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    Bullish on auto stocks? Here are 14 ideas from Sharekhan ahead of Q2 results.

    Synopsis

    The 3W and bus segments showed remarkable recovery led by the opening of schools, institutions and corporate offices

    Sharekhan bullish on automobile demandiStock
    Within the OEM space, the brokerage has chosen 6 counters – Eicher Motors (price target -Rs 4,100), TVS Motor (price target -Rs 1,254), M&M (price target -Rs 1,550), Maruti Suzuki (price target -Rs 10,200), Escorts Kubota (price target -Rs 2,503) and Hero MotoCorp (price target -Rs 3,210)
    Brokerage firm Sharekhan expects Q2FY23 to be strong for the auto industry with 33% YoY revenue growth, despite the severe chip crisis that the industry is currently reeling from.

    Margins are also seen to show improvement sequentially on the back of benefits from high operating leverage, cost rationalisation, and softening commodity prices, noted the brokerage.

    Furthermore, owing to positive rural sentiments, the domestic farm equipment segment continues to perform strongly. Also, the 3W and bus segments showed remarkable recovery led by the opening of schools, institutions and corporate offices.

    Nevertheless, for the auto ancillaries, Sharekhan sees a relatively weak quarter, given the downturn in exports during the period. However, the segment is performing strongly in the domestic market aided by a number of launches, robust uptick seen in EVs, channel filling before the festivities and technology business verticals.

    The brokerage is bullish on the automobile demand as a whole and shrugs off near-term challenges of geo-political tensions and semiconductor chip crisis. “We stay positive on the sector, driven by expected volume recovery across segments. Battery and tyre companies are expected to witness improvement in revenue growth and EBITDA margins, driven by aftermarket sales growth, recovery in domestic OEM sales, and operating leverage benefits,” added the brokerage report.

    Given the optimism, Sharekhan has come up with its preferred picks in both the OEM category and auto ancillaries segment.

    Within the OEM space, the brokerage has chosen 6 counters – Eicher Motors (price target -Rs 4,100), TVS Motor (price target -Rs 1,254), M&M (price target -Rs 1,550), Maruti Suzuki (price target -Rs 10,200), Escorts Kubota (price target -Rs 2,503) and Hero MotoCorp (price target -Rs 3,210).

    Similarly, in the auto ancillaries segment, Sharekhan’s preferred picks are Bosch (price target -Rs 19,795), Sundram Fasteners (price target -Rs 1,030), Ramkrishna Forgings (price target -Rs 238), Mahindra CIE (price target -Rs 378), Suprajit Engineering (price target -Rs 386), Greaves Cotton (price target -Rs 212), Gabriel India (price target -Rs 197), and Apollo Tyres (price target -Rs 303).

    However, the key risks to the brokerage’s forecasts may arise in case the semiconductor chip crisis and geopolitical situation worsen.

    (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)





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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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