Auto Stocks Surge in FY26: 2 Multibaggers Beat Sensex Easily

The Indian auto sector is witnessing a massive rally in FY26, delivering strong returns to investors. The BSE Auto Index has jumped 32% so far this fiscal, making it the best-performing sectoral index. In comparison, the benchmark Sensex has gained only 8.5% during the same period.

The rally is supported by strong vehicle demand, positive Q3 earnings outlook, and improving operating leverage across auto companies.

Auto Stocks Leading the Rally

Nearly 40 stocks in the BSE Auto Index have gained more than 20% in just nine months. Major automobile companies driving the rally include:

• Ashok Leyland

• Hero MotoCorp

• TVS Motor Company

• Maruti Suzuki India

These stocks have delivered returns ranging from 40% to 80%, rewarding long-term investors.

Two Auto Stocks That Became Multibaggers in FY26

In the broader auto space, two stocks have emerged as clear multibaggers:

SML Mahindra – surged 185%

Force Motors – climbed 121%

Strong fundamentals, rising sales, and improved profitability helped these stocks outperform the market.

Q3 Results Expected to Be Strong

According to Elara Capital, auto companies are expected to post robust Q3 FY26 results.

Key highlights:

• Auto OEM revenue (excluding Tata Motors) may grow 29% year-on-year

• 14% quarter-on-quarter growth expected

• Auto ancillary revenue likely to rise 12.3% YoY

• Strong Demand Across Vehicle Segments

• Vehicle demand remains healthy across segments:

• Passenger vehicles: ~19.2% retail growth in Q3

• Two-wheelers: ~19.8% retail growth

• Tractors: Estimated 19% annual growth

Elara Capital has upgraded its FY26 passenger vehicle growth forecast to 8%, while maintaining two-wheeler growth at 9%.

Margin Outlook Remains Positive

Despite ongoing commodity price pressures, brokerages believe operating leverage will support margins, helping auto companies sustain profitability in FY26.

• Brokerages’ Top Auto Stock Picks

• Elara Capital’s preferred auto stocks:

• Maruti Suzuki

• Mahindra & Mahindra (M&M)

• TVS Motor

• Eicher Motors

Auto ancillary stocks with strong potential:

• Uno Minda

• Gabriel India

• Minda Corp

• Sona BLW Precision Forgings

• Stocks to Watch With Caution

• Brokerages advise caution on:

• Samvardhana Motherson

• Bharat Forge

• Motherson Sumi Wiring India

• Tyre sector companies

FAQs

 

Why are auto sector stocks rising in FY26?

Strong demand, positive earnings outlook, and operating leverage benefits are driving auto stocks higher.

Which auto stocks became multibaggers in FY26?

SML Mahindra and Force Motors delivered returns of over 100%.

Which auto stocks do brokerages recommend?

Maruti Suzuki, M&M, TVS Motor, and Eicher Motors are top picks.

Is it safe to invest in auto stocks now?

Selective investing is advised as valuations have risen sharply.

Conclusion

The auto sector has emerged as the strongest performer in FY26, clearly outperforming the broader market. With robust demand, strong earnings visibility, and select multibagger opportunities, auto stocks remain in focus. However, investors should choose stocks carefully and stay cautious on overvalued segments.