Top Stocks To Buy From The Auto Sector With A Potential To Rally

Here are a list of stocks to buy from the auto sector, with a good potential to rally. These are stocks recommended by broking firm, Motilal Oswal in its latest report on the sector.

Mahindra and Mahindra

Brokerage firm has set an upside target of 16% on the stock of Mahindra and Mahindra for a target price of Rs 1470. M&M's wholesales were in line with Motilal Oswal's estimates at 79.9k units (v/s est. 77.3k units), up 39% YoY. UV volumes (in line) grew 41% YoY to 50.75k units (est.51.5k units). Domestic passenger UV sales rose 60.5% YoY, whereas Pickup/SCV volumes posted 25% growth. "We estimate UV volumes to grow 47% in FY23, with a residual growth rate of 18% or a monthly run rate of 56.3k units," the brokerage has said.

Sentiments remain upbeat in the farming sector

According to the report commenting on the performance, Hemant Sikka, President of Farm Equipment Sector, M&M said, "We have sold 21,640 tractors in the domestic market during Dec'22, a growth of 30% over last year. Rabi crop sowing has progressed very well and is higher than last year acreage and also higher than the average of last five years. Wheat and oil seeds are expected to be bumper harvest. On the back of strong Rabi sowing, good kharif procurement and likely exports of wheat, sentiments remain upbeat in the farming sector, leading to strong demand for tractors and farm implements. In the export market, we have sold 1,603 tractors, a growth of 1% over last year."

"The stock trades at a core PE of 11.4x FY24E S/A EPS and 2.1x core P/B. Maintain Buy," the brokerage has further added.

Buy Ashok Leyland stock for a 21% upside

The brokerage also has a buy call on the stock of Ashok Leyland for a 21% upside target. "Wholesale volumes rose 45% YoY to 18.1k units. M&HCV volumes grew 61% YoY to 12.3k units (v/s est.9.9k units), outperforming its peers. LCV volumes increased 20% YoY to 5.9k units (v/s est.5.1k units). We estimate volumes to grow 41% in FY23, implying flat growth or 16.1k units. The stock trades at 11.4x FY24E EV/EBITDA and 4.7x FY24E P/BV. Maintain Buy on the stock," says Motilal Oswal.

 

Disclaimer

The stock has 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 check with certified experts before taking any investment decision.