New Delhi, June 2 -- Demand across India's automobile sector is expected to remain broadly stable in the near term, but rising raw material costs are likely to squeeze profit margins of automakers during the first half of FY27, according to a sector update report by Kotak Institutional Equities.

The brokerage said the automobile industry delivered a strong performance in the March quarter of FY26, supported by healthy demand across segments and the benefits from recent policy measures.

"While we expect demand trends across most segments to remain steady in the near term, profitability trends will worsen during 1HFY27E," Kotak Institutional Equities said in its report.

According to the report, original equipment manufacturers (OEMs) rec...