Top fund manager calls this company as world’s best automobile stock; CLSA says buy

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Published: December 1, 2017 12:30:39 PM

While it may be difficult for investors to sift through loads of data to ascertain best performing stocks globally, Nilesh Shah of Kotak Mutual Fund says that the world’s best performing automobile stock is in India.

Nilesh Shah of Kotak Mutual Fund says, “The world’s best performing automobile stock is in the Indian market.” (Image: Reuters)

While it may be difficult for investors to sift through loads of data to ascertain best performing stocks globally, Nilesh Shah of Kotak Mutual Fund says that the world’s best performing automobile stock is in India. In a recent interview to CNBC TV18, Nilesh Shah, Managing Director of Kotak AMC said last that in his recent visit to Japan, he used the Indian car manufacturer Maruti Suzuki’s rise to explain the country’s potential.

“I carried just one chart with me, and said, I can explain India in hundred slides or I can explain India in one slide. I compared Maruti Suzuki’s performance with Honda, Toyota, Nissan, General Motors, Ford and all the listed companies, and said that look, the world’s best performing automobile stock is in the Indian market, and this is how Suzuki has made money in India. Surprisingly, they were not aware of this story and they all lapped it up.”

Track live stock price: Maruti Suzuki India

Maruti Suzuki India shares edged up on Friday morning, after the car-maker reported a 14.3% rise in total domestic passenger vehicle to 1,44,297 units in November 2017. Maruti Suzuki shares were trading at Rs 8,652, up by more than 0.6% on NSE this morning. CLSA has a target price of Rs 10,000 on the shares, implying an upside of more than 15.5% from the current market prices.

In 2017, the shares have risen by more than 61%, as compared to BSE Sensex returns of 24% in the same period. CLSA says that the company is in a sweet spot as easing of competition in small cars and entry level sedans is a positive. Further, the global firm observed that the company is likely to broaden its SUV portfolio in the coming years. CLSA says that the valuation looks justified given higher results visibility, and better longer-term outlook.

The company has registered a strong volume increase in domestic utility vehicles segment under by 34% to 23,072 units. This increase is backed by an increase in demand for Vitara Brezza, S-Cross, Ertiga and others. The overall domestic sales under all categories grew by 15% to 1,45,300 units in November, 2017 from 1,26,220 units in November, 2016. The export sales remained stable as compared to corresponding month of previous year at 9,300 units.

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