Look at auto ancillary space: Parag Thakkar

Parag Thakkar of HDFC Securities told CNBC-TV18, "Basically auto ancillary has been my favourite since long and I have been recommending stock after stock in that space because I feel that monsoon which will increase the vehicle sales, seventh pay commission which will again boost vehicle sales, Goods and Services Tax (GST) will help lot of this auto ancillary companies which cater to replacement market because in replacement market they face competition from unbranded players who pay lower taxes and once GST comes their tax payout will also increase. ""Amara Raja is a little bit expensive one but some of the stocks which I have been highlighting like Jamna Auto in the past or something like Lumax Auto Tech or Rane Brake Lining which reported excellent numbers this time. So, Rane Brake Lining is just trading at 11 times FY17 earnings. On a 30 percent return on equity (RoE) basis and a debt free company. So, there are so many interesting ideas in auto-ancillary space. They are clear beneficiaries of all this happening, plus if the scrapping comes it will just add fuel to the fire. So, this is a very interesting space and I would watch out for many companies in this space where valuations are also attractive," he added.