Emkay Global Financial Services has highlighted several auto stocks in its latest sector assessment, with the brokerage assigning ‘Buy’ ratings to at least nine companies and setting target prices that indicate potential upside of up to 58% from the levels considered in its report.
The brokerage has identified Tata Motors Ltd (TMCV) as its top pick in the auto sector, while saying that the sustainability of demand in the second half of the year will remain an important factor to monitor. Emkay also remains positive on Ashok Leyland, citing strong medium and heavy commercial vehicle (MHCV) demand and expectations of margin improvement from the second half.
In the two-wheeler space, Emkay highlighted TVS Motor, pointing to premiumisation and electric vehicles as key long-term growth drivers. It also covered Ather Energy, while Hyundai Motor India and Mahindra & Mahindra were identified among its four-wheeler picks.
Tata Motors, Ashok Leyland Targets Highlighted
Emkay has assigned a Rs 700 target to Tata Motors, implying a potential upside of 58%. For Ashok Leyland, the brokerage has set a target of Rs 240, indicating 47.4% potential upside.
The target for Escorts stands at Rs 4,000, which translates into a potential upside of 42.9%, according to the brokerage’s assessment.
Emkay said the commercial vehicle segment continues to show strong demand, supported by a healthy freight environment. The ability of vehicle manufacturers to implement successive price increases without significantly affecting demand was cited as one indication of the segment’s strength.
The brokerage expects the staggered festive season, with Navratri and Dussehra in October followed by Diwali in November, to support demand across the automobile industry despite a high comparison base. It also described the current demand cycle as broad-based across commercial vehicles, passenger vehicles and two-wheelers.
Ather Energy, M&M and Hyundai Targets
Among two-wheeler stocks, Emkay has set a Rs 2,200 target for Ather Energy, indicating 36.6% potential upside based on the reference price used in its report.
For Mahindra & Mahindra, the brokerage has given a target of Rs 4,100, implying 34.3% potential upside. Hyundai Motor India has also received a ‘Buy’ rating with a target of Rs 2,600, representing 26% potential upside.
Emkay said two-wheeler demand has become increasingly broad-based, with rural markets playing a growing role. The brokerage also noted that retail demand has remained evident despite supply-related constraints.
Commercial Vehicles and Passenger Cars Remain in Focus
According to Emkay, commercial vehicle demand appears to have a structural component, with both volumes and vehicle values benefiting as fleet operators move towards higher-tonnage trucks, including 49-tonne vehicles compared with 40-tonne trucks.
The brokerage also pointed to broad-based growth across commercial vehicle sub-segments. It said bus order books remain particularly strong, while Tata Motors Commercial Vehicles and Ashok Leyland have substantial order pipelines, including sizeable electric-bus backlogs.
Passenger vehicle demand, meanwhile, has remained healthy. Emkay said GST-led price adjustments have helped revive interest in entry-level models, particularly those offered by Maruti Suzuki India and Tata Motors Passenger Vehicles. The brokerage noted that consumers continue to remain price-sensitive while also paying attention to features.
Disclaimer
This article is intended only for general information and should not be treated as investment advice or a recommendation to buy or sell any stock. The target prices and potential returns mentioned are views expressed by Emkay Global Financial Services and may change with market conditions. Investors should independently evaluate risks and consult a qualified financial adviser before making investment decisions.