Latest News
-
Massive Employee Exodus Hits India's Top IT Companies in FY23-24 -
Air India Enhances Operational Efficiency with New Crew Management System -
BlackRock Acquires Shares in Electrosteel Castings and PTC India for Rs 207 Crore -
IndiGo Enhances Domestic Routes with Direct Chennai-Durgapur Flights -
Tesla to Recall Nearly 4,000 Cybertrucks Over Accelerator Pedal Fault -
Reliance, ONGC, Tata, Adanis: Energy Stocks Didn't Get The Memo Of Bears, Up 12% In 30-Days; 10 Stocks To BUY -
Sebi to Enhance Price Discovery for Firms Trading Below Book Value -
Hindustan Zinc to Persist in Demerger Discussions with Government, Says CEO -
8 Tata Group Stocks To Buy That Will Pay Dividends Soon, Q4 In Focus; Are You Invested? -
Gold Prices In US: Yellow Metal Rates Surge Amid Escalating Tensions In Middle East; Hit Record High
Auto Stocks That Remain “Top Buys” Post Lockdown
Auto companies are witnessing strong traction post the lockdown and with it, the stocks can generate solid returns over the medium to longer term.
According to brokerage firm Motilal Oswal, volume recovery in 2QFY21 was stronger than anticipated, with the continued benefit of demand recovery, improvement in supply chain, and inventory buildup for the festive season.
"While volumes for Tractors are growing on a YoY basis, two-wheelers and passenger vehicle volumes are at 90- 110% of last year's levels.
Light Commercial vehicles has also recovered to 70-80% of last year's levels, whereas Medium and Heavy Commercial Vehicles stands 40-50% lower YoY. The EBITDA margin for our OEM (ex-JLR) universe is likely to expand 60bp YoY to 10.9% (v/s -4% in 1Q), led by good recovery in margins for mainstream two-wheelers, Tractors, and MSIL.
"We have increased our FY22E EPS estimates for almost all of the companies under our coverage," the brokerage firm has stated.
Top two auto stock picks
Brokerage firm Motilal Oswal has kept Mahindra and Mahindra and HeroMoto Corp as its top picks from the OEM space.
The brokerage firm has kept in mind, higher visibility in terms of demand recovery, a strong competitive positioning, margin drivers, and balance sheet strength before short listing these companies.
a) HeroMoto Corp
Motilal Oswal has set 24 per cent returns from the stock price of HeroMoto Corp as against the current market price of Rs 3,152
Better demand recovery due to strong entry-level portfolio and robust rural recovery are among the major reasons that the broking firm has initiated a "buy" on HeroMoto Corp. The broking firm Also sees strong operating margin due to volume recovery.
b) Mahindra and Mahindra
Motilal Oswal estimates that the Mahindra and Mahindra stock can generate an upside potential of 26 per cent.
"Strong growth in Tractors to drive mix and margins. The LCV segment recovering faster than expected and SUV business recovering, but lagging behind underlying industry," the broking firm has said.
According to it the EPS upgrade takes into to account for strong growth in tractors.
The broking firm has revised its sales estimates for Mahindra and Mahindra and HeroMotor Corp, along with others.
| FY 2020-21 (revised) | Old (FY 2020-21) | |
| M&M | 30.00 | 28.2 |
| HeroMoto Corp | 159.2 | 155.9 |
The shares of Mahindra and Mahindra were last seen trading at Rs 599, while HeroMotor Corp shares were trading at Rs 3263.
Disclaimer
The article is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author does not own shares in Coal India as on date.
