Auto stocks in top gear after Sep sales; Maruti hits new high

Maruti shares hit a record high of Rs 5,707.25, rising over 4 percent intraday.

"This time the festival season (Ganpati, Dussehra, Diwali) will result into strong demand for automobiles. The sixth pay commission was in 2010. Six years is a good time to replace your old car or an old vehicle. So, my guess is that automobiles should continue to grow," Nilesh Shah of Kotak Mahindra Asset Management Company said.

JP Morgan expects growth rates in 2HFY17 to be driven by new model launches and capacity addition.

Morgan Stanley said Q2FY17 is set to be a strong quarter for Maruti, as sales are up 18 percent YoY and up 20 percent QoQ, pointing to strong operating leverage gains during the quarter.

According to its research note, average selling prices are also likely to rise, by 11 percent YoY, as exports are up 100 basis points QoQ; high ASP models like Ciaz and utility vehicles are up from 15.2 percent of mix in Q1FY17 to 16.9 percent in Q2FY17; and discounts have come off sequentially.

Morgan Stanley believes leverage gains will offset forex headwinds and Maruti's EBITDA margin will rise from 14.8 percent to 15.4 percent in Q2FY17 on sequential basis.

Country's largest commercial vehicle maker Tata Motors recorded sales growth of 8 percent YoY at 48,648 units in the month gone by, with its export business growing 29 percent, passenger car sales rising 27 percent and light commercial vehicle sales up 19 percent. However, its overall commercial vehicles sales were lower by 2 percent.

"Medium and heavy commercial vehicle sales continued to be stressed due to subdued demand, with the slowdown of recent months continuing, as a result of postponement of replacement and fleet expansion," Tata Motors said in its filing.

M&HCV sales continued to be stressed due to subdued demand, with the slowdown of recent months continuing, as a result of postponement of replacement and fleet expansion.

Utility vehicle maker Mahindra and Mahindra's auto segment sold 46,130 vehicles during September 2016, registering a 8 percent growth on yearly basis. Its domestic sales grew by 7 percent and experts 14 percent in same period.

A good and near normal spread of monsoon as well as new vehicle launches have helped the auto industry perform positively, Pravin Shah, president & chief executive automotive, M&M said.

Its tractor sales during the month surged 69 percent to 30,562 units compared to year-ago period with domestic business growth of 70 percent.

Country's second largest commercial vehicle manufacturer Ashok Leyland said sales declined 18 percent year-on-year to 12,057 units in September. However, its sales on month-on-month basis increased 10.6 percent.

Eicher Motors sold 57,842 units of Royal Enfield in the month gone by, a 30 percent growth over a year-ago period while its commercial vehicle business has registered a 14 percent growth YoY.