BofA Securities Upgrades Maruti Suzuki Shares, Identifies 5 Key Themes in the Automotive Sector

Shares Maruti-Suzuki On Thursday, January 16, the streak continued for the third consecutive session, with an increase of over 5% during the period. This increase follows an upgrade by BofA Securities, which raised its rating on the stock to “Buy” and raised its price target to ₹14,000, representing a potential increase of almost 16 percent from the daily high ₹12090.

Maruti Suzuki: Positioned for sustainable growth

BofA Securities has identified several growth drivers that could support Maruti Suzuki’s performance in 2025 and beyond. These include the launch of new value-enhancing commercial vehicles (UVs), increased export growth, further development of the alliance with Toyota and a strong entry into the electric vehicle (EV) market.

The brokerage highlighted Maruti’s resilience and market dominance, which puts it in an advantageous position to benefit from changing trends in the industry. At 22 times 2026 earnings, the stock’s risk-reward remains attractive, providing significant upside potential, BofA said.

However, it noted some uncertainties regarding the recovery in the mass segment, especially in entry-level cars, which were not included in the base case scenario.

Automotive sector: stabilization in the face of structural changes

BofA Securities expects automotive volume growth trends to stabilize at 5-7 percent annually across all sub-segments, supported by changing market dynamics and unfavorable structural factors:

Passenger vehicles (PV) and trucks: The growth rate is expected to be 4-5 per cent year-on-year, with a gradual recovery expected after a poor FY25.

Two-wheelers (2W): The segment’s volume is expected to grow 6-7 percent in FY2026, slowing from 11 percent in FY25.

Tractors: Growth in the tractor segment is likely to continue in the mid-single digits, reflecting the second year of economic growth.

Key growth factors in the automotive industry

The brokerage house presented five key factors shaping the future of the automotive sector:

Export: Indian automakers are using scale to drive export growth. Africa and Latin America have emerged as strong two-wheeler export markets, benefiting players such as Bajaj Auto and TVS Motor. Global manufacturers such as Suzuki and Hyundai are also leveraging India’s scale to increase production and exports.

Electric vehicles (EV): The coming year will be a key year for electric vehicles, especially in the photovoltaic segment. Upcoming launches like Mahindra & Mahindra (M&M) are expected to gain significant momentum.

Economic recovery: The long-awaited recovery in the mass solar segment is taking shape, with hatchback sales volumes at their lowest and affordability improving due to lower car prices.

Alliances and unlocking value: Strategic partnerships such as Maruti-Toyota continue to open up growth opportunities in the fast-growing Indian market. The country remains a rare global market with both scale and growth, attracting interest from global automakers and investors alike.

Global Risk: Challenges such as a weak European market, competition from Chinese electric vehicles and uncertainty in tariff policy pose risks for Indian suppliers, highlighting the need for diversification.

Stock-specific updates

Manufacturers of passenger and commercial vehicles

Mahindra and Mahindra (M&M): BofA maintained a “Buy” rating for M&M, with a target price of ₹3650. The company’s strong performance in the SUV segment and stable profits in the tractor cycle remain its key strengths.

Tata engines: : The brokerage maintained its “neutral” stance with a target price of ₹850, citing difficulties in Jaguar Land Rover’s (JLR) business and increasing competition in the electric vehicle market.

Ashok Leyland: : BofA maintained its “Buy” rating with a target price of ₹250, driven by a strong recovery in the commercial vehicle (CV) cycle.

Players on two wheels

Bajaj Auto: : The brokerage named Bajaj Auto as the top pick in the two-wheeler segment due to its strong valuation, high export exposure and progress in the electric vehicle segment. It maintained its “Buy” rating with the target price at ₹11,000.

TVS engine: TVS Motor has been upgraded to ‘Neutral’ with a target price of ₹2625. The brokerage noted the commendable increase in market share, growing trends in scooterization and less demanding valuation after recent corrections.

Companies producing car parts

The Forge of Bharat: : The price target for Bharat Forge has been lowered to ‘underperform’. ₹1100. Slowing core business growth and continuing losses at European subsidiaries remain key concerns.

Samvardhana’s mother: The company is rated “Neutral” with a price target ₹62 as the EU’s significant exposure and limited growth prospects negatively impact its performance.

Overall, while challenges such as global risks and segment-specific slowdown remain, broader sector stabilization and focus on innovation are expected to maintain momentum in the coming years, making it an attractive space for investors.

Disclaimer: The views and recommendations presented above are those of individual analysts or brokerage firms, not of Mint. We advise investors to seek the opinion of certified experts before making any investment decisions.