Indian automobile sector is set to witness sturdy recovery in the final month of the monetary year 2021 following steady demand momentum in passenger cars (PVs) and tractors. Analysts also count on a sturdy rebound in FY2022E, driven by growing financial activities, enhancing sentiments of fleet owners, and reduced price of ownership beneath BS-VI cars. Research and brokerage firm Emkay Global Financial Services expects much better domestic 2W volume efficiency on a sequential basis. Analysts mentioned that even as demand is enhancing from salaried and enterprise neighborhood consumers, demand remains weak from the student segment. Moreover, dealer inventory create-up continues in anticipation of the festive season in April 2021.
The S&P BSE Auto index has rallied 145 per cent from the 52-week low of 10,256 to 25,073 levels in February this year. Since February this year, the BSE Auto index has corrected more than 11 per cent. On Wednesday, the BSE Auto index was up .26 per cent led by gains in Tata Motors, Balkrishna Industries, TVS Motor Company, Escorts and Maruti Suzuki India. While benchmark BSE Sensex was trading practically one per cent down in noon bargains on Wednesday.
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Emkay Global Financial Services holds a positive view on the automobile sector on expectations of sturdy cyclical upturn, which is anticipated to final for at least 3 years. It’s major picks amongst OEMs incorporate Tata Motors ( target cost: Rs 375), Ashok Leyland (TP: Rs 155), Maruti Suzuki India (TP: Rs 9,000) and Eicher Motors (TP: Rs 306).
Those at Prabhudas Lilladher think that there will be no effect of the current cost enhance announcement in PVs when for 2Ws it will additional dent acquiring sentiments in cost-sensitive sub-segments. The brokerage firm favors Ashok Leyland as it believes that MHCV volumes will recover by H1FY22 based on financial recovery benefitting demand from segments like Infra, Mining and E-commerce. It also sees Mahindra & Mahindra as nicely placed to develop in FY22 due to a healthier outlook for the FES segment led by healthier farm sentiments and sturdy rural presence benefitting UV sales.
Current valuations largely issue in sustained recovery, leaving a restricted margin of security for any damaging surprises, mentioned Motilal Oswal Financial Services. It prefers corporations with greater visibility in terms of demand recovery, sturdy competitive positioning, margin drivers, and balance sheet strength. Its major picks are Maruti Suzuki India and Mahindra & Mahindra amongst OEMs. While amongst auto element stocks, It prefers Endurance Technologies.
Research and brokerage firm Nirmal Bang expects March 2021 sales efficiency to show sturdy development across segments on the back of the low base, channel filling, steady demand momentum, specially in passenger cars (PVs) and tractors. It believes Commercial Vehicles (CVs) will recover sequentially, led by a gradual choose-up in financial activities.
Among index heavyweights from the auto sector, brokerage firm expects Maruti to witness uptick in domestic volumes to sustain led by sturdy demand for entry segment cars. For Mahindra and Mahindra (M&M), the brokerage firm expects tractor sales to see 76 per cent on-year development, as demand continues to stay healthier on great rabi sowing and much better farm incomes.
(The stock suggestions in this story are by the respective investigation and brokerage firm. TheSpuzz Online does not bear any duty for their investment suggestions. Please seek advice from your investment advisor just before investing.)