India’s automobile and allied manufacturing space is seeing a steady pickup in demand alongside a faster move towards electric vehicles, according to a detailed field study and sector note released by Nomura. Dealer checks across Uttar Pradesh point to firm demand in passenger vehicles and two-wheelers, even as supply bottlenecks persist for select models.
Electrification is gathering pace across segments with policy backing, rising fuel costs and improving charging infrastructure acting as tailwinds. Against this backdrop, Nomura has identified a set of stocks where it sees upside from current levels, maintaining ‘Buy’ ratings across names tied to both core auto demand and the broader electrification chain.
Nomura on Mahindra and Mahindra: ‘Buy’
Nomura has retained a ‘Buy’ call on Mahindra & Mahindra with a target price of Rs 4,662, implying an upside of 44%. The brokerage builds its case around strong demand visibility across utility vehicles and a rising contribution from electric offerings, alongside steady execution in tractors and subsidiaries.
The valuation is based on a sum of parts approach, assigning value to the core automotive business as well as listed and unlisted investments. Dealer feedback cited in the report shows robust demand for models such as Scorpio N and Bolero, with supply constraints still visible in certain variants, indicating a healthy order pipeline.
“Demand sentiments across passenger vehicles and two wheelers have remained good, with select models facing supply constraints which indicates strong underlying demand momentum,” Nomura said in its report.
The firm also notes that Mahindra stands out in meeting upcoming fuel efficiency norms, given its relatively higher electric vehicle mix targets. It estimates original equipment manufacturers will need to increase EV mix by around one to two per cent annually over the next few years to comply with Corporate Average Fuel Efficiency norms, a shift that favours companies with early investments in electrification.
Nomura on Hyundai Motor India: ‘Buy’
Hyundai Motor India carries a ‘Buy’ rating with a target price of Rs 2,698, suggesting an upside of 43%. Nomura values the company at 25 times its estimated earnings for FY28, supported by a strong product pipeline and steady premiumisation across its portfolio. The brokerage expects Hyundai to benefit from upcoming launches in both internal combustion engine and electric segments, including premium EV models that could lift margins over time.
“Government policy direction is expected to remain supportive as seen from recently announced drafts which will likely support EV penetration,” Nomura said.
The report also points to improving EV penetration in the passenger vehicle segment, which has moved to around 4% in FY26 from 2.4% in FY25. Penetration in larger cars has already reached above 9% by the fourth quarter of FY26, indicating faster adoption in higher price categories where Hyundai has a strong presence. The company’s ability to balance volume growth with profitability remains central to Nomura’s positive stance.
Nomura on Ather Energy: ‘Buy’
Nomura maintains a ‘Buy’ rating on Ather Energy with a revised target price of Rs 1,111, indicating an upside of 24%. The brokerage has raised its volume estimates for FY27 and 2028 to 3,99,000 units and 5,09,000 units respectively, driven by strong demand trends in electric scooters and expanding distribution.
The report outlines that Ather’s revenues are expected to grow sharply, supported by rising adoption of electric two wheelers where penetration in scooters has already reached 16.4% in FY26. Nomura expects this segment to expand rapidly, with overall two-wheeler EV penetration potentially reaching around 17% by FY30.
“We expect strong demand for Ather electric two-wheelers to continue, supported by new launches and improving penetration levels across segments,” Nomura said.
The brokerage also expects the company to turn EBITDA positive by FY28, aided by operating leverage as volumes scale up. At the same time, it flags potential risks from subsidy changes and competitive intensity but maintains that the long-term growth trajectory remains intact.
Nomura on Sona BLW Precision Forgings: ‘Buy’
Sona BLW Precision Forgings has been assigned a ‘Buy’ rating with a target price of Rs 623, translating into an upside of 7%. Nomura’s investment case rests on the company’s strong positioning in the electric vehicle supply chain, particularly in driveline components and precision engineering.
The firm derives a significant portion of its revenue from global markets, and a large share is already linked to battery electric vehicles. This positions it well to benefit from the global shift towards electrification, even as domestic adoption gathers pace.
“Electric vehicle adoption globally remains far more advanced, particularly in China and the European Union, and this trend supports suppliers aligned with EV platforms,” Nomura said.
Nomura values the company at 42 times its estimated earnings for FY28, placing it in the middle of its expected valuation band. While the brokerage acknowledges risks from any slowdown in global auto demand, it sees structural growth drivers intact given rising EV penetration across key markets.
Nomura on Uno Minda: ‘Buy’
UNO Minda is also rated ‘Buy’ with a target price of Rs 1,513, indicating an upside of 32%. Nomura values the company at 45 times its projected earnings for FY28, backed by strong growth prospects in automotive components linked to electrification and advanced vehicle systems.
The company has been expanding its presence in sensors, controllers and other high-value components, areas that are gaining importance as vehicles become more technology-driven. Nomura believes this transition positions Uno Minda to capture a larger share of value in the evolving auto ecosystem.
The report also highlights that EV penetration across segments such as three wheelers has already reached above 33% by the end of FY26 and could approach 60% by FY30. This rapid adoption is expected to drive demand for components supplied by companies like Uno Minda.
Conclusion
Nomura’s latest sector study paints a picture of steady demand recovery alongside a decisive push towards electrification across India’s auto industry. Passenger vehicles and two wheelers are seeing firm traction on the ground, while policy support, rising fuel costs and improving infrastructure continue to support EV adoption. The brokerage expects this trend to sustain over the next few years, with penetration levels rising across categories and new model launches widening consumer choice.
Disclaimer: Investment analysis and stock ratings mentioned here represent the views of the brokerage firm and do not constitute personal financial advice or a recommendation to buy, sell, or hold any security. Investors should note that equities, particularly those in evolving sectors like EVs, involve significant market risk and volatility. It is strongly recommended to consult a SEBI-registered investment advisor to assess the suitability of any investment based on your individual risk profile and financial goals.
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