Tata Motors, Maruti Suzuki India, M&M: Analysts share top auto stock ideas ahead of June sales data

Auto makers are likely to report a muted set of sales data for June amid a lack of wedding dates. Two-wheeler makers (2Ws) are expected to report an average 5 per cent year-on-year drop in sales while passenger and commercial vehicle makers may log an average of 2 per cent drop each in units sold, Anand Rathi said while seeing flattish sales for tractors.

"June automobile wholesale volumes across segments are likely to  have been subdued, mainly due to lack of wedding dates. Listed 2W companies' volumes would have declined in single digits (2Ws overall would have grown, led by Honda and its favourable base). PV and CV volumes are likely to have  dipped slightly. Tractors are likely to have been flat," said Anand Rathi. 

Its preferred OEM picks include Hero MotoCorp, TVS  Motor and Mahindra & Mahindra Ltd (M&M).  

Within the 2W segment, Nuvama Institutional Equities sees a mixed bag, with growth for TVS Motor and Honda, flat performance for Bajaj Auto, and decline in volume growth for Eicher Motors (Royal Enfield) and Hero MotoCorp. Among PV OEMs, it expects some growth, with M&M outpacing Tata Motors and Maruti Suzuki India. In the CV segment, the growth is likely due to low base, Nuvama said. Among tractor makers, Nuvama is building in a marginal dip due to high base and weak farmer sentiments in southern states.

"Over FY24–26E, we believe 2W/tractor volumes would grow in high-single digits vis-à-vis low-single digits for PV. Our top picks among OEMs are Bajaj Auto and M&M," it said.

Ambit Capital said it prefers OEMs with better segmental outlook, company-specific revenue and margin triggers, lower risk of disruptions and reasonable valuations. It has initiated coverage on 9 OEM stocks with preference order among its 'Buy' recommendations being M&M, followed by Eicher Motors, Tata Motors Ltd and Ashok Leyland.

Broadly, Motilal Oswal Financial Services expects the 2W segment to continue to outperform other segments even in FY25 but believes it is fully priced-in after the recent strong rally in 2W stocks. Maruti Suzuki India is its top pick among auto OEMs, as "it continues to be a play on rural recovery with an attractive valuations."