Prefer tyre stocks, says Rajen Shah

Excerpts from Your Stocks on CNBC-TV18 Watch the full show » Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

Prefer tyre stocks, says Rajen Shah of Angel Broking.

Shah told CNBC-TV18, " Maruti Suzuki itself saw vehicle sales up 24% and in October the growth was 32%, we expect this 23-25% kind of sales numbers to continue and I think it should report good numbers. We are expecting about Rs 81 kind of earnings for Maruti and next year it could be in excess of Rs 100. So the numbers are going to be good but valuations remain a little concern because 16 times next year earnings I think I would be a little skeptical getting into Maruti and maybe on sharp declines I could look at this company."

He further added, "More than getting into auto's space where we like Mahindra and Mahindra and we have up rated the target to Rs 1,200. But if you really want some good double income then one needs to get into tyre because of the strong OEM demand from the autos sector plus there is a firm replacement demand and also they are available at 5-6 kind of PE multiples, so why get into auto stocks at 15-17 when you are getting something cheap."