Citi said that the auto sector demand outlook remains modest, with FY26 volume growth guidance pointing to low single-digit growth for two-wheelers (2Ws) and mid-to-high single-digit growth for passenger vehicles (PVs).
Global demand remains cautious, weighed by geopolitical uncertainty and tariffs — especially for auto component makers. That said, many OEMs remain optimistic on export prospects.
Citi flagged emerging cost pressures that could erode margins in the coming quarters, including:
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Rising metal costs — particularly steel and aluminum
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Regulatory costs — especially in 2Ws and commercial vehicles (CVs)
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Potential supply chain disruptions in rare earth metals.
Citi’s preferred order in OEMs is Maruti > M&M > Hyundai, while Endurance Technologies remains its top pick among auto component stocks.
Disclaimer: The views and target prices mentioned in this article are as stated by Citi. They do not represent the opinions or recommendations of this publication. Readers are advised to consult their financial advisors before making any investment decisions.
