AUTO SECTOR

 

TRANSCEND GLOBAL INVESTMENT RESEARCH 

Investment Committee Report 

Report Date: October 3, 2025 Analyst: Global Investment Research Team Sector: Indian Automobile & Two-Wheeler Sector 

 I. Executive Summary & Investment Recommendation 

Stock	Rating	Target Price (TP)	Upside / (Downside)	Investment Thesis
TVS Motor Company	TBD	INR 3,800	+10%	Premiumization, strong EV pipeline, and market share gains in the 2W segment, driven by new model launches and favorable rural demand.
Mahindra & Mahindra (M&M)	TBD	INR 3,750	+8%	Leading position in the high-growth SUV and Tractor segments. Superior capital allocation and margin expansion from operating leverage.
Bajaj Auto	NEUTRAL	INR 8,800	+2%	Consistent margin profile, but valuation already reflects strong export performance. Near-term domestic growth remains dependent on recovery in the entry-level segment.
Eicher Motors	NEUTRAL	INR 7,200	−3%	Dominant in the premium motorcycle segment (Royal Enfield), but the introduction of new competing models poses a near-term market share risk.
Tata Motors	NEUTRAL	INR 740	−5%	Strong domestic PV/CV recovery and JLR's turnaround are priced in. Global macro uncertainty and high debt levels require a more attractive entry point.

CONCLUDING VIEW: We recommend an Overweight position on the Indian Auto sector, favoring domestic-focused players with strong product cycles and clear market share momentum. TVS Motor and M&M are our top picks, positioned to outperform the sector on volume growth and superior execution. 

II. Sector & Macro Environment Overview 

India Auto Sector: Inflection Point Driven by Domestic Recovery 

• Demand Drivers: The sector is positioned for a cyclical upturn driven by: 

• Festive Season Momentum: Strong channel checks suggest robust retail demand heading into the festive season, supported by improving consumer sentiment. 

• Rural Revival: Expectations of normal monsoon, potential government support (e.g., Pay Commission payouts), and easing of inflation are expected to drive a recovery in the long-languishing entry-level two-wheeler and small-car segments. 

• Policy Support: Potential further Goods and Services Tax (GST) cuts on two-wheelers and small vehicles could provide a significant demand boost. 

• Key Risks: Global economic slowdown impacting exports (particularly for Bajaj Auto), sustained high commodity prices, and slower-than-anticipated rural demand recovery. 

• Outlook: We project a compounded annual growth rate (CAGR) of 9% in industry volumes over the next three years, with premium and SUV segments outperforming. 

III. Company-Specific Investment Thesis 

A. TVS Motor Company: TBD (INR 3,800 TP) 

• Thesis: TVS is the prime beneficiary of the premiumization trend and the accelerating shift to Electric Vehicles (EVs) in the two-wheeler space. 

• Key Drivers: 

1. Market Share Gains: TVS has consistently gained domestic 2W market share, driven by a strong new product cycle (e.g., Raider, Apache) and superior dealer network penetration. 

2. EV Leadership: Positioned as an early mover in the e-scooter segment with the iQube, securing a strong position in a high-growth category. 

3. Margin Expansion: Operating leverage and favorable product mix should drive Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin expansion of +150 bps over FY26-FY28E. 

B. Mahindra & Mahindra (M&M): TBD (INR 3,750 TP) 

• Thesis: M&M maintains structural leadership in high-margin utility vehicles (SUVs) and tractors, coupled with disciplined capital allocation. 

• Key Drivers: 

1. Unmatched SUV Demand: Order book for key models (Scorpio, XUV700, Thar) remains robust, ensuring near-term volume visibility and pricing power. 

2. Tractor Segment Resilience: Dominant market share in the tractor business provides a hedge against potential slowdowns in the auto cycle. 

3. Profitability Focus: Strategic divestment of non-core assets and a focus on core automotive and farm businesses enhance Return on Equity (ROE). 

 

IV. Valuation & Peer Comparison 

The following table compares key financial and valuation metrics for the covered stocks based on next twelve months (NTM) estimates. 

