Auto sector stocks are on a roll. The Nifty Auto Index is up over 1% higher. Maruti Suzuki, Eicher Motors, Mahindra & Mahindra, and Bajaj Auto are among the top Nifty gainers at this hour.
The share price of Maruti Suzuki has surged 3% intra-day, hitting a 52-week high on the National Stock Exchange. The stock is also the top Nifty gainer at the moment. Eicher Motors’ share price too surged 2.5% to a new 52-week high of Rs 7,122.50. The share price of M&M rallied 2.6% to intra-day high of Rs 3,679.20.
Nuvama on Automobile: Maruti Suzuki, M&M, TVS top pick
Nuvama Institutional Equities has picked Maruti Suzuki, TVS, Mahindra & Mahindra, and Hero MotoCorp as its top bets in the automobile sector. According to Nuvama, customer sentiments have received a significant boost from GST cuts. As per the channel checks, the rate cut is likely to lead to double-digit growth in the festive period across PV, two-wheelers, and tractor segments. The indications are that PVs and two-wheelers are expected to grow by 15–40%, tractors by 10–15%, and CVs by 10–15%.
Nuvama on Automobile: Upgrade Auto OEM and EBITDA estimates
Nuvama has upgraded its Auto OEM estimates by up to 5%, which is led by the benefits of GST cuts, new products, upcoming pay commission for government employees and interest rate or income tax reforms. Moreover, better scale and lower discounts are supporting EBITDA upgrades by up to 14%. Maruti Suzuki is offering incentives of up to Rs 25,000 per vehicle to clear stocks ahead of September 22, driving strong offtake—particularly for sub4m PVs. A brief slowdown is likely post-September 22 until the month-end.
“Better affordability is likely to aid recovery in entry-level segments, leading to a rise in target multiples for Maruti Suzuki, Hyundai Motor and Hero MotoCorp,” said Nuvama.
Nuvama has a target price of Rs 18,200 on Maruti Suzuki, implying an upside of 15%. The brokerage has a price target of Rs 4,100 on TVS Motor indicating an upside of 16% for the stock.
Nuvama has a price target of Rs 4,200 on Mahindra & Mahindra. This shows potential for the M&M share price to rally another 17% over 12 months. This is the highest prediction among all automobile stocks under Nuvama’s coverage.
Nuvama on Automobile: Downgrades Eicher Motors and Bajaj Auto
However, the brokerage firm has downgraded Eicher Motors and Bajaj Auto to ‘Hold’ from ‘Buy’ as it sees limited upside potential.