risen from 7% in FY22 to 14% in YTD-FY26, taking it to #2 position,” the brokerage report noted.
Meanwhile, leaders Maruti Suzuki and Hyundai have seen their dominance erode.
Jefferies on Autos & Auto Parts: Diverging fortunes in earnings
This shift in market share is also reflecting in profitability. The brokerage house pointed out that “Q1 EBITDA rose strong 21–32% YoY for TVS Motor and Mahindra & Mahindra, but grew just 3-6% YoY for Ashok Leyland, Bajaj Auto & EIM, declined 5-11% YoY for Hero MotoCorp, Hyundai & Maruti Suzuki, and fell a sharp 37% YoY for TTMT.”
Jefferies on Autos & Auto Parts: Outlook for August wholesales
The industry is expected to post modest wholesale growth in August, though most companies are likely to curb shipments ahead of the possible GST rate cut.
“We still expect Aug wholesales to rise, by 8-13% YoY for EIM(RE), Mahindra & Mahindra & TVSL, but to remain flattish YoY for Ashok Leyland, Bajaj Auto, Hero MotoCorp & Maruti Suzuki and decline 2-5% YoY for Hyundai and Tata Motors,” Jefferies said.
“Our preferred picks are Mahindra & Mahindra & TVS Motor, followed by Maruti Suzuki & EIM,” the report added.