Elara highlights four top auto picks for 2026 post GST 2.0

Brokerage firm Elara Capital's top picks remain Maruti Suzuki, Mahindra and Mahindra

, Eicher Motors and TVS Motor Company. The brokerage said strong growth momentum in the sector continues.

In a note on the auto sector, Elara said that after the GST 2.0 reforms, growth has picked up across all segments.

Passenger vehicle and two-wheeler retail growth accelerated to 18% and 17% during September to December, compared with 4% and 3% in the April to August period.

Growth in medium and heavy commercial vehicles, light commercial vehicles and tractors also improved sharply. These segments posted growth of 11%, 19% and 23.2% in September to December, versus 2%, 2% and 11% in April to August.

The brokerage has raised its FY26 growth estimates to 8% for passenger vehicles, 9% for two wheelers, 9% for medium and heavy commercial vehicles, 11% for light commercial vehicles and 19% for tractors.

It has also upgraded FY26 to FY28 earnings estimates by 1% to 21% for auto OEMs, excluding TMPV.

Elara said retail momentum for Royal Enfield remains strong and market share gains are likely to continue through FY26 to FY28. It added that the GST cut has led to a revival in Classic 350 volumes, which had been lagging earlier.

Before the GST cut, Royal Enfield reported volume growth of 18% year-on-year and EBITDA growth of 8% year-on-year during Q3FY25 to Q1FY26.

For the second half of FY26, Elara expects EBITDA growth of 21%, ahead of volume growth of 20%. The brokerage believes EBITDA growth outperformance versus volume growth could continue into FY27 and FY28.