Automobile OEMs are expected to deliver strong earnings growth in the second quarter of FY26, supported by healthy growth in revenue and operating profit, along with margin expansion.
The improvement is attributed to the recent GST rate cut, subdued commodity inflation, and a favourable regulatory environment.
The GST Council’s decision to reduce tax rates across most automobile segments has provided a much-needed boost to the sector. These timely rate cuts, combined with other supportive factors such as a normal monsoon improving rural sentiment, a ~100 bps reduction in interest rates in CY25, and income tax benefits, are expected to revive auto demand during the ongoing festive season.
According to Axis Securities, automobile OEMs under its coverage are likely to report revenue growth of 12.6% year-on-year (YoY) in Q2FY26, driven by low- to mid-single-digit industry growth in two-wheelers, passenger vehicles (PVs), and commercial vehicles (CVs), along with double-digit volume growth in the tractor segment.
EBITDA and net profit of auto companies are projected to grow 11.2% and 21.2% YoY, respectively, in the July-September 2025 quarter. While higher discounts and advertisement expenses may lead to a slight YoY decline in EBITDA margins, the impact is expected to be partially offset by a richer product mix (including higher exports) and price hikes implemented over the past year.
On a sequential basis, revenue, EBITDA, and PAT for Q2FY26 are estimated to increase by 10.7%, 14.8%, and 10.4%, respectively, with EBITDA margins expanding by around 50 basis points, Axis Securities noted.
Here’s how the top auto companies are expected to perform in Q2FY26:
Maruti Suzuki Q2 Results Preview
Maruti Suzuki India, the country’s largest passenger carmaker, is expected to report a 6.9% YoY growth in total revenue for Q2FY26, driven by a 1.7% YoY rise in volumes and a 5% YoY increase in average selling prices (ASPs).
The company’s net profit is projected to jump 23.3% YoY to ₹3,784 crore. However, EBITDA margins are expected to decline by around 7 bps, impacted by negative operating leverage, higher personnel expenses due to wage revisions, and increased marketing, advertisement, and forex costs. These pressures are likely to be partly offset by a richer sales mix, led by higher CNG vehicle sales and exports, according to Axis Securities.
Tata Motors Q2 Results Preview
Tata Motors’ India passenger vehicle (PV) margins are expected to improve sequentially, supported by higher volumes, though partly offset by elevated discounts. According to Motilal Oswal Financial Services (MOFSL), margins for the PV segment are likely to decline 130 bps YoY to 4.9%, while India commercial vehicle (CV) margins are seen improving 50 bps QoQ and 190 bps YoY to 12.6%.
Jaguar Land Rover (JLR) volumes are likely to be impacted by the cyberattack that led to production shutdown in September.
Overall, Tata Motors’ EBITDA margin is expected to contract ~190 bps QoQ to 7.4%, while net profit may fall 31% YoY, primarily due to the JLR disruption and higher discounting in the domestic market.
M&M Q2 Results Preview
Mahindra & Mahindra (M&M) posted strong 13% YoY growth in PVs and a much stronger 32% YoY growth in tractors. For the auto segment, margins are likely to remain stable QoQ, but decline 90 bps YoY to 8.6%. Tractor segment margins are likely to remain healthy, up 130 bps YoY to 18.8%, MOFSL said.
M&M’s Q2 revenue from operations is expected to grow 19.5% YoY, while net profit is estimated to rise 11.8% YoY, and EBITDA may increase 16.9% YoY.
Hero MotoCorp Q2 Results Preview
Hero MotoCorp, the world’s largest two-wheeler manufacturer, is expected to report a 13.5% YoY rise in revenue, driven by 11% growth in volumes supported by strong domestic demand, robust exports, and price hikes over the past year, Axis Securities said.
The company’s net profit is expected to grow 12.8% YoY, while EBITDA is projected to rise 17.1% YoY, aided by an improvement of 46 bps in EBITDA margin. Margin expansion is likely to be supported by better operating leverage, a richer product mix, and ongoing cost control initiatives.
Bajaj Auto Q2 Results Preview
Axis Securities expects Bajaj Auto’s total revenues to increase by 7% YoY, respectively, led by a 6% YoY increase in overall volumes and a mild improvement in ASPs on account of higher 2W and CV export volumes. EBITDA margins are expected to be muted YoY but improve 46 bps QoQ, richer product mix (higher exports), and cost control efforts. Net profit growth is seen at 17.4% YoY.
TVS Motor Company Q2 Results Preview
TVS Motor Company’s revenue is expected to increase by 29% YoY, and net profit growth is estimated at 46.4% YoY. EBITDA margins are expected to increase by ~122 bps YoY, with 40-50 bps due to PLI income, higher operating leverage, and cost control efforts, being partly offset by the margin dilutive mix of EV scooters.
Top Picks
Axis Securities remains selective in its approach towards OEMs under its coverage. For Q2FY26, its top earnings plays in auto OEMs are TVS Motor Company, Eicher Motors, Hero MotoCorp, and M&M.
MOFSL’s top auto stock picks are Maruti Suzuki India and M&M.