Company	Current Price (INR)	Rating	NTM P/E (x)	NTM P/B (x)	NTM EV/EBITDA (x)	3-Year Rev. CAGR (Est.)	ROE (LTM)
TVS Motor	3,457	TBD	32.0	8.5	18.5	19.5%	27.6%
M&M	3,463	TBD	25.5	6.2	14.0	15.0%	18.3%
Bajaj Auto	8,618	NEUTRAL	28.0	7.0	15.5	13.5%	20.9%
Eicher Motors	7,004	NEUTRAL	34.5	7.8	17.5	16.0%	22.3%
Tata Motors	718	NEUTRAL	18.0	3.5	9.5	12.0%	20.1%
Sector Average	-	-	27.6	6.6	15.0	15.2%	21.8%

Export to Sheets 

Source: TRANSCEND Global Investment Research, Company Filings, consensus data. 

Valuation Commentary: 

• TVS Motor & Eicher Motors trade at a premium NTM P/E, justified by higher projected revenue growth and superior Return on Equity (ROE) for TVS, but Eicher’s premium is partially eroded by competitive risk. 

• M&M trades at an unjustified discount to peers given its sector-leading growth in high-value segments and strong operational efficiency. This presents a compelling valuation opportunity. 

• Tata Motors’ lower multiples reflect the relative volatility of its JLR (Jaguar Land Rover) global operations and higher debt. 

V. Risks & Mitigants 

Risk Factor	Description	Potential Impact on TP	Mitigant/Hedge
Global Macro/Exports	Geopolitical conflicts or sustained high interest rates dampen demand in key export markets (Africa, Latin America) for 2W/3W manufacturers.	↓5% to 15% on Export-heavy names (e.g., Bajaj Auto).	Focus on domestic demand recovery. Hedging export revenues via currency forwards.
EV Competition	Faster-than-expected adoption of EV by new, well-funded entrants erodes market share of established OEMs.	↓10% to 20% on all legacy 2W OEMs.	Strategic alliances, aggressive internal EV rollout plans (TVS & M&M show a strong lead).
Input Cost Inflation	Renewed surge in key commodity prices (Steel, Aluminum, Lithium for batteries) compresses operating margins.	↓5% on EBITDA margins.	Gradual price hikes and strong supplier contracts. Operating leverage from higher volumes provides a buffer.
Domestic Slowdown	Delayed rural recovery or consumer spending fatigue due to persistent inflation.	↓5% on Volume Growth.	Policy stimulus (e.g., GST cuts) and robust demand in the premium/SUV segments (M&M).

This report is for informational purposes only and is not a solicitation to securities. Prices and target prices are subject to market conditions. The information are taken from internet  we are not in a position to verify such information and, accordingly, we cannot accept responsibility for the consequences of any errors or omissions contained in that information.   Again, we cannot accept responsibility for the consequences of any errors or omissions contained therein. Whoever want to buy or sell the shares mentioned in this report should make their own enquiries and evaluations they consider appropriate to verify the information contained in this report and may seek all necessary financial, legal and technical assistance, wherever required. This report is only for educational and information purposes only and does not provide all the information the recipient may require in order to arrive at a decision.

BANKNIFTY TRADE POSITION 31 JULY 2025

 DAY 31 JULY -Trump Tariff hits India

10.20 

🔻 Market Overview:

• Trend: Strong downtrend continues after a failed bounce.

• Bias: Firmly bearish.

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🕒 30-Minute Chart:

• Price Action: Sharp bearish candle confirms renewed selling.

• Moving Averages: EMA 9 & MA 20 sloping down; price well below both.

• Volume: High selling volume; sellers in control.

• RSI (14): Deeply oversold (21.21), showing persistent bearish strength.

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🕔 5-Minute Chart:

• Price Action: Failed bounce above 55,800; new intraday lows.

• MAs & VWAP: Price sharply below EMA 9, MA 20, and VWAP (55,753.27).

• Volume: Heavy sell volume; "Down Vol" dominant.

• MACD: Deep in negative territory; strong bearish histogram.

• RSI (14): Oversold (~20-25); strong downside pressure.

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📈 Trade Plan:

• Bias: Strongly bearish.

• If Not Already Short:

  • Wait for a weak pullback or bear flag for better entry.

  • More aggressive traders can short on continuation if next candle is strongly bearish.

• Stop-Loss: Above recent swing highs (e.g., 55,800–55,900 or prior 5-min candle high).

• Target: Lower support zones; trend is in "sell mode".

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❌ Avoid:

• Long/buy trades — the momentum is clearly against it.

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Conclusion:
Sell weak rallies or short on continuation. Strong downtrend with heavy sell volume. Wait for minor pullbacks to enter with tighter stops.

