Auto sector Q4 FY26: Revenue up 24%, margins at 15.7%

What stood out in auto companies’ Q4FY26

Automobile companies reported a strong operating performance in the fourth quarter of FY26, with analysts pointing to profitability that beat expectations despite commodity headwinds. The quarter was marked by broad-based volume growth across key categories, alongside pricing actions taken by several original equipment manufacturers (OEMs). Analysts also linked the improved operating picture to cuts in the Goods & Services Tax (GST). In aggregate, OEMs reported 22% year-on-year (YoY) volume growth in Q4FY26, supported by two-wheelers, passenger vehicles (PV), commercial vehicles (CV), and tractors. The tractor segment also saw support from a subsidy in Maharashtra, as noted in the report.

Volumes and pricing drove revenue momentum

Kotak Institutional Equities said aggregate revenue of auto OEMs, excluding Tata Motors Passenger Vehicles (PV), grew 24.1% YoY in the March quarter. The brokerage attributed this to strong volume expansion, including more than 20% YoY increases in tractors, light commercial vehicles (LCV), two-wheelers and medium and heavy commercial vehicles (MHCV). It also noted “teens” volume growth in PV and LCV segments. Beyond volumes, revenue was supported by price hikes across most OEMs, aimed at offsetting commodity headwinds. Lower discounts across OEMs also contributed to the revenue outcome described in the report.

Tata Motors PV: JLR volumes under pressure

The review flagged a different trend at Tata Motors PV, where its luxury car subsidiary Jaguar Land Rover (JLR) saw a sharp YoY decline in volumes during the quarter. The decline was attributed to weakening global demand and tariff-related impact. While the sector commentary focuses on domestic OEM performance, this point highlights that global exposure can pull in additional demand and policy risks even when domestic conditions are supportive. The report separately noted that Tata Motors PV’s EBITDA declined 6.4% YoY, citing multiple headwinds for the JLR business.

EBITDA growth beats expectations, margin expands

On the operating front, Kotak said EBITDA of auto OEMs, excluding Tata Motors PV, rose 26.1% YoY. The brokerage attributed the growth to strong performance from two-wheeler OEMs, Mahindra & Mahindra (M&M) and Escorts Kubota. It added that Hyundai Motor India’s weak operating performance partly offset the gains. Even with that offset, aggregate EBITDA margin improved by 30 basis points YoY to 15.7%, as per the review. Analysts also said profitability trends were ahead of expectations, supported by cost control measures despite commodity headwinds.

Key sector snapshot from the results season

The numbers below reflect the aggregated trends cited in the review, with Tata Motors PV excluded for certain metrics as specified.

TVS Motor results: a closer look at company-level trends

TVS Motor Company’s Q4FY26 updates cited in the provided material pointed to strong volume growth and improving operating metrics. One report said consolidated net profit rose 19% YoY to Rs 771.5 crore, while consolidated revenue from operations increased 30% YoY to Rs 15,052.7 crore. The company also said its standalone business delivered its highest-ever quarterly operating revenue of Rs 12,808 crore in the March quarter. TVS added that standalone revenue grew 36% over a “normalised” operating revenue of Rs 9,392 crore in the corresponding quarter last year, after adjusting for Production Linked Incentive (PLI) benefit recognised in Q4FY25.

Operating EBITDA margin was reported at 13.1% in Q4FY26, compared with a normalised EBITDA margin of 12.5% a year earlier, indicating a 60 basis point expansion on that basis. The material also noted that Q4FY25 margins were impacted by recognition of the full-year PLI benefit during that quarter, which lifted reported EBITDA margin to 14%. On volumes, TVS reported overall two-wheeler and three-wheeler sales (including exports) rose 28% YoY to 15.60 lakh units in Q4FY26, versus 12.16 lakh units a year ago. Electric vehicle sales were reported up 51% YoY to 1.15 lakh units, while three-wheeler sales rose 65% YoY to 0.60 lakh units.

TVS Motor: headline numbers cited in the material

All currency values are presented in Rs crore for consistency.

What Kotak expects next and where it is selective

Kotak Equities said demand trends across most segments are expected to remain steady in the near term. At the same time, it cautioned that profitability trends are likely to worsen during the first half of FY27. The commentary matters for investors because Q4 outcomes were helped by a combination of volumes, pricing, and cost control, while commodity headwinds remain part of the operating backdrop. In that context, Kotak said it remains selective in the automobile sector. Its top picks were Mahindra & Mahindra and TVS Motor Company.

Market impact: what the results imply for the sector

The sector-level outcome described in the review suggests that volume-led growth continues to be the key revenue driver, with pricing acting as a supporting lever when input costs are unfavorable. Margin expansion to 15.7% in the aggregate, alongside EBITDA growth outpacing revenue growth (26.1% vs 24.1% YoY, excluding Tata Motors PV), indicates that cost control played a meaningful role in Q4FY26. But the contrast between domestic OEM strength and JLR’s volume decline also underlines that demand conditions can vary sharply by geography and exposure. The stated expectation of steady near-term demand, paired with a warning on profitability for 1HFY27, sets up a more cautious frame for the next few quarters even after a strong Q4.

Conclusion

Auto OEMs delivered a strong Q4FY26, with Kotak estimating 24.1% YoY revenue growth and a 30 bps margin improvement to 15.7% for the group excluding Tata Motors PV. The same review highlighted JLR-related pressure at Tata Motors PV and flagged a potential profitability softening in the first half of FY27. Within the sector, Kotak’s stated top picks were Mahindra & Mahindra and TVS Motor Company. Investors are likely to track how pricing discipline, commodity costs, and segment-wise volumes evolve into FY27, alongside any further updates tied to demand and margins.