9 Stocks To Buy From The Auto And Ancillary Space According To Sharekhan

Positive on the auto sector

To begin with, the brokerage has said that the faster rollout of vaccinations will augur well for economic recovery. "As far as demand is concerned, we expect pent-up demand will continue to drive growth for the automobile sector from Q2FY2022. However, semi-conductor shortage remains a key concern in the near term. Automobile companies expect semi-conductor supply issues to gradually improve from H2FY2022. OEMs and auto ancillary companies dependent on exports will be better positioned to drive volumes during the current scenario. We remain positive on the automobile sector and expect a strong rebound in FY2022E," the brokerage has said.

9 stocks that the brokerage likes

In the OEM space, Sharekhan prefers rural-centric companies with a strong balance sheet.

1. HeroMoto Corp from 2 wheeler space

"In the 2W space, we prefer Hero MotoCorp because of positive sentiments in rural and semi-urban areas," the brokerage has said.

2. Maruti Suzuki from passenger vehicle space

In the passenger vehicle space, Sharekhan likes Maruti Suzuki and expect it to maintain its dominant market share and robust export growth.

3. M&M in the tractor space

"In the tractor segment, we like M&M, given its leadership position in the tractor segment and its continued strong performance in other segments such as LCV and Uvs," the brokerage has said,

4. Bosch, Sundram Fasteners, Suprajit Engineering, Ramkrishna Forgings, Apollo and Gabriel India

In the auto-ancillary space, Sharekhan likes Bosch (due to its extensive network and brand equity), Sundram Fasteners (beneficiary of strong growth traction in CV, PV, 2Ws, and tractor and its strategy to de-risk business from cyclicality), Suprajit Engineering (on account of increased share of business with existing clients and new client additions), Ramkrishna Forgings (beneficiary of CV upcycle in India, North America, and Europe), Gabriel India (due to its leadership position and brand recall in the suspension components segment and focus on the e-mobility space), Greaves Cotton (beneficiary of e-2W adoption and focus on nonautomotive segment), and Apollo Tyres (strong brand recall in India and Europe and focus on profitable growth).

The brokerage sees supply constraints of semi-conductors remains the key risk in the near term. Any significant delay in recovery from COVID-19 infection or vaccination rollout could slow down demand, it has said.

Disclaimer

The above stocks are based on the report of Sharekhan. Investing in stocks is risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as are at record peaks. Please consult a professional advisor.