Suresh Mahadevan positive on auto sector

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Suresh Mahadevan , HOR at UBS Securities is positive on auto sector.

Mahadevan told CNBC-TV18, "There are few concerns around automobiles. One is certainly whatever the tailwinds were in 2009 are potentially becoming headwinds, interest rates are going up because at least in the four wheeler business 70-72% of the cars are kind of financed, so interest rates going up. People are concerned about the raw material cost going up because certain commodity prices have gone up. But my sense is the auto sector is actually very interesting sector in the sense it's probably where telecom was maybe five years ago in the sense structurally there is very bullish argument you can make in automobiles and these stocks while certainly they are expensive relative to their historic range, I do not think they are very expensive."

He further added, " Maruti Suzuki still trades at probably less then 15 times FY11 earnings though it's expensive considering its own range. But look at it from a perspective of a high quality company, earnings potentially being understated because of their conservative depreciation policy etc. My sense is probably a correction like this gives long-term fundamental investor to build a position on something like Maruti or even Hero Honda. So we are still positive on the sector so Maruti, Hero Honda, to a certain extent Mahindra & Mahindra, we still like those names."