3 Auto Stocks To Buy As Recommended By Motilal Oswal
Broking firm Motilal Oswal has suggested buying the stocks of Maruti Suzuki, Eicher Motors and Tata Motors with significantly high targets. Here are some of the reasons the brokerage is optimistic on these stocks.
Maruti Suzuki
Oswal sees an upside of 34% on the stock of Maruti Suzuki for a target price of Rs 11,250. The company's Dec'22 Wholesales were in line with Motilal Oswal's own estimates of 139.35k units, which was a decline of 9% YoY. Domestic volumes declined 10% YoY to 117.55k units (est. 126.2k units). Compact segment volumes declined 19.5% YoY to 57.6k units (est. 69k units). Mini segment volumes declined 40% YoY to 9.8k units (est. 15k units). UV segment volumes grew 25% YoY to 37k units (est. 33k units). "We estimate FY23E volumes to grow by 21% YoY, implying a residual growth of 13%, or run-rate of 184.7k units. The stock trades at 35.5x/22.2x FY23E/FY24E earnings. We maintain our BUY rating," the brokerage has said.
Eicher Motors
On Eicher Motors stock, Motilal Oswal has a buy rating with a price target of Rs 4150, which is an upisde of 29% from the current levels. Royal Enfield's (RE) dispatches declined by 7% YoY to 68.4k units (est. 69K units). Exports which were muted for the last 2 months improved 71% MoM to 8.6k units; flat YoY.
"We estimate RE volumes to grow by 44% in FY23E, implying a residual growth of 34%, or a run-rate of 83k units. There is downside risk to our estimates. VECV's wholesales were above our estimate. Volumes grew 17% YoY to 7.2k units (est. 5.4k units). The stock trades at 29.7x/20.2x FY23E/FY24E consolidated EPS. We maintain our Buy rating," the brokerage has said.
Buy Tata Motors stock, says Motilal Oswal
On Tata Motors stock, Motilal Oswal has a buy call with a target price of Rs 500 per share.
According to Motilal Oswal, commercial vehicle volumes were above its estimates flat YoY to 33.95k units (est. 30.5k units). M&HCV volumes grew 20% YoY to 15.8k (above our estimate of 13.4k). LCV volumes declined 13% YoY to 18.2k units (above our estimate of 17.1k).
Overall, we estimate a 32% growth in total volumes for FY23E, implying a 7% residual growth, or a monthly run-rate of 86k units. The stock trades at 7.2x FY23E/4x FY24E EV/EBITDA. We maintain our Buy rating with a target price of Rs 500 per share (Sep'24E SoTP based).
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.