D-Street Buzz: Auto stocks in focus! Tata Motors jumps 7%, Bajaj Auto hits 52-week high ahead of Q3 results

The top performers included Tata Motors which jumped over 7 percent followed by Bajaj Auto, Eicher Motors, Balkrishna Industries, Hero MotoCorp and MRF.

January 21, 2021 / 12:32 PM IST
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Sensex is up 344.49 points or 0.69 percent at 50136.61, and the Nifty added 95.20 points or 0.65 percent at 14739.90. The S&P BSE Sensex climbed Mount 50K while the Nifty50 also hit a fresh high above 14,600 for the first time.

The auto sector added almost 2 percent intraday on January 21 and is trading at over 2-year high on hopes of strong Q3 earnings growth.

As per the Federation of Automobile Dealers Associations (FADA), the auto retail sector saw growth for the first time in FY 2020-21 in the month of December.

Vehicle registrations in December registered a rise of 11 percent year-on-year (YoY), which is a significant improvement from last month that had witnessed a slump of over 19 percent YoY.

The top performers included Tata Motors which jumped over 7 percent. The stock surged over 51 percent in the last 15 days. CLSA has retained buy on the stock with target at Rs 290 per share. It is of the view that building confidence of a turnaround could lead to a valuation re-rating.

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Global wholesales of all passenger vehicles in Q3FY21 were at 1,88,550, higher by 4% as compared to Q3FY20.

Tata Motors said it has received 98 patents last year under its accelerated drive for engineering excellence and innovation. These patents predominantly relate to the megatrend of CESS (connected, electrified, sustainable and safe) automobiles, the company said in a statement.

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Ruchit Jain, Senior Analyst - Technical and Derivatives, Angel Broking suggests holding the stock. It has caught everyone’s attention due to its sharp run-up in the last few weeks. The recent price up move has been backed by increasing volumes which is a good sign, he said.

He also recommends holding Bajaj Auto. Nifty Auto has been forming a ‘Higher Top Higher Bottom’ structure and is in an uptrend for the last few months. The two-wheeler space has witnessed a good buying interest and Bajaj Auto has seen good momentum over the last few months, he said.

On the daily charts, the intermediate corrections have been bought and as the stock approaches its 20-Days EMA, we again see a resumption of the uptrend, he added.

Share price of Bajaj Auto gained over 2 percent ahead of its Q3 results. The company is likely to register more than 16 percent year-on-year growth in standalone profit, revenue and operating profit for the quarter ended December 2020 led by festive demand.

Profit is expected to be supported by revenue and operating performance, while higher volumes and average selling price (ASPs) could boost topline during the quarter.

The other gainers included Eicher Motors, Bharat Forge and Ashok Leyland which added 1-2 percent each.

Tata Motors was the most active stock on NSE in terms of volumes with 14,32,95,643 shares being traded. The auto names which hit new 52-week high apart from Tata Motors included Bajaj Auto, MRF and Balkrishna Industries.

Including Tata Motors, ICICIdirect said its coverage universe topline growth is seen 8 percent YoY to Rs 1.65 lakh crore with corresponding margins at 11.6 percent (down 140 bps QoQ) and PAT de-growth of 10.7 percent YoY to Rs 6,679 crore.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandip Das
first published: Jan 21, 2021 12:28 pm

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