Auto Sector Weekly Report – 06.11.2017 To 10.11.2017
Auto Sector Weekly Report – 06.11.2017 To 10.11.2017
Stocks of automobile companies are likely to show stock-specific movement next week, with earnings being a key trigger. Investors will keep a close eye on Ashok Leyland, which will post its Jul-Sep results Wednesday. We expects the company to post a 30% on-year growth in
its top line, driven by a 23% on-year jump in volumes and spike in average selling price for the September quarter. Terming the outlook for the company as excellent, we see a sharp sequential expansion of 450 basis points in the operating margin of the company at 11.7%. We have a strong outlook for the country's largest carmaker, Maruti Suzuki India Ltd, whose Jul-Sep results surpassed the estimates and resulted in an up tick of as much as 44% in the stock's price target by us. Maruti Suzuki is likely to continue to outpace the industry growth as four of its models (Baleno, Vitara
Brezza, Ignis and Dzire sedan) which form about 35-40% of the vehicle portfolio, command a waiting period of 3-5 months. A continuous spike in input costs, especially copper and steel, higher
marketing expenses due to brand ‘NEXA’, however, may keep the company's operating margin under pressure.
Two-wheeler companies posted a dismal performance in October sales volume. Hero MotoCorp Ltd's sales in October fell 4.8% on year to 631,105 units, while Bajaj Auto Ltd's sales rose by just 7% on year. Two-wheeler makers witnessed a weak performance in October as dealers stocked up inventory in September ahead of the onset of festival season from Sep 21 onwards. However, with the onset of the marriage season and pick-up in rural demand, we believe Oct-Mar would be strong. Tata Motors posted a 7% on-year rise in its commercial vehicle sales in October. Viewing the recovery in Jaguar Land Rover numbers and strong domestic passenger vehicle sales and recovering commercial vehicle sales. Tata Motors would be an out performer, led by potential levers such as strong margin performance at Jaguar Land Rover and lower losses in the standalone business..
Source : Cogencis Information Services Ltd.
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Auto Sector Weekly Report – 06.11.2017 To 10.11.2017
Stocks of automobile companies are likely to show stock-specific movement next week, with earnings being a key trigger. Investors will keep a close eye on Ashok Leyland, which will post its Jul-Sep results Wednesday. We expects the company to post a 30% on-year growth in
its top line, driven by a 23% on-year jump in volumes and spike in average selling price for the September quarter. Terming the outlook for the company as excellent, we see a sharp sequential expansion of 450 basis points in the operating margin of the company at 11.7%. We have a strong outlook for the country's largest carmaker, Maruti Suzuki India Ltd, whose Jul-Sep results surpassed the estimates and resulted in an up tick of as much as 44% in the stock's price target by us. Maruti Suzuki is likely to continue to outpace the industry growth as four of its models (Baleno, Vitara
Brezza, Ignis and Dzire sedan) which form about 35-40% of the vehicle portfolio, command a waiting period of 3-5 months. A continuous spike in input costs, especially copper and steel, higher
marketing expenses due to brand ‘NEXA’, however, may keep the company's operating margin under pressure.
Two-wheeler companies posted a dismal performance in October sales volume. Hero MotoCorp Ltd's sales in October fell 4.8% on year to 631,105 units, while Bajaj Auto Ltd's sales rose by just 7% on year. Two-wheeler makers witnessed a weak performance in October as dealers stocked up inventory in September ahead of the onset of festival season from Sep 21 onwards. However, with the onset of the marriage season and pick-up in rural demand, we believe Oct-Mar would be strong. Tata Motors posted a 7% on-year rise in its commercial vehicle sales in October. Viewing the recovery in Jaguar Land Rover numbers and strong domestic passenger vehicle sales and recovering commercial vehicle sales. Tata Motors would be an out performer, led by potential levers such as strong margin performance at Jaguar Land Rover and lower losses in the standalone business..
Source : Cogencis Information Services Ltd.
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