Japan Essentials - 13 Jul 2026

Research evidence excerpt

Japan Essentials - 13 Jul 2026

1.7x

rest of 9MFY27E. More importantly, our stock picks factor in ability to Eicher Motors* (RE) 36.3x 31.8x 27.6x

deliver healthy volume growth led by market-share gains and/or strong Escorts Kubota 21.7x 21.0x 18.6x

Hero MotoCorp* 16.0x 15.3x 13.4x

export opportunity. We prefer TVS, MSIL, TMPV and HMIL. HMIL 29.5x 28.9x 23.5x

• Margins should improve in 2HFY27E after bottoming in 1HFY27E: M&M*MSIL 20.4x29.9x 19.4x26.7x 16.2x22.7x

While rise in commodity price is a key near-term earnings risk, we Tata Motors PV NA 11.6x 7.5x

expect margins to improve in 2H vs 1H, helped by recent moderation TVSUNOMotors*Minda 45.7x54.5x 39.4x46.3x 32.5x37.0x

in commodity prices, management focus on cost optimisation and

Source: Company Data, Macquarie Research, Jul 2026

potential price increase (which is also helped by headroom created with

(*) indicates core multiples

GST rate reduction in Aug-25). We factor in 30-100bps YoY EBITDA

margin contraction in FY27E (ex-Bajaj Auto) and improvement in FY28E. Figure 3 - India Auto: Profit Summary

In our view companies with exposure to consumer upgrade and share

PAT (Rs Mn) 1QFY27E YoY

gains and sizeable export business (as % of revenues) are better placed. Ashok Leyland 4,719 -21%

• Model launches to facilitate PV growth/market shares: In the near BajajEicherAutoMotors 28,22212,115 35%16%

term, MSIL and TMPV are better placed from a model standpoint vs Escorts Kubota 3,137 -16%

peers, while HMIL should benefit from launches in 2HCY26E. Model Hero MotoCorp 12,680 13% HMIL 9,029 -34%

launch is also driving BEV penetration that has improved to ~7.5% in M&M 34,869 -4%

1QFY27E vs ~5-6% in FY26; this bodes well for M&M and TMPV. MSIL 32,930 -11%

Tata Motors PV (India PV EBIT) 1,898 N/A