ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Railways
  • World
    • Economy
    • Politics
    • Markets
  • videos
  • photos
  • MSME Summit
  • Trending News
    • Viral News
    • Travel
    • People
    • Entertainment
    • Sports
  • More ...
    • VIDEOS
    • PHOTOS
BREAKING NEWS
  • Policybazaar system vulnerabilities exposed customers' personal details, says this report
  • Government removes cap on airfares with effect from 31 August
  • Samsung Galaxy Z Fold 4, Galaxy Z Flip 4, Watch 5 series, Buds 2 Pro revealed - price, India availability, specs and more
  • Maruti Suzuki Alto K10 2022 bookings open; Check token amount and how to book online
  • DSP Silver ETF – 5 things to know about this NFO from minimum investment amount to issue closing date
Read in App
Business News » India News

Hot stocks! Which auto stocks should you buy after RBI rate cut, monsoon booster shots?

Looks like the days of weak to muted auto sales are getting over, and now carmakers are set to turn positive.

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Hot stocks! Which auto stocks should you buy after RBI rate cut, monsoon booster shots?
Auto stocks are trading at reasonable valuations, hence, creating a buying opportunity for investors. Photo: Pixabay

The auto sector, which has been witnessing lackluster demand over past few quarters, are now in for a treat, thanks to the Reserve Bank of India (RBI) repo rate cut, which happened for the third time in a row. Interestingly, looks like the days of weak to muted auto sales are getting over, and now carmakers are set to make a positive come back. Not only that, even auto stocks are trading at reasonable valuations, hence, creating a buying opportunity for investors. On Thursday, auto stocks were mostly trading in red, with the S&P BSE Auto performing at 18,223.81 down by 162.60 points or 0.88%. Major stocks like Apollo Tyre, Balkrishna Industries, Tata Motors, Ashok Leyland, Bharat Forge, Hero Motocorp, Maruti Suzuki, Bajaj Auto, TVS Motor, M&M, Eicher Motors and MRF were also in the losers list. 

But here’s why you should buy auto stocks when they are at lower levels.

Jigar Shah and Vikram Ramalingam, analysts at Maybank Kim Eng said, “We believe the demand weakness in the auto sector may be in its last stages following the third rate cut in 2019 and timely onset of monsoon. A bright spot was the slight improvement in the MoM sales of motorcycles, even with the decline in cars (-26%), trucks (-10%) and scooters (-15%). We believe the impact of recent rate cuts is now filtering through the market and liquidity should improve in 2H enabling the dealers/customers to resume purchases. A stimulus package for the economy in the 5 July budget could also unleash latent demand.”

Talking about overall May sales, the duo believes motorcycles segment were exception in an otherwise dull May. They added, “May domestic motorcycle sales for Bajaj Auto rose 7% YoY (flat MoM), while those for Hero Motocorp increased by a faster 14% MoM because the entry segment with high focus on fuel efficiency attracted price conscious buyers. Suzuki announced its withdrawal from the entry level motorcycle market, which augurs well for Hero and Bajaj. Scooter sales fell 15% YoY for Honda and 21% YoY for TVS, indicating a shift by consumers to more fuel efficient and lower cost products.”

Now that focus has shifted to production cuts and transition to BSVI, the duo at Maybank explains saying, “With the continuing slack demand, most automakers cut production by 17% (15-18 days) in 1Q. Automakers are also focused on minimizing the impact of the transition to the new BSVI standards by maximizing localisation and minimizing the increase in cost to end customers (April 2020). The industry is confident of beating analyst estimates for an 8-10% price increase due to the shift to BSVI. We believe MSIL will be a big gainer from BSVI because of its predominantly petrol-based portfolio of cars vs MM, while TTMT and Toyota, which have relatively larger diesel portfolios are more exposed to larger cost increases.”

On auto stocks, they said, “We believe auto stocks are trading at reasonable valuations with upside hinging on a strong recovery in demand from 2H. Demand should be supported by a normal monsoon, interest rate cuts, GST rate cut, and demand stimulus from the federal budget on 5 July (direct tax cuts and infrastructure spending).”

Maintaining positive on auto sector, the analysts have given buy on  MM and HMCL due to their attractive valuations. 

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
auto stocksTata MotorsMaruti SuzukiM&MBajaj AutoHero MotoCorpMarketsSensexNiftyStocks to buy
Written By: ZeeBiz WebTeam
Updated: Thu, Jun 13, 2019
02:48 pm
Mumbai, ZeeBiz WebDesk
RELATED NEWS
Automobiles Q1FY23 preview: Cost inflation remains amid easing of supply side issues; Ashok Leyland, Maruti Suzuki among 4 stocks to buy Automobiles Q1FY23 preview: Cost inflation remains amid easing of supply side issues; Ashok Leyland, Maruti Suzuki among 4 stocks to buy
June Auto Sales Preview: PV, CV may report healthy numbers; 2-Wheeler sales likely to disappoint – Brokerages picks these auto stocks as best bet June Auto Sales Preview: PV, CV may report healthy numbers; 2-Wheeler sales likely to disappoint – Brokerages picks these auto stocks as best bet
Rakesh Jhunjhunwala stocks: These two Tata Group stocks in Big Bull's portfolio can surge up to 83% in one year—Here is why Rakesh Jhunjhunwala stocks: These two Tata Group stocks in Big Bull's portfolio can surge up to 83% in one year—Here is why
Stocks to buy in June: 15 stocks that can clock 19-55% return in 12 months - Do you own any? Full list Stocks to buy in June: 15 stocks that can clock 19-55% return in 12 months - Do you own any? Full list
Auto stocks gain up to 7% intraday after excise duty cut on petrol, diesel; brokerage picks Hero Moto, Ashok Leyland as best bet Auto stocks gain up to 7% intraday after excise duty cut on petrol, diesel; brokerage picks Hero Moto, Ashok Leyland as best bet

LATEST NEWS

Raju Srivastav suffers heart attack at gym, admitted to AIIMS in Delhi

Maruti Suzuki Alto K10 2022 bookings open; Check token amount and how to book online

8th Central Pay Commission News: Central government employees alert! Will there be 8th CPC? Searching for release date? Check latest development

Bajaj Finance Fixed Deposit: Higher FD rates and quick online process - Details

Raksha Bandhan 2022 correct date, best time; Rakhi Shubh Muhurat in India - Know inauspicious Bhadra, what to avoid as per Hindu calendar

Samsung Galaxy Z Fold 4, Galaxy Z Flip 4, Watch 5 series, Buds 2 Pro launched- price, India availability, specs and more

Elon Musk sells Tesla stock worth $6.9 billion as possibility of forced Twitter deal rises

Sebi's grievance redressal platform SCORES disposes of 2,245 complaints in July

Why didn't BJP try to stop Nitish Kumar from leaving NDA?

Policybazaar system vulnerabilities exposed customers' personal details, says this report

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
© 2022. India Dot Com Private Limited. All Rights Reserved.
LIVE TV