Jefferies has shared its outlook on the Indian auto sector for 2025, reiterating its preference for two-wheelers (2Ws) and tractors over passenger vehicles (PVs) and trucks. The brokerage has highlighted strong growth potential for select stocks with revised target prices.

Key highlights on Auto sector stocks:

  1. Growth Projections:
    • Two-wheelers and tractors are expected to grow at a 13-15% CAGR over FY25-27E, significantly outpacing the 5-8% CAGR projected for PVs and trucks.
  2. Stock-Specific Preferences:
    • Mahindra & Mahindra (M&M):
      • Rating: Buy
      • Target Price: Raised to ₹4,075 from ₹3,700.
      • Key Drivers: Gaining market share across tractors, PVs, and light commercial vehicles (LCVs).
    • Eicher Motors:
      • Rating: Buy
      • Target Price: Raised to ₹6,600 from ₹5,500.
      • Key Drivers: Strong performance in the premium motorcycle segment.
    • TVS Motors (TVSL):
      • Gaining traction in both domestic and export two-wheeler markets.
  3. Target Price Revisions:
    • Bajaj Auto:
      • Rating: Buy
      • Target Price: Cut to ₹10,350 from ₹13,400.
    • Hero MotoCorp:
      • Rating: Buy
      • Target Price: Cut to ₹4,900 from ₹5,500.
  4. Sector Leaders:
    • M&M, Eicher Motors, and TVS Motors remain Jefferies’ preferred Buys, with strong growth momentum across multiple segments.

Jefferies sees two-wheelers and tractors leading the auto sector’s growth in FY25-27, supported by robust demand and market share gains. Stocks like M&M, Eicher Motors, and TVS Motors are expected to outperform, while Bajaj Auto and Hero MotoCorp remain attractive despite revised target prices.

Disclaimer: The above analysis is based on provided data and is for informational purposes only. It does not constitute financial advice. Readers should consult their financial advisors before making investment decisions.

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