Tata Motors, Ceat Among 15 Automobile Stocks To Buy In 2023 As Motilal Oswal Sees Strong Return

Name of the stocks, Rating, CMP, & Target Price

Sr.No.	Name of Stocks	Rating	CMP (Rs.)	Target Price (Rs.)
1	Apollo Tyres	Buy	320.8	390
2	Ashok Leyland	Buy	147.05	185
3	Bharat Forge	Buy	873.45	1015
4	Ceat	Buy	1674.2	1950
5	Eicher Motors	Buy	3162.05	3825
6	Endurance Technologies	Buy	1399.05	1700
7	Exide Industries	Buy	183.05	215
8	Hero MotoCorp	Buy	2728.45	3150
9	Mahindra & Mahindra	Buy	1328.15	1500
10	Mahindra CIE	Buy	377.25	425
11	Maruti Suzuki	Buy	8453.4	11275
12	Samvardhana Motherson Sumi	Buy	77.25	97
13	Motherson Wiring India	Buy	52	74
14	Tata Motors	Buy	411.5	520
15	Tube Investments	Buy	2652.8	3225

3QFY23 to start witnessing benefits of moderation in commodity prices

According to the brokerage, 3QFY23 volumes were reasonably good, considering channel inventory filling for the festive season in 2QFY23. Demand largely remained intact across segments, except for the entry-level PV segment. Stable demand environment in the domestic market, along with limited impact of supply-side issues, boosted wholesales. 

Further, In terms of wholesale volumes, PVs posted 19% YoY growth (-10% QoQ), CVs saw 12.5% YoY growth (-2% QoQ), 2Ws volumes declined 6% YoY (-22% QoQ) and tractors grew 10% YoY (+6% QoQ). This was despite the timing difference in the festive season (Diwali was in Nov in FY22). 

Motilal Oswal said, "We estimate margins to improve for the second quarter in a row, with 160bp YoY (+40bp QoQ) expansion in EBITDA margins for our Auto OEM Universe (ex TTMT), led by benefits of RM cost moderation (-100bp YoY, -70bp QoQ). Except for BJAUT and HMCL, all other OEMs are likely to report margin expansion on YoY and QoQ basis."

It added, "We revise our FY24E EPS for select companies to account for 1) demand evolution in the domestic market, 2) weakness in exports, and 3) commodity price/FX changes. We lower our FY24E EPS for EIM (-5%), EXID (-5%) and BJAUT (-5%). We have not raised our estimates materially for any company for FY24."

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal. 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.

Leading brokerage Motilal Oswal maintain a positive outlook on the Automobile sector. The brokerage in its December 2022 Result Preview has listed 15 stocks from the sector with a "Buy". These stocks are Apollo Tyres, Ashok Leyland, Bharat Forge, Ceat, Eicher Motors, Endurance Technologies, Exide Industries, Hero MotoCorp, Mahindra & Mahindra, Mahindra CIE, Maruti Suzuki, Samvardhana Motherson Sumi, Motherson Wiring India, Tata Motors, and Tube Investments. Here we have listed these 15 stocks with their Current market price (CMP) and the target price given by the brokerage.