Best Auto Sector Stocks: The Russia-Ukraine crisis has added to the problems for the already under pressure auto sector. The automobile sector has been facing all kinds of difficulties for a long time. The lockdown due to Corona, disturbance in the supply chain and lack of semiconductor chip was very harmful for it. But after the removal of the lockdown and the reduction of corona, this sector started getting relief.
Along with the demand for passenger vehicles, there is also a demand for commercial vehicles. Brokerage house Emkay Global has given a positive view on the sector and has suggested investing in some quality stocks. Although these stocks are showing pressure due to Russia-Ukraine crisis, but it is less likely that it will last very long.
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Brokerage House’s Top Picks and Targets
Tata Motors (TP: Rs 575, CMP: Rs 450)
Ashok Leyland (TP: Rs 160, CMP: Rs 116)
Bajaj Auto (TP: Rs 4490, CMP: Rs 3465)
Minda Industries (TP: Rs 1230, CMP: Rs 885)
Bharat Forge (TP: Rs 950, CMP: Rs 668).
Expect recovery in the next few years
Brokerage house Emkay Global says that there is a recovery in the sector and a cyclical uptrend can be seen for the next 3 years. The brokerage house says that the kind of trend that is going on in the commercial vehicle segment, the upward momentum is seen continuing in the month of February. At the same time, growth momentum remains in the passenger vehicle segment as well. However, there is pressure in the two wheeler and tractor segment due to high base effect and weak customer sentiment. The brokerage house has kept the overall view on the sector positive.
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The problem of semiconductor is decreasing
The brokerage says that the pressure on the auto sector in the last few months was due to the shortfall of the chip. Due to the shortage of semiconductors, the production was reduced even after the order. But now this problem is getting resolved now and after Kovid 19 the supply network is also better than before.
Volumes improve with healthier orders and better supply chain
According to the report, the CV industry volumes seem to be improving. Chip supply has improved for LCVs and there is better demand for ICVs. On the other hand, 2W industry volumes may remain weak on a year-on-year basis. Volumes should improve with healthy orders and better supply chains in the PV industry. The domestic volume of TTMT and MM is expected to grow by 51% and 23% on a yearly basis. However, the volume of MSIL may remain low by 9% in February. Tractor volumes may also decline in February. The domestic volume of MM may drop by 30% and that of Escorts by 35%.
(Disclaimer: Tech for FTCP is not recommending you to invest in any stock. Investment in stocks is advised by the brokerage house. Markets are risky, so take expert opinion before investing.)
Tags: auto, Investment tips, stock return, Stock tips, Tata Motors
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