Top 5 New Year Picks From Auto Sector: 5 Large Cap Stocks Get Hold, Buy Call

Leading brokerage Chola Wealth has recommended investors to buy shares of Maruti Suzuki India Ltd, Tata Motors Ltd, Mahindra & Mahindra Ltd, Ashok Leyland Ltd, and TVS Motor Limited. If you buy these stocks now, you will get maximum 32% return. Check key takeaways below:

1. Buy Maruti Suzuki India Ltd

Chola Wealth has assigned buy rating to Maruti Suzuki India Ltd (MSIL) with a target price of Rs 10629 per share. If you buy Maruti Suzuki India shares now, you can potential 28% return.

The company has a market capitalisation of Rs 2,50,749.11 crore. The shares have rallied 13% in last 3-years and 13% in last 1-year. The stock has fallen 7% in last 1-month.

According to Chola Wealth, "The overall PV industry is seeing a strong upstick in volumes, and MSIL being the market leader is seeing strong YoY growth in no. of vehicles sold. We have assigned a P/E multiple of 33x on FY24E EPS of INR 322 to arrive at a revised target price of INR 10629/share. Accordingly, we maintain our "BUY" rating on the shares of Maruti Suzuki India Ltd."

2. Buy Tata Motors Ltd

The analyst has assigned buy call to Tats Motors with a target price of Rs 520. The current market price of the stock is Rs 395 apiece. If you buy the stock now, you will get 32% return.

The current market price of the stock is Rs 395 apiece with intraday gain of 2.70%. The stock's 52-week high is Rs 528 apiece and 52-week low is Rs 366 apiece, respectively. The shares have declined 16% in last 1-year and gave return of 123% in last 3-years. The stock has declined 6% in last 5-years.

According to the brokerage, "TTMT should witness a gradual recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize (for the India business). It will benefit from: a) macro recovery, b) company-specific volume and margin drivers, and c) a sharp improvement in FCF and leverage in both JLR as well as the India business. The stock trades at 16.8x FY24E consolidate P/E and 4.2x EV/EBITDA ratio. We maintain our Buy rating, with a TP of ~INR520/share (Jun'24E based SoTP)."

3. Hold Mahindra & Mahindra Ltd

The analyst has assigned "Hold" rating to Mahindra & Mahindra with a target price of Rs 1242. The current market price of the stock is Rs 1232 apiece. The stock has given maximum 132% return in last 3-years. The large cap company has a market capitalisation of Rs 1,53,235.91 crore.

According to Chola Wealth, "With stronger order backlog in automotive segment and market leadership in tractor space it is not likely to witness demand destruction. Consequently, we incorporate YTDFY22 volume outperformance and issue "Hold" rating on M&M with an SoTP based target price of 1242 (9.7x FY 23- FY24E average EV/EBITDA; 25% holding company discount to investments)."

4. Buy Ashok Leyland

Chola Wealth has assigned buy call to Ashok Leyland with a target price of Rs 170 apiece. The current market price of the stock is Rs 141 apiece. If you buy Ashok Leyland now, you can get 21% potential return.

The stock has given maximum 78% return in last 3-years. The large cap company has a market capitalisation of Rs 41,619 crore.

According to Chola Wealth, "Given the ongoing cyclical recovery in the CV space, we remain positive on this stock and assign BUY rating. We value ALL at revised SOTP based target price of 170 (15x average EV/ EBITDA FY24E, 2.5x P/BV for investments)."

5. Buy TVS Motor Company Limited

The analyst has assigned buy call to the stock with the target price of Rs 1350 apiece. The current market price of the stock is Rs 1044 apiece. If you buy TVS Motor Company Limited now, you can get 29% return.

The large cap company has a market capitalisation of Rs 49,606 crore.

According to the analyst, "TVS is witnessing strong growth across its portfolio with its market share of total 2W market improving YoY. Considering new product launches in both IC and EV segments and improving demand outlook in domestic as well as international markets, we expect TVSL to grow ahead of the industry over the next 2 years. We arrive at a TP of Rs 1,350, using a P/E multiple of 36x (~1x on PEG) FY24E ."

Disclaimer

The stocks have been picked from the brokerage report of Chola Wealth. 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 taking any investment decision.