Stocks to buy for long term: Maruti Suzuki, Hero MotoCorp among top auto sector stock picks for 2025 by Vinit Bolinjkar

The Indian automotive sector has emerged as a standout performer in 2024, with the Nifty Auto index delivering an impressive year-to-date (YTD) rally of over 24%, significantly outpacing the benchmark Nifty 50, which recorded nearly 10% YTD returns.

The Nifty Auto index recorded an impressive 49% growth between January and September 2024, reaching an all-time high. However, it subsequently experienced a correction, declining by 17% from its peak in September.

Mahindra & Mahindra shares led the gains with an exceptional 76% growth this year, while Tata Motors was the only laggard among the Nifty Auto constituents, with its stock price declining by 3% YTD.

As we step into 2025, the outlook for the Auto sector remains a mixed bag, with some segments poised for growth while others brace for challenges.

Vinit Bolinjkar, Head of Research at Ventura Securities, shared his insights on the sector’s performance and future prospects.

Commercial Vehicles: Muted Demand Ahead

The commercial vehicle (CV) segment faced a 5% year-on-year (YoY) decline till November 2024, largely attributed to reduced government spending on infrastructure ahead of the general elections and assembly polls in eight states. Bolinjkar noted that a sharp rebound in government spending is unlikely in 2025, leading to subdued CV demand.

According to him, companies operating in the CV space, including auto ancillary suppliers such as Ramkrishna Forgings, ZF Commercial Vehicle Control Systems India, and Bosch, are expected to face headwinds in the coming year.

Passenger Vehicles: Growth Losing Steam

Passenger vehicle (PV) sales grew by 4.8% YoY in 2024, but the momentum is fading due to a high base effect from 2023 and weak urban demand. Inventory levels in the PV segment have surged to 57 – 62 days — almost double the typical 30 – 35 days — creating liquidity challenges for dealers.

“The pent-up demand from semiconductor shortages, which had driven sales for over two years, is largely exhausted. As a result, PV sales are expected to grow only 1–3% in 2025,” Bolinjkar said.

Two-Wheelers and Tractors: Rural Demand Driving Growth

The two-wheeler (2W) segment clocked an impressive 18% YoY growth driven by a rural market recovery. This trend is expected to continue in 2025, with 2W sales projected to grow by 8–10%.

Similarly, Bolinjkar forecasts tractor sales to grow 2% – 4% in 2025, supported by sustained rural demand recovery.

Auto ancillary companies supplying to the 2W segment, especially Minda Corporation, Uno Minda, and Endurance Technologies, are poised to benefit in 2025 due to strong rural demand, he said.

Stocks to Buy for Long Term

Despite the challenges in the PV industry, Bolinjkar remains optimistic about Maruti Suzuki India and believes in the two-wheeler space, Hero MotoCorp is well-positioned to benefit from rural market recovery.

“Despite a slowdown in the PV market, Maruti Suzuki is expected to maintain double-digit volume growth in 2025, driven by expansion in Tier 2 & Tier 3 cities, new launches in hybrid & EV segments, robust export growth and rapidly changing product mix which is improving the quality of growth,” Bolinjkar said.

He remains bullish on Maruti Suzuki shares and recommends a ‘Buy’ rating at the current price.

Hero MotoCorp is well-positioned to benefit from rural market recovery, supported by its dominance in the 100–180cc segment, where demand is strong. Additionally, the company’s Vida electric scooter is gaining traction, he added.

He is optimistic about Hero MotoCorp stock performance and recommends a ‘Buy’ call at the current price.

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.