1. Maruti, M&M, Tata Motors: Should you ‘Buy’, ‘Hold’ or ‘Sell’ auto stocks post Feb sales?

Maruti, M&M, Tata Motors: Should you ‘Buy’, ‘Hold’ or ‘Sell’ auto stocks post Feb sales?

The passenger vehicle industry is expected to come under more pressure as prices of vehicles are set to go up for the second time in a span of two months with the introduction of an infrastructure cess of up to 4%.

By: | Updated: March 2, 2016 12:51 PM
cars, car infra cess, car cess, car prices, budget 2016, budget news 2016, income tax slab 2016, budget highlights, budget 2016 india, budget 2016 income tax, 2016 income tax rates, tax rates 2016, tax rates 2016-17, budget news Auto sales: The passenger vehicle industry is expected to come under more pressure as prices of vehicles are set to go up for the second time in a span of two months with the introduction of an infrastructure cess of up to 4%. (Reuters)

Domestic car sales registered a muted growth for the second consecutive month (February) of the current calendar with the top five carmakers in the country putting together a growth of 0.95 per cent following Jat agitation in Haryana. The passenger vehicle industry is expected to come under more pressure as prices of vehicles are set to go up for the second time in a span of two months with the introduction of an infrastructure cess of up to 4%.

Leading car maker Maruti Suzuki reported marginal increase to 1,08,115 units for February 2016 as against 1,07,892 in February 2015. The company indicated that the Jat reservation agitation in Haryana had disrupted component supplies, causing a temporary suspension of production. Total production loss due to this was over 10,000 units. MSIL’s mini segment cars which include Alto and WagonR declined by 11.2 per cent to 35,495 units while compact car sales increased marginally by 192 units to 42,970 units.

Sharekhan in a research note said, “We have revised downwards Maruti Suzuki earnings estimates for FY2017 and FY2018 to factor in the pressure on margins due to the adverse foreign exchange rate movements (yen appreciating against the rupee) and some fine-tuning in volume growth assumptions. Consequently, we have revised our price target downwards to Rs 4,800, but have maintained our ‘Buy’ rating on the stock.

Mahindra & Mahindra’s domestic sales grew by 18.4 per cent to 41,348 units in February as against 34,918 in February 2015. As per the management, the auto sales growth has been on the back of the company’s range of passenger and commercial vehicles.

Angel Broking said, “We have ‘neutral’ ratings on Maruti Suzuki, ‘Accumulate’ rating on Mahindra & Mahindra.” Maruti Suzuki was trading 2.27 per cent up at Rs 3,575. However, Mahindra and Mahindra was trading 2.86 per cent down at Rs 1230 in the morning trade on Wednesday.

According to Prabhudas Lilladher, continued allocation under MGNREGA and infrastructure focus are positive for the auto sector; biggest beneficiaries are M&M, Hero MotoCorp on rural side and CV companies on infrastructure side.

While MSIL and M&M witnessed marginal and strong growths respectively, Tata Motors witnessed a decline of 20 per cent in its passenger vehicles sales for the month of February to 10,962 units.

In two-wheelers space, Hero MotoCorp reported a 14 per cent increase in sales to 5,50,992 units during the period despite of production being impacted due to local agitations that affected production.

Angel Broking has ‘Buy’ rating on Tata Motors and ‘Accumulate’ on Hero MotoCorp. Shares of Hero MotoCorp and Tata Motors were trading 6.54 per cent and 2.12 per cent up at Rs 2841 and Rs 322, respectively, at 10.37 am.

TVS Motor reported a 7.3 per cent increase in total sales to 2,19,467 units for the period. Angel Broking is bullish on TVS Motor owing to its growing market share and presence in fast growing scooter segment and have ‘Buy’ rating on it. The scrip was trading 2.11 per cent up at Rs 289.70 in the early trade on Wednesday.

Tags: Auto Stocks
  1. A
    Ashish
    Mar 2, 2016 at 7:44 am
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