KR Choksey Picks These 4 Auto Stocks With Buy Call For Gains Up To 45%

KR Choksey in its recent Auto Sales report published on 2nd January 2022 has picked 4 stocks with a buy call. These 4 auto sector stocks include 3 large-cap and 1 mid-cap stock. The stock has given good returns over the years. The brokerage claims an upside of up to 45% in the share price with the given target price. Here are the key takeaways from the stocks:

Maruti Suzuki India Ltd (MSIL)

The brokerage has placed a "Buy" on the stock of MSIL with a target price of Rs 11,158 apiece. It sees 34% potential upside in the share price of the stock considering the given target price and the current market price.

The current market price of the stock is Rs 8,374.95 apiece, trading 0.34% down from the previous close. It recorded its 52 week high at Rs 9,769 apiece and 52 week low at Rs 6,536.55 apiece on NSE. It is a large-cap auto sector stock with a market capitalisation of Rs 2,53,846 crore.

It has given 11.52% positive return in 1 year, 15.66% positive return in 3 years and 10,9% negative return in 5 years, respectively.

Valuation

The overall PV industry is seeing a strong uptick in volumes, and MSIL being the market leader is seeing strong YoY growth in no. of vehicles sold. MSIL is focused on new product launches, especially in the SUV segment. On margins, MSIL is expected to benefit from FX realization, lower commodity costs, and higher operating leverage due to an increase in volumes. "We have assigned a P/E multiple of 28.2x on FY24E EPS of INR 395.7 to arrive at a target price of INR 11,158/ share. We maintain our "BUY" rating on the shares of Maruti Suzuki India Ltd," the brokerage has said.

Tata Motors Ltd (TTMT)

The brokerage has picked the stock of TTMT with "buy" for a target price of Rs 572 apiece. If you buy the stock at the current market price, you are likely to get 45% potential return. This is a large-cap auto sector company with a market capitalisation of Rs 1,31,120 crore.

On NSE, the stock is currently trading at Rs 396.60 apiece with the 52-week low of Rs 366.30 apiece and a 52-week high of Rs 528.50 apiece. The stock has fallen 7.06% in the past 1 week. In 1 year it has fallen 16.92%. However, it has given 122.51% multibagger return in 3 years. In 5 years, it has fallen 8.42%.

Valuation

TTMT's domestic PV and CV businesses continue to see strong topline growth and margin improvement backed by higher volumes and realizations. JLR performance is expected to improve with better chip availability, ramp up in production, improving mix, and Refocus cost savings. FY23E EBIT and FCF targets have been reduced by the management. "While we believe performance improvement is on cards, the time taken for the same is getting elongated. We apply a multiple of 18.0x on FY24E EPS of INR 31.8 and arrive at a Target price of INR 572. We maintain our "BUY" rating on the shares of Tata Motors," the brokerage has said.

Bajaj Auto Ltd (BJAUT)

KR Choksey assigned a buy on the stock of BJAUT with a target price of Rs 4,483 apiece. The stock is likely to surge up 25% considering the brokerage's given target price and the Current Market Price of the stock. With a market capitalisation of Rs 1,01,385 crore, it is a large-cap auto sector stock.

The current market price of the stock is Rs 3,618 apiece on NSE, trading 1.23% up from its previous close. It recorded its 52 week high at Rs 4,131.75 apiece and 52 week low at Rs 3,125 apiece, respectively.

It has fallen 1.36% in the past 1 month. However, in the past 1 year, the stock has given 10.14% positive return. In the past 3 years, it has given 17.49% positive returns. Whereas, in the past 5 years, it has given 11.37% positive return.

Valuation

BJAUT has overcome its supply chain constraints in Q2FY23. "We expect margins to see further improvement due to the commodity costs softening, FX realizations, and operating leverage. We remain positive on BJAUT due to the gradual recovery seen in domestic 2-wheelers and 3-wheelers, recovery in exports over time as the macro issues stabilize, margin tailwinds, and strong financial position. We assign a P/E multiple of 17.6x on FY24E EPS of INR 254.3 to arrive at a target price of INR 4,483/share. We maintain our "BUY" rating on the shares of Bajaj Auto," the brokerage has said.

Ashok Leyland Ltd (AL)

KR Choksey assigns a "Buy" on the stock of Ashok Leyland with a target price of Rs 194 apiece. It claims a potential upside of up to 32% if you buy the stock at the current market price. Ashok Leyland is a mid cap auto sector company with a market capitalisation of Rs 43,636.61 crore.

The current market price of the stock is Rs 146.95 apiece on NSE, trading 1.14% down from its previous close of Rs 1,48.65 apiece. The 52 week low is Rs 93.20 apiece and the 52 week high is Rs 169.45 apiece, respectively.

In the past 1 week, the stock gave 3.84% positive return. Whereas, in the past 1 year, it has given 15.35% positive return. The stock in the past 3 years has given a maximum 75.99% positive return and in the past 5 years, it has given 18.31% positive return.

Valuation

AL is benefiting from overall industry tailwinds along with market share gains within the competitive industry. New product launches along with the expansion of distribution will help AL to sustain market share gains. AL's AVTR range is gaining higher demand from consumers, which will aid in higher realizations and profitability. Improving realizations, reducing discounts, softening commodity costs, and cost rationalization measures will aid in margin improvement. We have assigned a P/E multiple of 26.2x on FY24E EPS of INR 7.4 to arrive at a target price of INR 194/share. We maintain our "BUY" rating on the shares of Ashok Leyland Ltd.

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 consult with certified experts before making any investment decision.