Elara's Jay Kale: India Auto Sector Set for Strong Earnings Momentum into FY27

• India's auto sector poised for structurally stronger growth, with demand momentum extending beyond festive season into FY27.
• Passenger Vehicle (PV) volume growth estimates sharply upgraded to 8-9% for FY26 and 9-10% for FY27.
• Maruti Suzuki's stock decline attributed to profit booking; Q3FY26 EBIT margins expected around 9.2% despite commodity pressures.
• Rising commodity prices are a near-term headwind, but sustained demand allows companies to pass on costs, ensuring full-year profitability.
• Two-wheeler segment sees revival post-GST price cuts, with Eicher Motors showing strong volume and EBITDA growth, potentially rerating the stock.

Why It Matters: India's auto sector is set for robust earnings and volume growth into FY27, driven by sustained demand.