Auto stocks gained as Kotak projected a strong Q1 FY27 for two-wheeler makers.
Bajaj Auto and TVS Motor are expected to lead earnings growth this quarter.
FADA reported record June vehicle sales, boosting sentiment across the automobile sector.
Automobile stocks traded higher on Monday, with Bajaj Auto and TVS Motor leading gains, after brokerage firm Kotak Institutional Equities projected a strong June quarter for two-wheeler manufacturers and diversified auto ancillary companies. Investor sentiment also received a boost from record June vehicle sales reported by the Federation of Automobile Dealers Associations (FADA).
The Nifty Auto index rose more than 1%, emerging as one of the top-performing sectoral indices during the session.
1 June 2026
Get the latest issue of Outlook Business
Among individual stocks, Bajaj Auto climbed 2.07% to ₹9,988, while TVS Motor advanced 2.06% to ₹3,702. Apollo Tyres gained 2.01%, Ashok Leyland rose 1.70%, CEAT added nearly 1%, and Maruti Suzuki traded marginally higher.
Kotak Expects Mixed June Quarter
In its Q1FY27 preview, Kotak Institutional Equities said it expects revenue for the automobile companies under its coverage to grow 17% year-on-year, although performance is likely to vary across segments.
"We expect revenues for the auto stocks under our coverage to increase by 17% YoY in 1QFY27," the brokerage said, adding that "it will be a mixed quarter with weak prints from Hyundai Motor, TMPV and tyre companies. Two-wheeler OEMs and diversified auto ancillaries will have a strong quarter."
Kotak expects Bajaj Auto's EBITDA to rise 40% year-on-year, followed by TVS Motor at 32% and Eicher Motors at 27%. Maruti Suzuki and Mahindra & Mahindra are both expected to post around 7% EBITDA growth, supported by healthy vehicle sales and improving product mix.
However, the brokerage expects Hyundai Motor India to report a 31% decline in EBITDA, while Jaguar Land Rover's EBITDA is projected to fall 32% because of operating deleverage, adverse foreign exchange movements and higher raw material costs.
Among component manufacturers, Bharat Forge, Endurance Technologies, Uno Minda and Sona Comstar are expected to deliver healthy earnings growth. In contrast, tyre manufacturers such as Apollo Tyres, CEAT and MRF could face margin pressure due to elevated rubber and crude-linked input costs.
Kotak added that softer crude oil and rubber prices towards the end of June should help improve margins from the September quarter onward.
Record June Sales
The sector also benefited from strong retail sales data released by FADA.
According to the industry body, overall vehicle retail sales increased 21.8% year-on-year to 2.6 million units in June, marking the highest-ever sales recorded for the month. Passenger vehicle sales rose 28.6% to 410,853 units, while two-wheeler sales climbed 21.2% to 1.8 million units.
FADA also said electric two-wheelers accounted for 10.6% of total two-wheeler sales during the month, crossing the double-digit mark for the first time.
The association attributed the strong demand partly to higher fuel prices following the rise in crude oil prices during the Middle East conflict. Maruti Suzuki had also indicated last month that bookings for its CNG vehicles increased 40% after petrol and diesel prices were raised.
The combination of a constructive earnings outlook and robust June sales data helped lift the broader automobile sector despite expectations of margin pressure in select segments.
