Auto sector momentum likely to continue into 2026: Dipan Mehta

The latest auto sales numbers have left investors optimistic, as industry experts point to strong growth driven by recent GST cuts. Dipan Mehta, Director, Elixir Equities, said, “Great set of numbers coming through from the auto industry and clearly the GST cuts have benefited auto volumes across the board and more importantly the managements are sounding very positive of double-digit growth rate for the rest of the year as well. So definitely, this particular GST cut has been a big trigger for auto volumes which are kind of stagnating.”

He added that the standout performers included Maruti Suzuki, M&M, and TVS Motors, highlighting that operating profit margins are likely to improve due to better operating leverage and benign raw material costs. “These are great times for the auto industry. I have not seen this kind of volume growth in a long-long time and definitely December quarter numbers will be very impressive and these stocks may have some more steam left in them to rally even from these levels,” Mehta said.

Turning to the IPO market, Mehta discussed recent promoter block sales in Bajaj Housing and Bank of Maharashtra. He observed that while some overhangs remain, the broader impact on stock prices has been muted. “When the Bajaj Housing went public also we were aware that at some point of time we should expect promoters selling…But under the day the money is flowing back to Bajaj Finance. So as a shareholder of Bajaj Finance as a measure of disclosure, it is quite positive from that point of view,” he explained.

He cited examples of other stocks, such as Whirlpool and IndiGo, where promoter sales did not hinder long-term returns. Mehta emphasized that responsible and well-timed divestments, coupled with deep-pocket investors absorbing large lots, help maintain market stability.

Looking ahead, Mehta remains bullish on both the auto and agri-equipment segments. He noted, “Perhaps you may have missed it but VST Tillers also reports its monthly figures although it is not exactly auto, but certainly agri equipment and those numbers also are quite impressive. The GST cut has acted as a big trigger for the auto companies…Looking forward to great numbers coming through for the December quarter.”

With festive demand and an upcoming marriage season, analysts expect momentum to continue into 2026, bolstered by new models and sustained consumer interest. Investors will be closely watching the December quarter results, which are expected to reaffirm the sector’s growth trajectory.