Growth continues in two-wheelers, tractors: Motilal Oswal
Motilal Oswal has come out with its report on auto sector update. "Growth continues in two-wheelers and tractors, other segments sees sharp decline," says the research firm.
December 04, 2013 / 18:26 IST
Motilal Oswal: Auto sector update
Scooters drive growth in two-wheelers; favorable monsoon continue to drive healthy tractor growthGrowth in two-wheeler industry continues to be driven by the scooter segment as motorcycles and mopeds continues to remain weak. Favorable monsoon coupled with rise in minimum support prices continues to drive strong growth in the tractor industry.The decline in passenger vehicle has intensified with the end of festive season. Sharp drop in CV volumes continues reflecting continued challenges on the macro front.Easing of macro headwinds to be key catalyst for demand recovery With the expectation of an increase in rural incomes led by favorable monsoon coupled with election spending-led improvement in macro-economic factors, we hope for a better 2H for the auto sector.Over the long term, easing macro headwinds such as lower interest rates and higher economic growth would be the key driver for volume growth, profitability and in turn for re-rating.Valuation and view: Tata Motors, Hero MotoCorp and Eicher Motors are top picksDemand environment and changing competitive landscape in the auto sector would be the key determinants of stocks' performance.We are hopeful of a demand recovery in 2HFY14 driven by rural areas on favorable monsoon and consequent higher cash flows.We prefer Tata Motors (led by strong momentum in JLR) and Hero MotoCorp in large caps, and Eicher Motors in mid caps.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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. 
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