PV, CV, 2W sales growth to moderate post festive season: Monarch Networth Capital
According to Monarch Networth Capital Limited (MNCL), sales growth will moderate for the PV, CV and 2W industry in 2HFY27 on a high base, while tractor sales will remain lacklustre. Therefore, MNCL prefers diversified auto ancillaries, which have several levers for content per vehicle expansion, over and above the underlying industry growth.
The Indian automobile industry reported healthy volume growth in October 2026, supported by strong festive-season demand, improved consumer sentiment and sustained replacement demand. GST rationalisation and improved affordability further supported vehicle demand across most segments. Passenger vehicles, two-wheelers, three-wheelers and commercial vehicles witnessed healthy growth, indicating broad-based demand momentum. However, the farm equipment segment remained weak, reporting double-digit volume de-growth, reflecting continued pressure on tractor demand.
Minda Corp, RK Forgings, Sundaram Fasteners top picks
From MNCL’s coverage universe, Minda Corporation, RK Forgings and Sundram Fasteners are top stock picks, owing to their potential to outgrow the underlying industry.
Minda Corporation is expected to deliver strong growth through increasing content per vehicle.
Stock rating: BUY | Target price: Rs 985 | Upside: Up to 44%
RK Forgings is well-positioned to benefit from a healthy new order booking and expansion in casting.
Stock rating: BUY | Target price: Rs 805 | Upside: Up to 16%
Sundram Fasteners is expected to benefit from its export orders and diversification into non-auto.
Stock rating: BUY | Target price: Rs 1,315 | Upside: Up to 23%
Additionally, valuations at current market prices appear very attractive for all three stocks.
“The passenger vehicle segment reported strong sales volume growth in October 2026, supported by festive-season demand, improved affordability, strong exports and favourable consumer sentiment. The festive calendar, with Navratri and Dussehra falling in October, resulted in a concentration of vehicle deliveries, while advance dealer stocking ahead of Dhanteras and Diwali in November further supported wholesale dispatches. The benefits of GST 2.0 have improved vehicle affordability and purchasing power, supporting both first-time buyers and replacement demand. Demand continued to be skewed towards SUVs and compact SUVs, with a wider product portfolio and new launches supporting consumer traction. Despite a high base, Maruti Suzuki, Tata Motors and Hyundai reported strong double-digit Y-o-Y volume growth backed by large order backlogs, while M&M reported relatively muted growth of 1% Y-o-Y, largely due to a very higher base. We will closely watch out for the inventory levels and order backlogs to determine the growth trajectory. However, we expect the overall 4W sales growth to moderate in 2HFY27 once the festive period ends,” says Sahil Sanghvi, VP, Institutional Research at Monarch Networth Capital.
For two wheelers, improving rural demand, replacement buying, premiumisation and rising EV penetration are expected to support industry growth. However, as with passenger vehicle sales, MNCL expects the growth to taper in 2HFY27 on the back of a high base. On the 2W heavy auto ancillaries, MNCL suggests watching out for signs of sustained underlying industry growth before turning positive.
The commercial vehicle segment reported healthy volume growth in October 2026, reflecting sustained demand across freight and passenger transportation. Force Motors, Volvo Eicher and Tata Motors reported strong volume growth of 45%, 35% and 27% Y-o-Y, respectively, while M&M recorded 17% growth. The M&HCV segment continued to outperform, indicating healthy fleet utilisation and replacement demand. Going ahead, expansion in logistics activity, fleet replacement and sustained infrastructure spending are expected to support demand.
The farm equipment segment remained weak in October 2026, partly attributable to the high base of the previous year. Additionally, below normal and uneven monsoon rainfall have raised concerns over farm incomes and near-term tractor demand. While exports provided some support, with M&M and Escorts Kubota reporting healthy export growth, domestic demand remains subdued. Going ahead, post-harvest cash flows and improvement in rural liquidity will be key factors driving recovery in the segment.
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