Jefferies' Top Picks: Bharat Forge, Motherson, Sona BLW

Jefferies Flags Buying Opportunity in Auto-Component Stocks; Bharat Forge, Motherson, Sona BLW Top Picks​

Global brokerage firm Jefferies has identified a fresh buying opportunity in Indian auto-component stocks with strong global exposure, citing a turnaround in earnings revisions after a prolonged phase of downgrades.

The brokerage has named Bharat Forge, Samvardhana Motherson International, and Sona BLW Precision Forgings as its preferred picks within the sector.

Earnings Downgrades in FY27 Now Reversing​

According to Jefferies, consensus estimates for financial year 2027 earnings per share faced significant cuts throughout calendar year 2025.

On average, FY27 EPS for the selected auto-component companies was reduced by 17 percent in the first half of CY25. This was followed by an additional 8 percent downgrade in the second half of the year.

However, the earnings revision cycle appears to have shifted direction. So far in CY26, the Street has upgraded earnings estimates by an average of 5 percent, signalling improving sentiment toward globally exposed auto-component manufacturers.

Jefferies believes this reversal in earnings trajectory strengthens the case for accumulation in select names within the segment.

OEM Earnings Revisions More Stable​

In comparison, the earnings revision cycle for original equipment manufacturers has remained relatively stable.

Excluding Toyota Motor Corp, consensus FY27 EPS estimates for OEMs were trimmed by an average of 2 percent in the first half of CY25. This was followed by upgrades of 6 percent in the second half of the year and a further 2 percent increase so far in the current calendar year.

This indicates that while component manufacturers saw sharper swings in expectations, OEM earnings revisions were comparatively moderate and more consistent.

Stock-Specific Trends Among OEMs​

On a year-to-date basis, earnings estimates have been revised upward for:

• Ashok Leyland
• Mahindra & Mahindra
• Two-wheeler manufacturers

In contrast, consensus earnings estimates have been lowered for:

• Maruti Suzuki India
• Hyundai Motor India

Auto-Component Sector Outlook​

Jefferies’ latest note suggests that after a period of aggressive earnings cuts through CY25, the improving upgrade cycle in CY26 could mark a turning point for auto-component stocks with global exposure.

With Bharat Forge, Samvardhana Motherson International, and Sona BLW Precision Forgings positioned as preferred picks, the brokerage sees the current phase as an attractive entry point within the broader auto and auto-components space.