These are Sharekhan's top picks in the auto space

In a chat with CNBC-TV18, Abhishek Gaoshinde, Deputy Vice President of Research of brokerage firm Sharekhan listed three potential reasons for the solid performance of Bajaj Auto -- the expected revival in exports, continued expansion of margin, and the focus on electric vehicles (EV), which has paid off.

Gaoshinde highlighted Triumph's substantial influence on Bajaj Auto's strategic positioning within the fiercely competitive two-wheeler market.

The Bajaj-Triumph partnership aims to develop a range of motorcycles that offer exceptional value, marrying the heritage and legacy of Triumph with Bajaj's expertise in cost-effective manufacturing, Rajiv Bajaj told CNBC-TV18 in an interview in July.

| Exclusive | Rajiv Bajaj unveils Bajaj Auto’s future: CNG motorcycles, electric KTM and Husqvarna scooters

Gaoshinde also emphasised Sharekhan's continued positivity towards mass-market players transitioning into the premium segment, citing both Bajaj Auto and Hero MotoCorp as prime examples of this industry trend in the two-wheeler sector.

On Thursday, November 23, brokerage firm JP Morgan also raised the target price for Bajaj Auto to ₹6,400 apiece from ₹6,100 and for Hero MotoCorp. to ₹3,750 apiece from ₹3,500 while maintaining an 'overweight' rating on both the stocks. The revised target price translates to an upside of 8% for Bajaj Auto which is currently trading at ₹5,912 per share while for Hero Moto it is around 6% from current levels of ₹3,542 per share.

Gaoshinde also talked about the strong performance of other players like TVS Motor in the electric vehicle (EV) segment. However, he believes that the company still has room for improvement in catching up with its peers in terms of profit margins.

In the overall automotive space though, Tata Motors is Gaoshinde's top pick. "Tata Motors' shift in commercial vehicles (CVs) from volumes to margin is playing out well," stated Gaoshinde.

He expects Tata Motors' performance in the second half of fiscal year 2024 to surpass the first half.

The third most-valued company within the Tata Group has gained over 77% so far in 2023 and is the top-performing stock on the Nifty 50 index. This is also the stock's second-best annual performance since 2009. In 2021, the shares had risen 163%.

Also Read | Bajaj Chetak triples market share in five months ahead of expansion

Last month, market expert Ajay Bodke told CNBC-TV18 that Tata Motors was "Not a bad place to be in for at least a 15-20% one-year return from here,"  while highlighting the strength in the company's India business. The Tata Motors stock has risen close to 6% over the last month.

Of the 35 analysts that track Tata Motors, 28 have a "buy" recommendation, three have a "hold" rating, and four have a "sell" call. CLSA's price target of ₹841 per share is the highest on the street for Tata Motors, with a potential upside of 25% from current levels. 

For more details, watch the accompanying video