Maruti Suzuki, Mahindra, Tata Motors: Why Auto Stocks Are New Favorites of Every Investor? Should You Buy?

Nifty Auto, which tracks top automobile giants like Hero MotoCorp, Maruti Suzuki, TVS Motors, Eicher Motors, MRF and Bajaj Auto, has zoomed nearly 24.35% in the past six months. The strong rally in auto stocks, coupled with their bullish outlook, has drawn attention of not just institutional players, but also of retail investors.

In August 2025, the automobile sector's weightage in mutual fund portfolios rose for the second month in a row, hitting a 10-month high of 8.5% (+50bp MoM; -10bp YoY), revealed Motilal Oswal's report. Adding to the frenzy, brokerage Emkay Global has also upped its allocation to auto stocks in its model portfolio. But what's really fuelling this sector's dream run: Is it strong earnings growth, festive demand optimism, or just a short-term trade?

Why Automobile Is The Buzzing Theme Among Investors?

The Goods and Services Tax (GST) rate cut, which came into effect today, ie September 22, and the cess withdrawal is one of the strongest boost for the auto sector in the recent historym and could trigger a cyclical recovery in the sector for next two-to three years, according to Incred Equities.

"The surge in demand is driven by multiple factors: resilient domestic vehicle sales, improving consumer confidence, and government incentives supporting electric vehicle (EV) adoption. Supply chains, which were disrupted in recent years, have stabilized, enabling companies to fulfill robust order books across passenger and commercial vehicles. Strong demand in both traditional and electric segments, combined with attractive growth prospects, is making the sector increasingly appealing. Automobiles now offer more than just a cyclical recovery play-they provide strategic growth potential in the medium to long term, particularly for companies that can capitalize on the evolving EV landscape and sustained domestic demand," stated Kalp Jain Research Analyst INVasset PMS

Should Investors Join The Automobile Frenzy?

Brokerages and experts are bullish on automobile stocks like Maruti Suzuki, Mahindra & Mahindra, and Tata Motors. "Tata Motors and M&M stand out with attractive valuations, underpinned by their EV pipelines and rising market shares in SUVs. Risks, however, remain-higher crude prices could pressure input costs and consumer sentiment, while any slowdown in exports due to global weakness may impact earnings," stated Naren Agarwal, CEO, Wealth1.

Maruti Suzuki Target Price

"High demand elasticity and car demand recovery from GST rate cut will be best captured by Maruti Suzuki, leading to market share gains and pricing power," noted IncredEquities in its report. The brokerage has given a target price of Rs 17677 per share to the auto stock.

Brokerage Motilal Oswal has given a 'Buy' rating to Maruti Suzuki with a target price of Rs 17890 per share. The stock opened at Rs 15835.20 per share on BSE on Monday.

CEAT Tyres Target Price

CEAT Limited shares opened at Rs 3391.40 per share on BSE on Monday. Motilal Oswal sees a 30% upside in its valuation in long run. The brokerage has given a target price of Rs 4393 per share on BSE.

Mahindra & Mahindra Target Price

The stock opened at Rs 3603.15 per share on BSE on Monday. Incred Equities has given an 'Add' rating to the auto stock. "Mahindra & Mahindra will benefit from both automotive demand growth and the tractor division's profitability improvement. We upgrade our rating on it from HOLD to ADD," noted the brokerage. It has fixed a target price of Rs 4157 apiece. Motilal Oswal also has a 'Buy' rating for the stock with a target price of Rs 4145 per share.

Tata Motors Target Price

Tata Motors shares opened at Rs 708.10 per share on BSE. The stock has an 'add' recommendation by IncredEquities. "Tata Motors to benefit big on a fresh truck demand upcycle, while the car division's participation in demand recovery to be gradual. Upgrade to HOLD rating (from REDUCE) for its attractive -1SD P/BV valuation." It has fixed a target price of Rs 744 per share.

Motilal Oswal has maintained a 'Neutral' stance on Tata Motors indicating a downside in its valuation. The brokerage has fixed a target price of Rs 686 per share.

Risks That Can Act As Speed Breaker For Auto Stocks

Despite their strong outlook, automobile stocks face several near-term risks that can hinder their bullish run. Rising interest rates and higher fuel costs could weigh on consumer demand, particularly for discretionary purchases like passenger vehicles. Any slowdown in economic growth or weakening consumer sentiment may also impact sales volumes. On the supply side, while supply chains have largely stabilized, unexpected disruptions or rising commodity prices-especially steel and semiconductor components-could pressure margins," added Kalp Jain.

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