Axis Securities’ view on Auto Sector
According to Axis Securities, the moderation in reciprocal tariffs to 18 per cent represents a meaningful tailwind for Indian automobile exporters, particularly auto component manufacturers, for whom the US remains a key end market contributing around 25–30 per cent of export revenues.
The sharp rollback in duties is expected to materially reduce export friction, enhance cost competitiveness, and strengthen India’s role in global OEM sourcing, while the benefit for vehicle manufacturers is likely to be relatively limited due to their low direct export exposure.
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Axis Securities added that auto ancillary companies are better positioned to capture a larger share of the benefits compared to vehicle original equipment manufacturers (OEMs), given their higher export intensity, contractual supply arrangements, and limited dependence on end-market pricing actions. In contrast, gains for OEMs remain constrained by regulatory entry barriers and distribution economics.
Overall, while tariffs are still above long-term averages, Axis Securities believes the downward revision materially eases profitability and earnings pressures, improves FY27–FY28 earnings visibility, and supports valuation comfort for US-linked automobile exporters, with the impact skewed decisively in favour of the auto ancillary segment.
The brokerage sees Steel Strips Wheels, Sansera Engineering, Tata Motors, Bharat Forge and Sona BLW as key beneficiaries of the US-India trade deal.
Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.