India’s automobile sector is showing steady demand, especially in the domestic market despite global uncertainties. Key automotive stocks are also putting up a steady front amid volatility across the stock market. Domestic brokerage house, Motilal Oswal, in its latest report, noted that buying activity across segments from cars to tractors has been stable, with signs of further momentum building.

But the bigger question is which stocks are best placed to ride this demand wave?

Let’s take a look at the stocks Motilal Oswal is bullish in the automobiles sector list and the rationale behind it –

Motilal Oswal top automobiles pick: Which are the stocks in focus

According to Motilal Oswal report, the focus remains on a select group of original equipment manufacturers (OEMs). These are companies that manufacture vehicles.

The brokerage its top picks in the sector has identified Maruti Suzuki India, TVS Motor Company, and Mahindra & Mahindra.

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These companies are seen as well-positioned due to a mix of strong domestic demand, new product launches, and improving operating conditions. As per the brokerage report,

The brokerage noted, “Demand momentum continues to remain healthy across most auto segments, even in March.”

Motilal Oswal’s top automobile picks: Passenger vehicles lead the charge

Passenger vehicles (PVs), which include cars and utility vehicles, continue to show strong traction.

As per the brokerage report, “Retail demand continued to remain healthy across segments, even in March.”

The report also highlighted that new launches are playing a key role in driving growth. For instance, Mahindra & Mahindra is expected to benefit from its recent vehicle introductions, while Tata Motors Passenger Vehicles (TMPV) is seeing traction from its electric vehicle lineup.

At the same time, some constraints remain. The brokerage noted that “Maruti Suzuki wholesales are expected to be capped due to supply constraints, even as retail demand remain intact.”

Motilal Oswal’s top automobile picks: Two-wheelers steady

The two-wheeler segment, which includes motorcycles and scooters, is also seeing stable demand.

Motilal Oswal added, “Retail demand continued to remain healthy in March, driven by improved consumer sentiments and a pick-up in wedding season demand.”

However, not all players are moving at the same pace. The report pointed out that “Royal Enfield is likely to underperform peers due to weak exports.”

Motilal Oswal’s top automobile picks: Commercial vehicles and tractors gain traction

The commercial vehicle (CV) segment, which includes trucks and buses, is also seeing a recovery.

“Retail demand continues to remain healthy for the CV segment,” added the brokerage house report.

At the same time, exports remain a concern due to geopolitical issues. The report noted that export demand could stay under pressure, particularly in regions like the Middle East.

Tractors, on the other hand, are emerging as a strong growth segment.

Furthermore, Motilal Oswal added, “Tractors continue to witness robust demand in the month.”

Motilal Oswal’s top automobile picks: What’s driving the sector?

A combination of factors is supporting the overall demand environment.

This include improved affordability, stable income levels, and seasonal demand such as weddings and festivals are all contributing to higher vehicle sales.

“Given the lean inventory, the strong wholesales momentum is likely to continue in the near term,” according to the brokerage report.

Auto sector: What to watch

Overall, the brokerage remains constructive on the sector, but with some caution around exports and global uncertainties. Domestic demand is expected to remain the key growth driver, while pricing discipline and new launches could support margins.

Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.