4 days Ago By [email protected] (Avishek Banerjee)
Updated April 16th 2025, 13:28 IST Emkay foresees continued headwinds in FY26, driven by slowing domestic demand and rising global uncertainty, particularly due to ongoing tariff tensions India’s automotive sector showed signs of cooling off in the fourth quarter of FY 2024-25, with revenue growth for key listed players (excluding Tata Motors) estimated at around 9% year-on-year, according to a report by Emkay Global. Once marked by strong double-digit growth across categories, the sector now appears to be entering a more moderate phase, with margins also beginning to soften. In the two-wheeler segment, revenue growth is expected to come in at roughly 6%, led by strong volume gains from Eicher Motors and TVS Motor, which posted year-on-year growth of around 24% and 15%, respectively.
However, margins may see a slight sequential dip, impacted by a mix of volume and pricing dynamics. The four-wheeler space is projected to grow by 11% year-on-year, buoyed by solid performances from OEMs like Ashok Leyland, Mahindra & Mahindra (M&M), and Hyundai Motor India (HMIL). Margins for the segment are expected to remain largely stable, the report noted.
Among auto ancillary players, growth is expected to be more muted—around 7% year-on-year—mainly due to sluggish performance in the tyre segment and export-focused companies like Bharat Forge. However, Uno Minda is likely to outperform its peers, supported by increased content per vehicle and resilient domestic demand. Also Read: Passenger Vehicle Sales Stood at 4.
3 Million Units, Surged by 2% - SIAM | Republic World Stocks to Watch According to Emkay, top picks for the quarter include Eicher Motors, TVS Motor, and Maruti Suzuki, citing strong product portfolios, disciplined pricing, and a rebound in exports. Both M&M and Uno Minda have been upgraded to ‘ADD’ due to improved valuations following recent stock corrections. M&M is also expected to benefit from the commencement of its EV sales during the quarter.
Meanwhile, Bharat Forge has been downgraded amid weakening demand in the commercial vehicle segment and export markets. Outlook and Challenges Looking ahead, Emkay foresees continued headwinds in FY26, driven by slowing domestic demand and rising global uncertainty, particularly due to ongoing tariff tensions. As a result, earnings estimates for FY26 and FY27 have been revised downward by around 4% across the board.
Global-facing component makers such as Bharat Forge, Samvardhana Motherson, and Suprajit Engineering are expected to face steeper cuts, with earnings estimates lowered by 9–12%. Despite the cautious outlook, analysts remain selectively positive, particularly on two-wheeler companies, due to increasing replacement demand and signs of rural recovery. In the passenger vehicle segment, Maruti Suzuki remains a preferred pick, with its upcoming ICE SUV launches expected to bolster performance.
Tata Motors is also seen as a long-term value play, supported by the ongoing turnaround at Jaguar Land Rover (JLR). Published April 16th 2025, 13:28 IST.
