KR Choksey Maintains "Buy" On These 2 Auto Sector Stocks Post September Sales Update

Maruti Suzuki India Ltd - September Sales Update

Maruti Suzuki reported total sales of 1,76,306 units in September 2022, which was a growth of 104.1% YoY. The sales are not comparable on a YoY basis as September 2021 was adversely impacted due to a shortage of electronic components. Domestic sales grew by 125.1% YoY to 1,54,903 units, while export sales grew by 21.9% YoY to 21,403 units in September 2022. Total domestic PV sales growth was at 135.1% YoY. LCV sales declined by 24.2% YoY. On a cumulative basis, H1FY23 total sales growth was 34.4% YoY. Domestic sales growth for H1FY23 was 35.7% YoY, while the export sales growth for H1FY23 was 26.4% YoY.

Maruti Suzuki - Stock Outlook, Returns, Market Cap & Potential Gains

Maruti Suzuki is a large cap auto manufacturer company having a market cap of Rs 2,63,383 crore. The brokerage claims a potential upside of around 22% considering the given target price and the current market price of the stock.  

The current market price of Maruti Suzuki is Rs 8,688.75 per share, trading 1.66% up from its previous close. The company has reported 21.48% positive return in the past 1 year, 31% in the past 3 years and 11.01% in the past 5 years, respectively. 

KR Choksey's View on Maruti Suzuki

Maruti Suzuki has seen MoM growth of 10.6% in the domestic PV segment for the month, indicating good festive demand. Maruti Suzuki's sales of SUVs have been improving MoM for the last 3 months, showing that the company's focus on improving its share in the SUV space through new product launches is yielding results.

Maruti Suzuki - Valuation

The brokerage said, "With improvement in the supply of electronic components, continued demand traction in exports, and improvement in domestic demand, we expect MSIL to perform well on the top line. FX benefits, lower commodity costs, and overall operating leverage due to an increase in volumes will aid MSIL's profitability. We have assigned a P/E multiple of 28.0x on FY24E EPS of INR 378 to arrive at a target price of INR 10,585/share. We maintain our "BUY" rating on the shares of Maruti Suzuki India Ltd."

Ashok Leyland Ltd - September Sales Update

Ashok Leyland reported total monthly sales of 17,549 units in September 2022, which is a growth of 84.1% YoY. Domestic sales grew by 87.8% YoY to 16,499 units. Exports sales grew by 40.8% YoY to 1,050 units. M&HCV sales were at 11,314 units and grew by 123.6% YoY. LCV sales of 6,235 units for the month grew by 39.4% YoY. For H1FY23, total sales grew by 86.6% YoY. M&HCV sales and LCV sales grew by 134.1% YoY and 39.9% YoY, respectively in H1FY23.

Ashok Leyland - Stock Outlook, Returns, Market Cap & Potential Gains

Ashok Leyland is a Hinduja Group mid-cap company having a market cap of Rs 45,970.36 crore. The stock is likely to gain 25% if we consider the stock's given target price and the current market price.  

The current Market price of the stock is Rs 156.35 per share, trading 4.03% up from its previous close at the time of writing. It has given 20.45% positive returns in the past 1 year, 129.85% in the past 3 years, and 27.67% in the past 5 years.

KR Choksey's View on Ashok Leyland

Ashok Leyland is witnessing strong growth due to the CV industry tailwinds. The September 2022 total sales have also seen a strong MoM growth of 24.3%. Interventions such as new product launches, and increased distribution network have been helping Ashok Leyland. CV industry is poised for continued growth due to the higher fleet utilization levels, higher levels of economic activities, demand from the e-commerce sector, and the Government's push on infrastructure development.

Ashok Leyland - Valuation

The CV industry is on a robust growth trajectory aided by a low base, uptick in economic activity, improving fleet utilization levels, and demand from agriculture and e-commerce industries. "Ashok Leyland is gaining market share in a competitive industry despite taking price increases. As commodity costs soften, we expect Ashok Leyland's profitability to improve aided by higher gross margins as well as higher volumes and operating leverage. We have assigned a P/E multiple of 26.5x on FY24E EPS of INR 7.3 to arrive at a target price of INR 194/share. We maintain "BUY" on the shares of Ashok Leyland Ltd," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage report of KR Choksey. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.