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Auto stocks rise on November sales data; brokerages betting on Maruti, Eicher Motors

Commercial vehicle is trending well on recovery but rising CNG demand is leading to market share shifts. "Our preferred picks post recent correction are Eicher Motors, Bajaj Auto and Maruti Suzuki," BofAML has said

December 01, 2021 / 01:51 PM IST
Stock Market, Auto stocks

Stock Market, Auto stocks

The Indian stock market was trading higher in the afternoon on December 1, with the Sensex up 624.26 points, or 1.09 percent, at 57,689.13 at 1.05 pm and the Nifty gaining 180.40 points, or 1.06 percent, at 17,163.60.

All sectoral indices barring pharma and realty were trading in the green. The auto index was up over a percent.

Among the top auto gainers, Eicher Motors jumped more than 3 percent after the tractor-maker declared its November sale numbers. Its total commercial vehicle sales were up 3.1 percent at 3,184 units against 3,088 units in the same month of the previous year.

Maruti Suzuki and Tata Motors were up over 2 percent each. Maruti Suzuki India share price was trading at Rs 7,265.15, up Rs 179, or 2.53 percent at 1.09 pm, while that of Tata Motors was at Rs 469.60, up Rs 10.80, or 2.35 percent.

Global research firm Goldman Sachs has maintained a “buy” call on Maruti, with the target at Rs 9,000 a share.

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It said the December production guidance of 80-85 percent of normalised levels indicates a flattish trend month-on-month, adding that semiconductor supplies could still take some more time to normalise.

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Tata Motors' total commercial vehicle sales in November grew 15 percent at 32,245 units against 27,982 units in the year-ago period. Domestic sales of passenger vehicle jumped 38 percent at 29,778 units against 21,641 vehicles in the same month of the previous year. The auto major's total sales stood at 62,192 units.

Ashok Leyland and Escorts were the other gainers, adding over a percent each.

Bajaj Auto stock, however, came under pressure after the company reported a 10 percent fall in sales volume to 3,79,276 units in November from 4,22,240 vehicles in the same month the previous year.

The automaker reported a weak domestic performance on muted demand, as sales declined 20 percent to 1,58,755 units.

The semi-conductor shortage continues to bite the recovery process with 2.09 million registrations of new vehicles during the festival days, which was 18 percent lower than the same period FY21 and nearly 21 percent lower than FY20, according to retail sales data supplied by the Federation of Automobile Dealers Association (FADA).

BofAML sees a steady demand for passenger vehicle but said the easing of supply was not broad-based.

Maruti fared relatively better than the industry on dispatches in the month of November, while two-wheeler and tractor dispatches would be underwhelming on soft demand, it said.

The brokerage expects TVS Motor and Eicher Motors to see MoM improvement on new launches and better supplies, adding that tractor prints would see steep decline over the next few months on demanding base.

"Commercial vehicle is trending well on recovery but rising CNG demand is leading to market share shifts. Our preferred picks post recent correction are Eicher Motors, Bajaj Auto and Maruti Suzuki," BofAML added.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Sandip Das
first published: Dec 1, 2021 01:51 pm

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