6 Stocks Sharekhan Recommends To Buy From The Auto Space Ahead Of Results

Markets have been exceedingly volatile, with sustained selling pressure from Foreign Portfolio Investors. With interest rates continuing to rise across the globe, selling pressure may continue. Here are 6 stocks Sharekhan recommends to buy from the auto space.

Buy Maruti stock

Ahead of corporate results, Sharekhan prefers the stock of Maruti Suzuki. "Revenue is expected to grow by 17.3% y-o-y at Rs27,268 crore, led by 8.2% increase in volumes and 8% increase in average realisation. The average realisation is expected to improve on back of product mix," the brokerage has said.

"We estimate EBITDA margin to contract by 50 bps q-o-q to 9.8%, driven by operating leverage benefits, softening of raw material prices and Yen depreciation against INR, partially offset by marketing expenses on new launches and increased discounts on vehicles. PAT expected to increase by 91.4% y-o-y and decline 6.1% q-o-q to Rs 1,935 crore," the brokerage has said.

Buy Eicher Motors, says Sharekhan

Eicher Motors is another stock that is a preferred pick of broking firm Sharekhan. "Eicher Motor Ltd's (EML's) standalone Q3FY23E results are expected to remain firm and EBITDA to growth by 9% q-o-q, led by 6.6% volume growth, operating leverage benefits, partially offset by unfavorable mix (higher share of Hunter 350 and lower share of exports)," the brokerage has said. PAT is expected at Rs676 crore, implicating a growth of 9.9% q-o-q and 60.1% y-o-y.

Buy Ashok Leyland stock, says Sharekhan

For Ashok Leyland, Sharekhan expects revenue to increase by 7.3% q-o-q to Rs 8,869 crore, led by steady volume growth and improved realisation.

"EBITDA margin expected at 7.5%, an improvement of 100 bps q-o-q, led by operating leverage benefits and softening raw material prices. EBITDA margin expected at 7.5%, an improvement of 100 bps q-o-q, led by operating leverage benefits and softening raw material prices. The company expected to report a PAT increase of 48.8% q-o-q to Rs282 crore in Q3FY23," Sharekhan has said.

HeroMoto Corp

Sharekhan expects Hero MotoCorp to register revenue increase of 2.1% y-o-y, led by 4.6% increase in average realisations and 4.1% decline in volumes. The average realisation is likely to improve back of price hikes taken by the company.

Operating profit margin is slated to improve by 30 bps q-o-q at 11.6% in Q3FY23, led by price hikes taken during the quarter and softening of raw material prices. The brokerage expects Q3FY23E PAT at Rs 658 crore, which is a decline of 4% y-o-y and an increase of 8% q-o-q.

Mahindra and Mahindra

According to Sharekhan, Mahindra and Mahindra's revenue to grow by 2.5% q-o-q to Rs 21,360 crore, aided by 3.2% increase in automotive revenues, partially offset by decline in tractor revenues. "EBITDA margins to improve by 60 bps y-o-y at 12.6% driven by volume growth and softening raw material prices. Adj PAT is expected at Rs1,825 crore in Q3FY23E, reflecting growth of 34.9% y-o-y and a decline of 12.7% q-o-q," the brokerage has said.

TVS Motors

For TVS Motors, Sharekhan expects revenue to grow by 7.3% y-o-y, aided by 7% increase in average realisations and 0.2% volume growth. "Average realisation is expected to improve on back of improved product mix. EBITDA margins to increase by 30 bps q-o-q to 11.5%, driven by improved product mix, and softening raw material prices. PAT to report an increase of 17.7% y-o-y at Rs339 crore in Q3FY23E," the brokerage has said.