10.55 

Market Summary – Nifty Bank (as of 10:55 am)

Trend Overview:

• 30-minute chart: Still in a downtrend, but a strong bullish candle has emerged with increased volume.

• 5-minute chart: Shows a clear breakout from earlier consolidation, suggesting a short-term bullish shift.

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Key Observations:

30-Minute Chart:

• Bullish Candle: Large green candle consuming previous red bar.

• EMAs: Price still below EMA 9 and MA 20, but pushing closer.

• Volume: Significantly higher than previous candles—buyers showing conviction.

• RSI: Rising from oversold, now at 29.06—bearish pressure easing.

5-Minute Chart:

• Breakout: Strong breakout from consolidation (was a bear flag).

• Above VWAP & EMA 9: Price now above VWAP (55,713) and EMA 9, nearing MA 20.

• Volume: Strong green volume bars confirm buyer interest.

• MACD: Bullish crossover forming.

• RSI: Moving toward 50—short-term momentum clearly bullish.

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Trading Implication:

For Existing Shorts:

• Tighten stop-loss or exit — bear flag is failing, and volume confirms upside.

For New Trades:

• Wait and Watch:

  • If price holds above 55,750-55,800 with volume, look for long entries on pullback—target 55,900–56,000.

  • If rally fails and drops below VWAP (55,713), consider fresh shorts—but only if strong bearish signals return.

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Conclusion:

A strong counter-trend rally is underway on the 5-min chart. The bearish momentum is no longer dominant in the short term. Patience is key—watch for continuation or failure before entering new positions.

11.20 

Overall Trend

• 30-minute chart: Still in a broader downtrend, but momentum shifting bullish with strong recovery from morning lows.

• 5-minute chart: Clear short-term bullish breakout with rising momentum—suggesting potential deeper retracement or trading range day.

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📊 30-Minute Chart Insights

• Price Action: Strong bullish candle engulfing the previous bearish one.

• Moving Averages: Price has crossed above EMA 9, approaching MA 20—a sign of short-term trend reversal.

• Volume: Elevated, indicating strong buyer conviction.

• RSI (14): Rebounding from oversold; now at 36.32, confirming momentum shift.

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⏱️ 5-Minute Chart Insights

• Price Action: Sustained breakout with price well above VWAP, EMA 9, and MA 20.

• Moving Averages: Bullish crossover (EMA 9 > MA 20), both trending up.

• Volume: Strong green volume bars confirm genuine buying.

• MACD: Bullish crossover with histogram turning positive.

• RSI (14): Strongly bullish, well above 50.

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📌 Actionable Trade Plan

🔄 If You’re Short:

• Neutralize short bias: Either exit or tighten stop-loss near 55,750–55,800.

• Market strength makes new short entries high-risk for now.

📈 If Looking to Go Long:

• Wait for shallow pullbacks to EMA 9 / MA 20 on the 5-min chart.

• If strength sustains, consider scalping long with targets around:

  • 55,812 (day high)

  • 55,900–56,000 (next resistance zones)

• Stop-loss: Below pullback low or EMA 9.

⚖️ If Market Stalls:

• Watch for potential range-bound behavior (buy near support, sell near resistance).

• Only short if a clear reversal pattern appears with weakening volume.

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🧠 Conclusion

The morning downtrend has been decisively interrupted by a strong bullish move. The short-term trend is now bullish.
Avoid shorting into this strength. Prefer buying shallow pullbacks or wait for range confirmation.

12.07 

 30-Minute Chart Key Points

• Price Action: Current candle SMALL RED after a large and bullish, challenging prior resistance — a sign of strong buying resurgence.

• Moving Averages (EMA 9, MA 20): Price is well above EMA 9 (which is sharply rising); approaching MA 20, confirming bullish momentum.

• Volume: High volume (12.03M) confirms strong buyer conviction.

• RSI (14): Recovered to 45.23, showing buying pressure has replaced selling.

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⏱️ 5-Minute Chart Key Points

• Trend: Strong, steady uptrend; healthy pullback near 11:30-11:45 found support at EMA 9, then resumed upward move.

• Moving Averages (EMA 9, MA 20): Both trending up; price consistently above them. Bullish crossover present.

• VWAP: Price is well above VWAP (55,779.29) — strong bullish control.

• Volume: Rally volumes are strong; pullback volumes are lighter, confirming a healthy trend.

