M&M, Eicher, TVS and Tata Motors Lead Kotak’s Auto Picks August 2026
- August 19, 2026
- Posted by: Neeraj Pandey
- Category: Market
Nifty Auto top picks: M&M, Eicher, TVS, Tata Motors CV. Aggregate EBITDA margin -210 bps YoY to 13.1%. Tata Motors PV EBITDA fell 13.4%.
Quick Answer
Kotak Equities has picked M&M, Eicher Motors, TVS Motor Company, and Tata Motors Commercial Vehicles as top auto stocks to buy and watch in August 2026. The sector saw aggregate EBITDA margin decline 210 basis points year-on-year to 13.1%, driven primarily by weaker domestic passenger vehicle profitability. Despite the margin pressure, volume momentum in two-wheelers and commercial vehicles remains a key support for the sector’s medium-term outlook.
The Nifty Auto stocks to watch list for August 2026 is dominated by four names flagged by Kotak Equities: Mahindra and Mahindra (M&M), Eicher Motors, TVS Motor Company, and Tata Motors (commercial vehicle segment). The brokerage released its Q1 FY27 sector note highlighting resilient demand fundamentals even as aggregate EBITDA margins contracted a significant 210 basis points year-on-year to 13.1%.
While auto demand stayed broadly firm in the June quarter, profitability came under pressure from higher input costs, discounting on passenger vehicles, and a 13.4% fall in Tata Motors’ domestic PV EBITDA. Kotak’s note draws a clear line between the winners, such as CV-heavy players and two-wheeler OEMs, and the laggards in the domestic four-wheeler space. The Nifty Auto index remains a closely watched sector benchmark as FY27 volume data trickles in.
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Why Kotak Prefers These Four Auto Stocks in August 2026
Mahindra and Mahindra: Rural Demand and SUV Portfolio Strength
M&M continues to outperform other auto stocks on the back of strong rural recovery and a loaded SUV order book. The XUV700 and Scorpio-N variants have maintained waiting periods even as the broader passenger vehicle market softened. Kotak’s thesis on M&M rests on an improving farm income cycle, resilient tractor volumes, and the company’s expanding EV lineup for FY28.
Eicher Motors: Royal Enfield Premium Cycle Holding
Eicher Motors remains Kotak’s preferred mid-cap auto stocks pick, supported by Royal Enfield’s steady premiumisation in the 250cc-450cc motorcycle segment. Export volumes to Southeast Asia and Europe provide a margin buffer that domestic OEMs lack. EBITDA margins for Eicher have remained above 25%, making it a relative outperformer in the current earnings cycle.
TVS Motor Company: Two-Wheeler Volume Growth and EV Momentum
TVS Motor Company stands out among auto stocks for two-wheelers this quarter for its clean earnings story. The company posted volume growth across both domestic and export markets, while iQube electric scooter dispatches continued their upward trajectory. Kotak highlights TVS’s ability to defend margins, making it one of the stronger auto stocks in the two-wheeler segment.
Tata Motors CV Segment: Commercial Vehicle Recovery Thesis
While Tata Motors’ PV EBITDA fell 13.4% due to weaker domestic profitability, Kotak’s pick among auto stocks is specifically the commercial vehicle (CV) business, which carries separate dynamics. Infrastructure spending, rising logistics demand, and fleet replacement cycles underpin Kotak’s bullish view on TMCV. The JLR segment recovery and debt reduction remain additional catalysts to watch.
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Auto Sector EBITDA Margin Decline: What the Numbers Say
The Q1 FY27 aggregate EBITDA margin for the listed auto stocks universe tracked by Kotak fell 210 basis points year-on-year to 13.1%. This was primarily driven by three forces: raw material cost inflation that was not fully passed on to end consumers, higher discounting in the passenger vehicle segment to maintain market share, and a surge in other expenses tied to new product launches and EV investment.
The 13.4% fall in Tata Motors PV EBITDA is the most visible data point in the note. Domestic passenger vehicle volumes remained healthy at a headline level, but aggressive pricing competition, especially in the sub-Rs 10 lakh hatchback segment, compressed margins further. Two-wheeler and CV margins held relatively better, which explains why Kotak’s picks are skewed towards those sub-segments.
Key Financial Data: Kotak’s Top Auto Picks
| Company | Segment Focus | Key Strength | Margin Outlook |
|---|---|---|---|
| M&M | SUV / Tractor | Rural recovery, EV order book | Stable to improving |
| Eicher Motors | Premium Two-Wheeler | Royal Enfield premiumisation | Above 25% EBITDA |
| TVS Motor | Two-Wheeler / EV | Export + iQube momentum | Resilient |
| Tata Motors CV | Commercial Vehicle | Infra spend, fleet replacement | Recovering |
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What Should Investors Watch in the Auto Sector Now?
