See double digit growth till FY16: Atul Auto

JV Adhia, VP Accounts & Finance, Atul Auto and Basudev Banerjee, AVP-Research, Antique Stock Broking spoke about the outlook on the auto space with Anuj Singhal and Latha Venkatesh on CNBC-TV18.Below is the transcript of the interview.Anuj: How is business shaping up because we have seen the auto sales haven’t really still picked up? From your point of view over the next three or four quarters how is business likely to shape up?Adhia: You are right, it is not as per the expectation. However, we expect that going forward since the sentiments are improving it is likely to improve. Everybody is just waiting for Union Budget. We expect that it will bring some good news for auto industry as well.Latha: How has sales been at this point in time, are you seeing the original equipment manufacturer (OEM) market doing well, replacement market because we have got a very mixed picture from the industry itself. Yesterday the Tata Motors numbers disappointed, we saw a series of disappointment in the two wheeler space but for Maruti Suzuki there hasn’t been any standout performer in the auto consumption space but how is business for you then volume wise?Adhia: At Atul Auto since we are engaged in manufacturing of micro commercial vehicle, the year has again turned out to be positive for us. We are growing at a rate of 12 percent till January last month. We expect that we will be able to continue this revenue momentum in time to come because when it comes to micro commercial we feel that still there is potential available for us and industry as well. Latha: What kind of volume growth you think in FY16 or even for that matter in the current quarter?Adhia: We expect that we would be able to continue this double digit growth momentum in current quarter as well as in next fiscal as well.Anuj: I just wanted to have a word on Tata Motors's earnings. The stock is down 7 percent, what is your first take?Banerjee: As you said Tata Motors earnings has nothing much to do with the domestic economy per se. Standalone margin broadly after few adjustments was at minus 3 percent which was the case in last few quarters also. Few one-offs in the tax perspective but nothing much new from the standalone results.Primarily the JLR margin disappointed a bit and because of the initial teething problems of the China JV, the management guided a bit muted margin in the near term. So, that was the prime negative thing from the concall yesterday.If you have seen the stock has moved up from Rs 500 levels to Rs 600 in a span of month so that is why some profit booking was pending and poor JLR margins was just a catalyst for this correction. So, nothing much to takeaway from the domestic demand scenario resulting into this correction per se.Latha: 2014 was a fairly good year for autos, they ran when the cyclicals ran, they ran when the cyclicals did not run but the Q3 earnings are a bit of a reality touch. What is your pick of the pack?Banerjee: We are positive on Eicher Motors. So that has been our top pick for many years followed by Tata Motors. I will advise everybody to make use of these kind of corrections based on few quarters of hiccups here and there. So, in the largecap space we are positive on these two stocks.Maruti Suzuki has run up quite a lot courtesy the new launch pipeline, the favorable Yen and the lower commodity prices. However, from launch pipeline perspective from next two years definitely Maruti will be our third best pick.In the two wheelers, we are broadly neutral on TVS Motors and Bajaj Auto. Hero has corrected a bit in last couple of weeks post the result so that is giving a decent opportunity to add further.

For entire interview watch accompanying video.