Auto sector will languish under near-term pressures: Angel

Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

According to Angel Broking's report on Automobile Sector, We believe the Auto sector will languish under near-term pressures with inflation expected to continue to remain high in the ensuing months.

Angel Broking's report on Automobile Sector:

We believe the Auto sector will languish under near-term pressures with inflation expected to continue to remain high in the ensuing months.

Hurdles to growth:

• Inflation, Interest Rates and Liquidity
• Fuel Price hike
• Soaring Raw Material prices
• Large Capex to take a toll on Returns

In conclusion, while rising input costs, interest rates and fuel costs are concerns, our cost of ownership analysis suggests that the impact this far has been moderate. We believe that it will spread with a lag effect and would change the near-term demand outlook. Nonetheless, CVs are far more exposed to such macro economic factors than the PVs. Hence, in view of these uncertainties, we believe that the Passenger Vehicle segment offers better growth visibility compared to the Commercial Vehicle and Two-wheeler segments.

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