Auto stocks have seen a meaningful decline over the past six months, creating pockets of value. According to a report by HSBC Securities and Capital Markets (India), the 10-30% fall in share price value has been driven by rising commodity costs and disruptions linked to the Middle East conflict, both of which continue to weigh on margins and demand visibility.
The brokerage has adjusted its earnings estimates for FY27 and FY28, building in slower demand and cost pressure. “Auto stock prices have fallen 10–30% over the past six months, largely due to commodity cost inflation and the Middle East conflict,” HSBC says. “We like the auto space in the medium to long term, but are braced for some further volatility in the near term.”
HSBC on Maruti Suzuki India: ‘Buy’
HSBC has maintained a ‘Buy’ rating on Maruti Suzuki India with a target price of Rs 15,000, implying an upside of 9.4% from the current price of Rs 13,709. The brokerage says the company is relatively better placed to manage fuel cost pressures due to its strong compressed natural gas portfolio, which continues to see steady demand. It also points to new product launches including its electric vehicle offering and hybrid models as drivers that can help the company hold its ground against peers.
At the same time, HSBC factors in the possibility of price hikes of 2-3% to offset rising commodity costs, which may weigh on demand in the near term and keep margins under pressure.
The brokerage also notes that earnings sensitivity remains tied to input costs and pricing action, with downside risks visible if commodity inflation persists longer than expected. Despite these concerns, it stays positive given the company’s scale, product pipeline and positioning in the passenger vehicle segment.
“We think inflation in petrol or diesel prices should be relatively less negative for Maruti due to its strong compressed natural gas portfolio,” HSBC says.
HSBC on Hyundai Motor India: ‘Buy’
HSBC has a ‘Buy’ rating on Hyundai Motor India with a target price of Rs 2,200, suggesting an upside of 22.5% from Rs 1,796. The brokerage says recent weakness has been driven by a combination of factors including a softer product launch cycle, pressure on market share and elevated exposure to export markets such as the Middle East. It also flags that demand for recently launched models has been weaker than expected, adding to the near-term challenges.
Even so, HSBC believes the company has levers to stabilise margins and improve growth over time. A planned price hike of 1% from May 2026 is expected to provide some support to profitability, while upcoming launches including new models and hybrid offerings could act as triggers for recovery. The brokerage sees these factors playing out over the next few financial years, keeping its constructive stance intact despite current headwinds.
“Weak product launch cycle and market share loss is leading to a decline in the consensus earnings per share estimate,” HSBC notes.
HSBC on M&M: ‘Buy’
HSBC has retained its ‘Buy’ rating on Mahindra & Mahindra with a target price of Rs3,900, implying an upside of 19.6% from Rs3,259. The brokerage says the stock has seen pressure largely due to concerns around the tractor cycle, where risks from El Nino conditions and high inventory levels have weighed on sentiment. This has led to a moderation in valuation multiples even as earnings estimates remain relatively stable.
The brokerage, however, believes the current valuation does not fully factor in the potential from upcoming launches, particularly those based on the new platform. It expects that successful product introductions could lead to earnings upgrades and a re-rating over time. While near-term demand in rural markets remains a watch point, HSBC continues to see strength in the company’s automotive business and product pipeline.
“We believe market is under estimating potential upside from the new platform next year,” HSBC adds.
HSBC on Tata Motors Commercial Vehicles:‘Buy’
HSBC has assigned a ‘Buy’ rating to Tata Motors Commercial Vehicles with a target price of Rs510, indicating an upside of 14.7% from Rs 444. The brokerage says the stock has seen a moderation in valuation multiples due to demand delays, postponement of orders from fleet operators and uncertainty around fuel prices. These factors have created near-term pressure on volumes and earnings visibility.
Despite these challenges, HSBC remains positive on the company’s medium- to long-term prospects. It points to the potential for improvement driven by operating leverage, recovery in demand cycles and value accretion from strategic initiatives including acquisitions. The brokerage believes that once demand stabilises, the company is well placed to benefit from its scale and positioning in the commercial vehicle segment.
“We remain positive on medium to long-term re rating potential of the commercial vehicles business and value accretion from the Iveco acquisition,” HSBC adds.
HSBC on Eicher Motors: ‘Buy’
HSBC has maintained a ‘Buy’ rating on Eicher Motors with a target price of Rs8,000, implying an upside of 7.8% from Rs7,424. The brokerage says near-term earnings could see some pressure due to risks around export revenue, particularly given the ongoing global tensions that affect key markets. This could weigh on volumes and margins in the short term.
However, HSBC continues to see a strong structural story in the business, led by Royal Enfield’s positioning in the premium motorcycle segment. It expects the brand to outperform peers over time, supported by premiumisation trends and steady demand in higher-end categories. The brokerage believes these factors provide a cushion against near-term volatility and support its positive stance.
“We expect Royal Enfield to outperform peers in the medium to long term on the back of premiumisation in the two-wheeler industry,” HSBC says.
HSBC on Ather Energy: ‘Buy’
HSBC has given a ‘Buy’ rating to Ather Energy with a target price of Rs 950, implying an upside of 10.1%. The brokerage says the company continues to gain market share in the electric two-wheeler space, supported by product strength and execution. It also expects the upcoming platform to support further growth momentum over the coming years.
At the same time, HSBC flags risks around slower adoption of electric vehicles and the impact of commodity costs on margins. It adds that policy support, including recent developments in electric vehicle regulations, could support demand from financial year 2028. The brokerage sees a balanced risk-reward profile, with growth visibility improving over time.
“Ather continues to gain market share, and we expect the upcoming platform to support growth momentum,” HSBC adds.
Conclusion
HSBC’s report lays out a selective approach within the auto space, where recent stock corrections have not fully removed near-term risks. Commodity costs, pricing actions and demand trends remain key variables that could influence earnings over the next few quarters. At the same time, companies with strong product cycles and positioning continue to find support in the brokerage’s recommendations.
Disclaimer: The investment ratings and target prices mentioned are based on a report by HSBC Securities and Capital Markets (India) and are for informational purposes only. These do not constitute an offer, solicitation, or specific investment advice by this publication. Equity investments are subject to market risks, and the projected upsides depend on variables such as commodity inflation, regulatory changes, and global geopolitical factors. Readers are strongly advised to consult with a SEBI-registered investment advisor before making any financial decisions based on these brokerage views.
This disclaimer has been generated using AI to support user well-being and responsible content consumption.