The near-term triggers for Nifty Auto stocks to watch in August 2026 include monthly sales data from SIAM, any revision to GST rates on EVs (expected in the next GST Council meet), and the trajectory of kharif crop arrivals that influence rural two-wheeler demand. The festive season from September to November is the single biggest volume catalyst for the two-wheeler and mid-size SUV segment.
Investors tracking auto stocks to watch should also monitor FII flows into Nifty Auto, which have been mixed in recent sessions. Auto stocks to watch in this context include both exporters and domestic OEMs. Any sustained strengthening of the rupee relative to the dollar typically helps OEMs with imported components and royalty outflows. Historically, a falling rupee benefits exporters like TVS and Eicher but pressures import-heavy players.
Risks to the Auto Sector Outlook
The broader basket of auto stocks in the Nifty Auto index remains vulnerable to several near-term headwinds. Input cost volatility: Commodity prices, especially steel and aluminium, remain elevated versus historical norms. Any further rise would compress OEM margins beyond current consensus estimates.
EV disruption speed: If the EV adoption curve accelerates faster than the incumbent OEMs’ product readiness, legacy ICE volume share could erode quicker than priced in.
Rural income uncertainty: A delayed or deficient monsoon in key states would hurt tractor and two-wheeler volumes in H2 FY27, directly impacting M&M and TVS.
PV demand slowdown: If the broad passenger vehicle demand slowdown deepens beyond the June quarter, further margin cuts could prompt earnings downgrades across the sector.
Conclusion: Top Auto Stocks to Watch in August 2026
Kotak Equities’ August 2026 auto note on Nifty Auto stocks to watch flags a sector where demand fundamentals hold but margins are under visible stress. M&M, Eicher, TVS Motor, and Tata Motors (CV segment) emerge as the top Nifty Auto stocks to watch for the quarter, each offering distinct risk-reward profiles tied to their respective sub-segment positioning. Investors considering the auto sector should weigh the near-term margin headwinds against the medium-term catalysts of festive demand, EV product launches, and infrastructure-driven CV recovery. Consult a SEBI-registered advisor before making investment decisions.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
Frequently Asked Questions on Nifty Auto Stocks
Which auto stocks did Kotak pick for August 2026?
Ans. Kotak Equities flagged M&M, Eicher Motors, TVS Motor Company, and Tata Motors Commercial Vehicles as top Nifty Auto stocks to watch in August 2026, based on their Q1 FY27 sector note.
Why did auto sector EBITDA margins fall in Q1 FY27?
Ans. The aggregate EBITDA margin for the auto sector declined 210 basis points year-on-year to 13.1% in Q1 FY27, driven by higher raw material costs, increased discounting in the passenger vehicle segment, and Tata Motors PV EBITDA falling 13.4% due to weaker domestic profitability.
Why is Tata Motors PV EBITDA falling?
Ans. Tata Motors passenger vehicle EBITDA fell 13.4% year-on-year due to intense pricing competition in the domestic PV market, higher discounts to defend market share, and elevated launch-related costs. Kotak’s auto picks focus specifically on the commercial vehicle segment where margins are recovering.
Is Eicher Motors a good stock to buy in August 2026?
Ans. Kotak Equities has flagged Eicher Motors as one of its top auto picks for August 2026. The company benefits from Royal Enfield’s premiumisation strategy and EBITDA margins above 25%. This is not investment advice. Consult a SEBI-registered advisor before investing.
What is the Nifty Auto index and where can I track it?
Ans. The Nifty Auto index tracks the performance of key automobile companies listed on NSE. It covers OEMs across passenger vehicles, commercial vehicles, and two-wheelers. You can track live Nifty Auto levels on the Univest screener or the NSE website at nseindia.com.
What are the risks in investing in auto sector stocks?
Ans. Key risks in auto sector stocks include raw material cost inflation, slower-than-expected EV adoption by incumbents, rural income uncertainty from a weak monsoon, regulatory changes in GST on EVs, and global headwinds affecting exports. Always consult a SEBI-registered financial advisor.
How does the festive season impact auto stocks?
Ans. The festive season from September to November is the single biggest demand catalyst for auto stocks, especially two-wheelers and mid-size SUVs. Historically, OEMs see volume spikes of 20-30% in festive months, which directly supports earnings and positively impacts stock performance.
