Sunday, July 3, 2011

BSE Auto Index Review - June 2011

The country's largest car-maker Maruti Suzuki reported 8.8% decline in total sales in the month of June compared to figures of same month last year which is lowest since July 2009 sales. While for the domestic market, the company registered a drop of 3.8pc in sales.

The export figure for the company also pointed to a downtrend, slipping over 32 pc.

Maruti Suzuki, which accounts for over half of the cars produced in India, was hit by a 13-day long strike at its Manesar plant over recognition of a new workers' union. The production loss during the strike amount to nearly Rs 630 cr with 13,500 cars less produced.

"Maruti Suzuki is still a top buying pick given the auto major was hit by a strike in the previous month", says Vineet Hetamasaria, VP-Research, PINC in an interview with ET Now.

Shares in Maruti Suzuki closed 1.3 pc lower on BSE at Rs 1143.55.

Check out leading losers in auto sector

TVS Motor declared positive numbers as the company registered 14% rise in June sales to 182,456 units. However the numbers did not excite the market.

Mitesh Thacker, in an interview with ET now said "TVS looks slightly better of the lot, once the stock crosses Rs 56 the stock might head to about Rs 60-61".

Speaking to ET Now, HS Goindi, Pres-Marketing, TVS Motor said, "The company will monitor growth in coming quarters and will be able to maintain 14% growth rate for the year."

The company's export market consist of countries such as Africa, Latin America region, Egypt and the management expects the export demand to be robust.

Commenting on margin pressure, Goindi said the company increased prices in the month of April and will review price hike soon. Shares in the company dropped little over 1 pc in trade today. The stock ended 0.4 pc lower at Rs 53.40 on BSE.

Tata Motors June overall vehicle sales fell 1 pc. This was a result of drop in sales of passenger vehicles in the domestic market while the exports saw a boost of 21 pc.

Shares in Tata Motors end marginally higher on the BSE. It touched a high of Rs 1007.90 and low of Rs 987.25 in trade.

"Autos are a mixed pack; Tata Motors has bounced back from lower levels but don't see strength in stock to scale up to Rs 1050 or Rs 1100 levels" said Sandeep Wagle, Founder & MD, APTART Technical Advisory Services, aptartindia.com in an interview with ET Now.

Mahindra & Mahindra June vehicle sales grew by 29 pc. Sales stood at 35,584 vehicles as against 27,562 vehicles in June 2010.

The exports for the company have grown by 38 pc in the month of June. The tractor segment has grown nearly 20 pc quarterly while on a monthly basis sales in segment grew by 40 pc in June.

"Increase in fuel prices, liquidity and raising rates may hurt sales in coming months", says Arun Malhotra, Sr VP, Automative Division in an interview with ET Now.

Shares in M&M dropped 1.4 pc to Rs 691.30. The stock has touched an intra-day low of Rs 688.10 and a high of Rs 711.00.

Our Recommendation :

Mahindra
Out of the large cap M&M can be bought on dips to around 650 for a target of 725 holding period of 3 months

Maruti - Avoid the share till year end as the sales are likely to be sluggish

2 Wheeler Universe

TVS Motor - buy on declines around 50 for a target of 60 for a holding of 2 months

Hero HOnda - a clear winner among 2 wheeler pack, buy on declines for a gain of 15% holding of 3 months

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