Auto Stocks Outlook For The Week – 18 to 22.12.2017

Auto Stocks Outlook For The Week – 18 to 22.12.2017

             Equity Cash/Futures/Options Segment 

The stocks of most automobile companies are likely to rise next week, though the gains are unlikely to be sharp. The stocks are expected to take cues from the broader market following the outcome of
the Gujarat Assembly polls on Monday. In the long term market continue to be positive on the automobile sector. Automobile manufacturers are likely to post strong double-digit growth in
sales for the next two months on account of a low base due to Demonetisation. A recovery in rural demand due to a normal to near-normal monsoon over two years is benefiting two-wheeler makers with a large rural presence, tractor manufacturers such as Mahindra & Mahindra Ltd, and passenger vehicle companies to some extent. Rural demand is likely to remain strong next year as well because the current La Nina conditions over East Central Pacific ocean generally lead to good monsoon for countries like India. The benefits of the Seventh Pay Commission are also likely to aid demand in urban areas, as government employee’s account for 20% of passenger vehicle customers and nearly
15% of two-wheeler customers. The commercial vehicle industry has also started witnessing a turnaround due to a spike in demand owing to strict implementation of over-loading in several states, government spending on road construction and infrastructure and a recovery in replacement demand.
Another sector heavyweight, Eicher Motors Ltd, is also a favourite, as the company is the prime beneficiary of the continuous rise in customer preference for premium motorcycles. The company has a healthy order book and has been doing dealership expansion. VE Commercial Vehicles is also benefiting from the turnaround seen in the segment. This sector also continue to be positive on two-wheeler manufacturer TVS Motor Co Ltd, which entered the super premium segment in the global and domestic markets with the launch of its much-awaited 312cc Apache RR. The Motorcycle is based on a new entry-level performance platform, developed by BMW in collaboration with TVS Motor.

Source : Cogencis Information Services Ltd.

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