Mirae Asset Sharekhan's Outlook On Auto Sector: Why M&M Is The Top Pick?

Will the auto sector continue its strong recovery, or is the recent surge in sales just a short-term trend? In this in-depth discussion from Market Today on Business Today TV, Gaurav Dua, Head of Capital Market Strategy at Mirae Asset Sharekhan, breaks down the latest trends in the two-wheeler, four-wheeler, and commercial vehicle segments and shares his outlook on the sector’s future.

January’s auto sales numbers were historic, with leading players like Maruti Suzuki posting strong growth. However, Gaurav Dua highlights that Maruti's recent success was driven by exports rather than a revival in domestic demand. This shift suggests that while international markets are showing strength, the Indian passenger vehicle market has yet to see a full-fledged turnaround. Meanwhile, commercial vehicles have faced a downward revision in sales estimates, raising concerns about demand in that segment.

On the investment front, Mahindra & Mahindra (M&M) remains the preferred stock in the auto space. Gaurav Dua explains that M&M’s efficient capital allocation, improving subsidiary performance, and strong SUV & EV demand have made it an outperformer for over two years, and it continues to be a solid bet for investors. The company’s strategic focus on electric vehicles (EVs) and SUVs, along with healthy financial management, sets it apart from competitors.

The policy landscape has also evolved, with auto stocks no longer facing the negative budget impact they once did. Earlier, new budgets often brought unexpected taxation on auto parts, but now, with GST reforms and positive announcements for EV and battery players, the sector is in a much better position. The government’s recent focus on custom duty adjustments for EVs and battery components further signals support for the industry’s long-term growth.

📉 So, what lies ahead for auto stocks? Will domestic demand pick up, or will exports continue to drive growth? Should investors bet on traditional players or EV-focused companies? Watch the full discussion for expert insights on the road ahead!