Jefferies maintains its positive stance on the Indian auto sector, reiterating Buy ratings on Mahindra & Mahindra (M&M), TVS Motor Company, and Eicher Motors (EIM). The brokerage acknowledges that valuations for most stocks in the sector are elevated but believes multiples will remain high given robust growth prospects.
M&M continues to be an attractive pick, trading at 24x FY26E core business earnings with an EPS CAGR of 19% over FY24-27E. TVS, though trading at 35x FY26E P/E, is expected to deliver the highest EPS CAGR of 30% in the same period. Eicher Motors, following a 40% underperformance against the Nifty Auto Index since January 2023, is seen as a value pick, trading 7% below its 10-year average P/E on consensus estimates.
Jefferies expects these companies to benefit from rising market share and expanding product portfolios, making them attractive investment opportunities in the Indian auto sector.
