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Street brightly optimistic about auto stocks, lukewarm to Budget 2023

Market forces are expected to drive strong volume and margin growth. The Street expects strong demand growth across categories, thanks to the low-base effect, product launches and an improving economy

January 25, 2023 / 12:22 PM IST
Over the last year, the auto sector has dealt with chip-supply shortages, delays in delivery, disruptive trends, and price hikes. (Photo by JESHOOTS.com/Pexels)

Over the last year, the auto sector has dealt with chip-supply shortages, delays in delivery, disruptive trends, and price hikes. (Photo by JESHOOTS.com/Pexels)

Auto stocks outperformed the benchmark index in 2022 and analysts expect it to continue to deliver strong numbers in 2023, as well, on good volume growth and margin expansion.

The Street does not seem to be expecting Budget 2023 to be momentous for the sector, especially for fuel vehicles, but it will be closely tracking announcements aimed at driving electric-vehicle adoption. It will also be on the lookout for announcements that leave more money in the hands of the consumer, especially the rural consumer, to boost demand across auto categories.

Also read: Are ITC's shares catching a Budget chill?

Optimism around the sector seems to be driven by the demand outlook. The Street expects strong demand growth across categories, thanks to the low-base effect, product launches and an improving economy.