Auto stocks rise post February sales prints; CLSA, Motilal Oswal positive on M&M, Maruti, Tata Motors

Brokerages and market experts have been positive about the auto space of late as the sector is among the key beneficiaries of the economic recovery and low-interest rates.

March 02, 2021 / 11:30 AM IST
 
 
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At first glance, it appears the February automobile sales data cheered investors as the BSE Auto index climbed almost 2 percent with most stocks in the green in morning trade on March 2.

Top automakers, including Maruti Suzuki, Tata Motors and Hyundai, reported strong sales for the month, supported by rising demand for personal mobility.

PTI reported Toyota Kirloskar Motor (TKM), Mahindra & Mahindra, and Honda Cars India, also reported strong wholesale dispatches to dealers last month.

Tractor, PV and CV volumes witnessed healthy growth, but volume was subdued for 2W OEMs owing to price hikes and delayed wedding season.

Read more: Automakers report double digit sales growth in February

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Brokerages and market experts have been positive about the auto space of late as the sector is among the key beneficiaries of the economic recovery and low-interest rates.

Global brokerage firm CLSA underscored that the recovery in the sector continued off a low base and tractor is the only segment that is growing strongly on a high base.

Brokerage firm Motilal Oswal Financial Services underscored the February sales data shows sustained demand across segments excluding two-wheelers (2Ws), as 2Ws saw some tapering in growth.

Due to economic activities picking pace and freight demand approaching normalcy, the country's retail sales increased across commercial segment (CV) categories on a month-on-month basis.

Brokerage firm ICICI Securities pointed out the registrations for tractors continued to witness an upward trend and improvement in rural cash flow aided by both superior winter harvest and rising usage in infrastructure-related haulage activities is likely to aid demand.

"A well-incentivized scrappage policy could further boost CVs segment demand in coming periods. Feb’20 retail registration base was also impacted due to BS-VI transition as consumers deferred purchases into Mar’20 for securing lucrative deals," ICICI Securities said.

Stocks to buy

CLSA

Mahindra & Mahindra and Tata Motors continue to be the top picks of CLSA.

Motilal Oswal

Motilal Oswal said it prefers companies with higher visibility in terms of demand recovery, a strong competitive positioning, margin drivers, and balance sheet strength.

Maruti Suzuki and Mahindra & Mahindra are its top OEM picks. Among auto component stocks, Motilal Oswal prefers Endurance Technologies and Motherson Sumi Systems.

Emkay Global Financial Services

Among OEMs, Emkay's top picks are Tata Motors (target price: Rs 375), Ashok Leyland (target price: Rs 155), Maruti Suzuki (target price: Rs 9,000) and Eicher Motors (target price: Rs 3,300).

Among ancillaries, Bharat Forge (target price: Rs 760) and Apollo Tyres (target price: Rs 306) are Emkay's top picks.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Nishant Kumar
first published: Mar 2, 2021 11:30 am

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