Auto Stocks Outlook for the week – 03 to 07.08.2015
Seen
up next week on momentum; RBI policy eyed
( www.rupeedesk.in )
Stocks
of major automakers are seen trading with a positive bias next week after a
good week, which has resulted in some momentum, and would rally in the event of
a rate cut by the Reserve Bank of India in its monetary policy review Tuesday.
A rate cut would augur well for the automobile industry, which is seeking some
incentives from the government in order to generate demand.
The coming
week has three Nifty players from the automobile sector—Hero MotoCorp Ltd, Tata
Motors Ltd, and Mahindra & Mahindra Ltd--detailing their Apr-Jun earnings.
Hero MotoCorp will report its numbers Monday, while the two Mumbai-based auto
giants will detail their earnings Friday. Hero MotoCorp is seen reporting a 20%
on-year rise in net profit to 6.74 bln rupees for the quarter ended June. The
rise in profit is likely to be backed largely by cessation of amortised royalty
to its erstwhile partner Honda Motorcycle. The royalty amount was 45 bln rupees
amortised over 14 quarters ending in Apr-Jun of 2014. The automaker's net sales
are seen flat during the quarter due to a fall in motorcycle volume. Net sales
are seen at 70.24 bln rupees, against 70.00 bln rupees in the year-ago period.
The
counter, as a result, is seen under pressure through the week, as fundamentals
of the company have been week over the quarter. Tata Motors is expected to have
an even worse set of numbers, with net profit seen down 40% on year at 32.24
bln rupees, even as its net sales are seen flat at 639.50 bln rupees. The
counter is seen carrying a negative bias through the week. M&M, which is
scheduled to detail its quarterly numbers on the same day as Tata Motors, has a
slightly better picture.
The
company's net sales are seen down 13% on year at 7.71 bln rupees, when net
sales are seen down 1%. Apart from the earnings, Ashok Leyland Ltd is seen
having a good week due to sales of medium and heavy commercial vehicles
reviving, and the company been poised well to meet demand.
