Easing Macro Concerns; Upgrade to Buy

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Easing Macro Concerns; Upgrade to Buy

expanding PREV 539.79

capacity by ~19% in FY27, with 250K each in the states of Haryana and Gujarat. Source: FactSet, Jefferies

Softening metal prices alleviate margin risk: The sharp rally in metal prices over Sep-May

raised margin concerns for auto companies. Aluminum and precious metals rose ~50-100% Exhibit 1 - PV demand remains strong

from Sep-Q average to respective peaks but have since corrected ~20-40% from the highs. PV Industry: YoY registrations growth (%)

24While higher input prices will still result in margin contraction in 1HFY27, softening metal prices 21

are alleviating incremental margin risk for OEMs. We assume FY27-29E EBIT margin for MSIL

at 8.2-9.1% (FY26: 8.4%).

5 4

More SUV launches ahead, but intense competition: MSIL's PV wholesale market share has

. FY25 1HFY26 2HFY26 Apr-Jun'26

fallen from a peak of 51% in FY19 to 13-year low of 39% in FY26. It has been adversely Source: Government of India, Jefferies. June based on the

first 28 days of the month.

impacted by industry demand shift to SUVs where it has weaker presence than cars. MSIL

plans to aggressively expand its SUV portfolio with 8 new launches by FY31; however, we Exhibit 2 - Softening metal prices are

expect competitive intensity to remain high with 36 new launches by the top 4 players (MSIL, alleviating incremental margin risk for OEMs

TMPV, MM, and HYUNDAI) over the next 5-6 years. 250 Indexed prices Aluminium Steel Precious metals

Upgrade to Buy: We raise MSIL's FY27-29E EPS by 2-4% to factor in higher domestic volumes. 175150

We expect healthy 10% volume and 16% EPS CAGR over FY26-29E. After the 16% CYTD 125100

underperformance to Nifty-50, the stock is at 24x FY27E PE, which is a slight discount to the 7550