Auto and auto ancillary sectors were quite beaten down as the rate hike continued over the past quarter. Reports from brokerages seem to suggest that maybe it is indeed time to start looking at the space for value buys.
Deutsche Bank maintains a buy on M&M with a target of Rs 780. The market is implying a 40-50 basis points contraction in margin. Margins will also be adversely affected as the very profitable Maxximo is produced by a 100% subsidiary but marketed by the parent.
Standard Chartered has an 'outperformer' rating on Apollo Tyres , They have set a target of Rs 80 on the stock. However, they warn the proposal to lift anti-dumping duty on medium and heavy commercial vehicles tyres is detrimental for the industry, producers may resort to a price war and an increase in imports.
Deutsche Equities has a 'buy' call on Bajaj Auto with a target of Rs 1600. Bajaj's current price implies FY12 volume growth of 13% versus estimates of over 18%. A deceleration, though, is likely for the stock in the second half of this fiscal.
RBS recommends holding HCL Infosystems , but has cut its target to Rs 74 from Rs 112. They see more challenges for the company post their earnings from the review of S-I contracts that have seen delays and cost overruns.
