Auto demand upcycle to sustain; M&M, Maruti, TVS, Tata Motors top picks: Kotak

India’s automobile sector has entered a broad-based demand upcycle that could continue into 2026-27 (FY27), according to Rishi Vora, Analyst at Kotak Institutional Equities.

Reviewing February Vahan registration trends, Vora said demand strength is visible across segments rather than confined to one category.

“Festive was bumper. And even beyond festive in December, January and including February, so far, we are seeing very strong demand trends across all the categories.”

He expects double-digit growth in passenger vehicles and two-wheelers, with even stronger momentum in commercial vehicles and tractors.

“In two wheelers and passenger vehicle segment… we will see a healthy… double-digit growth. Mid-teens maybe can go closer to 20%… commercial vehicles and tractors are tracking even about 20%… and tractors maybe even closer to 50%.”

The recovery should persist in the near term.

“It is quite broad-based… everything right now is in a very strong double-digit zone… and we expect it to sustain over the coming months as well, at least till… one quarter of FY27.”

Also Read | Rajiv Bajaj: Exports, EVs will drive Bajaj Auto growth next year

Within two-wheelers, electric vehicles (EVs) continue to expand, with market share gains shifting toward stronger executors.

“We believe that TVS Motors, which is the leader at this point in the EV two-wheeler segment, will continue to outpace the industry growth.”

In internal combustion models, premium motorcycles and scooters are expected to outperform entry-level segments.

Vora’s preferred stocks span categories: Mahindra & Mahindra and Maruti Suzuki in passenger vehicles, TVS Motors in two-wheelers and Tata Motors in commercial vehicles. He said Maruti currently faces capacity constraints amid strong demand.

Also Read | Motherson to use auto capabilities to enter aerospace, medical devices

“Today, the demand is actually outpacing the production.”

Upcoming capacity additions and income-related triggers could support demand further.

“We do believe that the demand tailwind will extend beyond the first half as well… next year, there is also the eighth pay commission… especially in the passenger vehicle segment.”

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here