Tata Motors PV, M&M, Maruti: Target prices; what 30 Asian investors told BNP Paribas

BNP Paribas in its fresh note on Friday said investor sentiment on India had turned more cautious. It interacted with more than 30 investors across Asia and said investors remained reluctant to take a strong directional market view amid heightened uncertainty. It consistently heard that hedge funds had been reducing portfolio tilts and actively degrossing. For auto sector, it said investors preferred two-wheelers (2Ws) over passenger vehicle (PV) players, and are more bearish on commercial vehicle (CV) names. 

Stock market view
Investors’ experience with how quickly the US tariff trade reversed last year makes them think the current energy crisis could also be short lived. But BNP Paribas noted that their view on India has turned more bearish. Investors fear that the LNG availability could be a longer issue in India, it said. 

BNP Paribas said unlike volatility in crude oil prices, which investors see as a transient price shock, investors fear that LNG supply issues could have a prolonged earnings impact in India. 

“We noticed Hong Kong based investors to be slightly less bearish on India than those based in Singapore, partly because HK investors are regional investors and are seeing a higher volatility in some of the other Asian markets,” BNP Paribas. 

The brokerage noted that investors drew parallels with last year’s sharp reversal in US tariff trades, leading many to believe the current energy shock could be short-lived. However, sentiment on India was relatively more negative, driven by concerns that LNG availability could remain constrained for longer. Unlike crude oil volatility, which was viewed as a transient shock, LNG supply risks were seen as having a more prolonged earnings impact.

BNP Paribas added that Hong Kong-based investors appeared slightly less bearish compared with those in Singapore, partly reflecting broader regional exposure and higher volatility in other Asian markets.

Auto sector view
BNP Paribas said investor discussions were more focused on demand risks rather than cost inflation. Investors broadly agreed that the commercial vehicle segment could see the sharpest demand impact if government capital expenditure slowed.

Two-wheeler demand was perceived to be relatively better positioned than passenger vehicles, although BNP Paribas noted that historical cycles did not fully support this view. Concerns were also raised around tractor demand in the event of a diesel price hike, which again the brokerage said lacked strong historical backing.

On costs, BNP Paribas observed relatively lower investor concern despite ongoing inflationary pressures that predated the Middle-East conflict, warning that this could still emerge as a source of negative surprise.

Investor positioning: Preference for 2Ws
BNP Paribas said investors currently preferred two-wheeler stocks over passenger vehicles and remained most bearish on commercial vehicle names. The brokerage also highlighted a wide divergence in views within each segment.

Target prices and upside potential
BNP Paribas suggested a target of Rs 165 for Ashok Leyland Ltd, implying 7 per cent upside. Bajaj Auto’s target is set at Rs 9,550, implying 9 per cent upside. 

BNP Paribas said its Eicher Motors target of Rs 7,710 suggests 17 per cent upside. It set Hero MotoCorp target at Rs 4,970, implying 2 per cent downside. Mahindra and Mahindra Ltd’s target is set at Rs 4,050, implying 37 per cent upside. BNP suggested Maruti Suzuki’s target at Rs 16,000, implying 30 per cent upside. 

It suggested target of Rs 130 for Samvardhana Motherson and Rs 375 for Tata Motors Passenger Vehicles Ltd, Rs 2,285 for TVS Motor India Ltd.