• MACD: Lines are well above zero with a positive histogram — sustained momentum.

• RSI (14): Firmly above 50 — confirms bullish strength. Dipped slightly during pullback but rebounded quickly.

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📌 Action Plan / Trade Strategy

1. Bias: Intraday bullish — do not short into strength.

2. Preferred Strategy:

   • Buy the Dip near EMA 9 or MA 20 on the 5-minute chart.

   • Ensure pullbacks are on low volume and show bullish reversal signs (e.g., hammer, engulfing pattern).

3. Entry: On confirmation of support after a dip.

4. Stop-Loss: Below the pullback low or EMA 9/MA 20.

5. Target Levels:

   • Previous day’s high.

   • Psychological level at 56,000.

   • Further resistance at 56,100–56,200.

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🧭 Final Outlook

The market is showing a reversal day setup with strong intraday bullish momentum.
Plan: Buy conservative pullbacks; do not fight the trend.

01 AUGUST

Current Situation (Friday, August 1, 2025, 14:13:00):

The charts show the Bank Nifty has experienced a significant amount of intraday volatility after the strong morning sell-off. The price is currently at 55,749.40.

5-Minute Chart Analysis (Intraday Focus):

1. Price Action: The Bank Nifty sold off sharply in the morning session, reaching a low around 55,800. Since then, it has entered a wide sideways range. There was an attempt at a strong bounce around 13:30, but it was quickly rejected, and the price is now pulling back towards the lower end of the range. The price is showing a series of lower highs, indicating continued bearish pressure even within the range.

2. VWAP (55,863.01): The price is trading below the VWAP, which continues to be a bearish sign for the intraday session.

3. EMA & MA Crossover (55,850.00 & 55,991.33): The 9-period EMA (55,850.00) is well below the 18-period EMA (55,991.33), and both are trending downwards, confirming the bearish bias.

4. MACD (-3.62, -13.80, -17.42): The MACD line (blue) is in negative territory and below its signal line (orange), confirming the bearish momentum.

5. RSI (36.64, 33.11): The RSI is in bearish territory, trading below 50. It's trending downwards again after the failed rally, indicating a lack of buying interest.

6. Volume: Volume has been relatively high on both the sell-offs and the attempted rallies, indicating a battle between buyers and sellers. However, the selling volume on the recent pullback seems to be more pronounced.

30-Minute Chart Analysis (Overall Context):

1. Price Action: The 30-minute chart shows a clear continuation of the strong downtrend. The price has pushed below the lows from the previous day, making new swing lows. The current candle is a red body, confirming the continued selling pressure.

2. Moving Averages: The price is significantly below the 30-minute 9-period EMA (56,039.93), which is trending downwards and acting as strong overhead resistance.

3. RSI (45.29, 44.80): The 30-minute RSI is turning downwards again and is in bearish territory, confirming the continued weakness of the larger trend.

Summarized Action / Trade to Take Next:

The market is showing a strong bearish bias on both timeframes, and the intraday chart confirms that the recent bullish attempt was a failure.

Primary Trade Action: Continue to hold or initiate Short Positions.

Specific Trade Strategy:

1. Bias: Strongly Bearish (Short).

2. Entry: The failure of the recent rally on the 5-minute chart provides an excellent short entry signal. The price is currently trading at the lower end of its intraday range. This is a high-probability shorting opportunity.

3. Confirmation: The rejection of the rally, the MACD remaining bearish, the price trading below VWAP and EMAs, and the confirmation from the 30-minute downtrend all provide strong confirmation.

4. Target: The immediate target is the intraday low around 55,770. If that is broken, the next psychological support level would be 55,700 and then 55,600. The 30-minute chart suggests significant downside potential.

5. Stop Loss:

   • Place a stop-loss just above the recent swing high on the 5-minute chart (around 55,900) or just above the 5-minute VWAP (around 55,863).

   • A more aggressive stop could be placed just above the last significant red candle's high.

6. Risk Management: Do not attempt to catch a falling knife by going long. This is a strong downtrend. Stay with the trend until there are clear signs of a reversal. A reversal would require a series of higher highs and higher lows on the 5-minute chart, a bullish MACD crossover, and a break above key resistance levels like the VWAP. These signals are not present.

In summary: The bears are in firm control. The path of least resistance is down. Look to sell into any weak rallies or continue to hold short positions, managing your risk with appropriate stop losses. Do not attempt to buy against this strong momentum.