Dhananjay Sinha bullish on tractors, two wheelers

Dhananjay Sinha of Emkay Global Financial Services told CNBC-TV18, "In the auto space we believe that the key driver for auto space will be volume growth and we see volume growth really happening in the space of tractors and also two wheelers. So, we have seen that there has been a considerable increase in government spending as far as revenue spending is concerned, net of interest payment it is growing at something like 17 percent and our long term correlation shows that there is a very high correlation upwards of 0.9 with respect to tractor volume growth and also two wheelers. So, those are the two spaces which we are very bullish about and there is a possibility of positive surprises as far as tractor volumes are concerned."He further added, "In the auto space as far as Ashok Leyland is concerned there has been a sort of a positive surprise with respect to margins largely because of the lingering impact of low commodity prices that is still persisting on the raw material cost but that could actually fade away going forward. However, the product mix has actually boosted the sales growth and that has been positive for Ashok Leyland.""The important thing with respect to Ashok Leyland is that volume growth has actually been decelerating over the past few months. So, it is in the lower teen levels and because you have had a pretty good run over the past one and half years it is possible that with a stronger base that might actually continue to decelerate. However, in the auto pack we would like to be overweight tractors and two wheelers in particular."