Pick M&M in auto space, says Rajen Shah

One can pick Mahindra & Mahindra (M&M) in the auto space, says Rajen Shah, CIO Angel Broking.
 
Shah told CNBC-TV18, "Tata Motors looks interesting, corrected almost about 15 percent or so. However, my picks in auto would be Mahindra & Mahindra (M&M). The kind of models they are coming out with that is going to do wonders to their top line and bottom-line and this is one company, which has shown a very strong growth over the past 12 months. Infact when the auto industry is going through such a crisis, a significant slowdown in the sales and all that, M&M is able to withstand that and actually grow. So that is one positive for M&M."
 
He further added, "Secondly, Escort is one stock which we need to look at. In the last quarter the company’s bottom line went up by 200 percent and the margins also improved significantly despite no growth in tractor sales. And the stock has come down from Rs 76 levels just about two months back to current levels of Rs 49. So Escorts at a market cap of Rs 607 crore looks actually very interesting. Actually it is just quoting at 7 times."
 
"Infact plenty of stocks are on sale right now in the market. We have lot of companies in India coming out with sale every year like Zodiac will come out with sale in the month of February, we have Bata coming during monsoon, July-August. But in stock market we don't know when the sale is on."
 
"I think the sale is currently on in stock market. How long will it last I don't know but a number of quality midcaps are down anywhere between 25-30 percent. Times like these need to be seriously looked at. Some of your gold assets, some of your real estate assets should be sold out at these levels and actually one should make an entry into the markets for those who actually missed out on this investing in the market. So it is a great time to accumulate very good quality companies, you are getting at 5-7 kind of PE multiples and you should really jump into buy."
 
"I have been hearing lot of bearish voices on number of channels but time will show. Why are Foreign Institutional Investors (FIIs) investing USD 12 billion dollars in three months in the Indian market? So significant industrial slowdown resulting in such a poor economic growth, weak currency, political uncertainty, high interest rates, non functional governments because the government is acting very slow, these are the various hammers of nature molding companies to highest levels of efficiency and productivity."
 
"Only during tough times like this companies cut excess flab, trim down their workforce, become more efficient, manage their inventories well, manage their forex well. When times will change in the next 24-36 months these are the companies which are going to report very high margins and very good profit numbers. So look at this market from a little longer time frame."