Tata Motors is currently focusing on better capital allocation, which could lead to more sustainable growth in the future. Meanwhile, Eicher Motors, which owns the Royal Enfield motorcycle brand, has been performing well in recent years, with strong sales growth and a solid brand reputation. Maruti has its own challenges, it by and large remains a tactical trading play, 10-15 percent move up and down.
In an interview with CNBC-TV18, Dhiraj Agarwal, