With India slowly and steadily easing out lockdown restrictions, the businesses are finally opening up to recover from the losses in the past few months. The badly-hit auto industry has begun its phased reopening of manufacturing units which will aid volume pick-up in the coming quarters, said Emkay Research.

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According to the brokerage, the automobile volumes will improve on the back of low base and pent-up demand, positive rural sentiments and gradual improvement in economic activity.

The recovery trend has already begun as the Nifty Auto index reported 50 percent growth since March lows, which is a big positive for the near-future as well given more and more manufacturing facilities and showrooms open up.

Except tractors, volumes for two-wheelers (2W), passenger vehicles and commercial vehicles will remain on the lower side as compared to last year given liquidity crunch, low sales and lacklustre demand, said the report.

MM is short form of Mahindra & Mahindra while ESC is short of Escorts

It further added that the domestic wholesales will remain strong at 86,000-88,000 units, implying a growth of 13-16 percent YoY. Demand for tractors will also be higher, hence Mahindra & Mahindra and Escorts are expected to grow at 14 percent and 13 percent respectively.

"Domestic 2W industry volumes have notably improved on a MoM basis due to pent-up demand, better rural sentiments and marriage season. However, on a YoY basis, the domestic volumes could fall, by 32 percent for Bajaj Auto, 35 percent for Hero MotoCorp, 38 percent for TVS Motors and 35 percent for Eicher Motors," said the brokerage.

AL is short of Ashok Leyland, EIM is short of Eicher Motors and MM is Mahindra & Mahindra

Similar pattern could be seen for the passenger vehicles category. However, the biggest fall is expected in the commercial industry volumes due to surplus capacity with fleet operators. In fact, the fall will higher in case of medium-to-heavier commercial vehicles rather than light commercial vehicle, the brokerage added.

Factoring in all the aforementioned aspected, Emkay Research picked out five auto stocks for the investors. They are Escorts (Target Price: Rs 1,103), Eicher Motors (Target Price: Rs 19,954), Ashok Leyland (Target Price: Rs 74), Amara Raja (Target Price: Rs 732) and Motherson Sumi (Target Price: Rs 115).