Auto
Stocks Outlook for the week – 12 to 16.01.2015
( www.rupeedesk.in )
Stocks of leading automobile makers are likely to trade in a narrow
range next week, while analysts will keep an eye on Bajaj Auto's Oct-Dec earnings.
The country's third largest two-wheeler manufacturer and largest
automobile exporter will report its earnings on Thursday. Automobile sales are likely to be
dented in near term by as excise duty sops have been withdrawn.
In the interim Budget, the government announced a cut of 300-600 basis
points in he excise
duty on automobiles in a bid to boost demand. This cut in duty was
extended up to Dec 31, 2014, in the regular Budget presented by Finance Minister Arun
Jaitley. This duty cut has been withdrawn from Jan 1, and it is seen denting demand for vehicles, as
manufacturers are expected to pass on the rise in duty to customers.
The Society of Indian Automobile Manufacturers Friday lowered its outlook
for growth in sales of passenger cars for the current financial year ending March to 1%
from 4% earlier.
Counters such as Mahindra & Mahindra and Tata Motors are expected
to see corrections owing to weak despatches to dealers over the past few months. Stocks of
automobile companies were the biggest wealth creators over the past year, and some correction in
values is expected.
We expect stocks of two-wheeler companies to do better than
four-wheeler and commercial vehicle manufacturers, mainly due to sustained demand for their
products. Demand for twowheelers, particularly
scooters, is seen remaining at sustained levels. Scooters sales have been growing
month on month for the past two years, led by demand in urban India.
Stocks are positive on Hero MotoCorp and TVS Motor Co. Hero MotoCorp
is the second-largest player in the scooters segment, while TVS Motor Co is the third
largest.
