Auto
Stocks Outlook for the week – 05 to 09.01.2015
( www.rupeedesk.in )
Stocks of leading Automobile makers are likely to fall next week
following revocation of the cut in the excise duty on vehicles. In the interim Budget, the government
announced a cut of 300- 600 basis points in the 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. The government has decided not to extend the duty cut, which
is expected to dent demand for vehicles, as manufacturers are expected to pass on the rise
in duty to customers.
Mahindra & Mahindra, the country's largest utility vehicles maker,
will hike vehicle prices by 4- 6% in a couple of days to offset the duty hike. 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. Stocks of two-wheeler companies to
do better than ourwheeler
and commercial vehicle manufacturers, mainly due to sustained demand
for their products.
Demand for two-wheelers, 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. So, we 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.
