Shares of automobile companies have not had a great year so far, falling around 7 percent on a year to date basis.
But, going forward, global research firms such as Macquarie are upbeat on the sector, citing multiple factors.
For instance, Macquarie is expecting rural sentiment to improve based on normal monsoon forecast. Along with it, implementation of pay commission recommendations by states will also drive sales growth, it said.
Having said that, it also observed that auto stocks are trading at a premium to historical valuations.
Speaking on specific stocks, it said that there is a large market opportunity in premium bikes for Eicher Motors and growth momentum could continue in this case.
In case of Maruti, it said that the firm is best placed on improving macros and looks poised to strengthen its market leadership.
Meanwhile, Motherson Sumi remains a unique play on fastest growing car market as well as growth themes.
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