Auto stocks to buy: Strong festive demand and improved vehicle affordability drove healthy automobile sales across segments in October 2026, prompting Monarch Networth Capital (MNCL) to remain positive on select auto ancillary stocks.
The brokerage has identified eight stocks from its coverage universe with Buy ratings, including Minda Corporation, RK Forgings, Sundram Fasteners, ASK Automotive, Pricol and others.
Among these stocks, MNCL identified Minda Corporation, RK Forgings and Sundram Fasteners as its top picks. The brokerage also noted that valuations for all three appeared attractive at current market prices.
8 auto ancillary stocks to buy, with up to 63% upside
MNCL has assigned Buy ratings to eight stocks, with target prices indicating potential upside ranging from 8% to 63% from their respective current market prices.
1. ASK Automotive: Target price ₹745 | Upside 63%
The brokerage has a target price of ₹745 against a current market price of ₹593, indicating a potential upside of 63%.
2. Fiem Industries: Target price ₹2,805 | Upside 36%
Fiem Industries has a target price of ₹2,805 compared with its current market price of ₹1,802, implying an upside of 36%.
3. Minda Corporation: Target price ₹867 | Upside 32%
MNCL has set a target price of ₹867 against a CMP of ₹655, indicating a potential upside of 32%. The brokerage expects the company to deliver strong growth through increasing content per vehicle.
4. Pricol: Target price ₹810 | Upside 23%
Pricol has a target price of ₹810 compared with its current market price of ₹658, implying an upside of 23%.
5. Sundram Fasteners: Target price ₹1,315 | Upside 23%
The brokerage has assigned a target price of ₹1,315 against a CMP of ₹1,077, indicating an upside of 23%. It expects the company to benefit from export orders and diversification into non-automotive businesses.
6. SJS Enterprises: Target price ₹2,525 | Upside 19%
SJS Enterprises has a target price of ₹2,525 against its current market price of ₹2,115, implying an upside of 19%.
7. RK Forgings: Target price ₹805 | Upside 16%
MNCL has set a target price of ₹805 against a CMP of ₹695, indicating a potential upside of 16%. The company is well-positioned to benefit from healthy new order bookings and expansion in casting.
8. Happy Forgings: Target price ₹1,875 | Upside 8%
Happy Forgings has a target price of ₹1,875 compared with its current market price of ₹1,740, implying an upside of 8%.
Its estimates point to strong earnings growth across the coverage universe. Between FY26 and FY29, RK Forgings is projected to deliver a 101.4% compound annual growth rate (CAGR) in profit after tax (PAT), alongside 30.2% EBITDA CAGR. Minda Corporation is estimated to record 25.4% PAT CAGR, while Sundram Fasteners is projected to deliver 17.7% growth.
ASK Automotive is also expected to deliver robust earnings growth, with estimated revenue, EBITDA and PAT CAGRs of 20.1%, 22.3% and 25.6%, respectively, between FY26 and FY29.
Why MNCL prefers diversified auto ancillaries
According to MNCL’s October auto sales review, the Indian automobile industry reported healthy volume growth, supported by festive-season demand, improved consumer sentiment, GST rationalisation and sustained replacement demand.
Passenger vehicles, two-wheelers, three-wheelers and commercial vehicles witnessed broad-based growth. However, the brokerage expects growth in passenger vehicles, commercial vehicles and two-wheelers to moderate in the second half of FY27 due to a high base. Tractor sales are also expected to remain subdued.
MNCL believes diversified auto ancillary companies are better positioned because they have several opportunities to increase content per vehicle, apart from benefiting from underlying industry growth. The brokerage also said it would wait for signs of sustained industry growth before turning positive on heavy auto ancillaries in the two-wheeler segment.
October sales data showed Maruti Suzuki’s passenger vehicle volumes rising 25% year on year, while Tata Motors PV and Hyundai recorded growth of 23% and 18%, respectively. In two-wheelers, TVS Motor reported 28% growth, while Hero MotoCorp and Bajaj recorded increases of 16% and 13%. Commercial vehicle volumes also remained strong, with Force Motors, Volvo Eicher and Tata Motors reporting growth of 45%, 35% and 27%, respectively.
The farm equipment segment remained the weak spot. Escorts Kubota, Mahindra & Mahindra and VST Tillers Tractors reported volume declines of 10%, 12% and 25%, respectively.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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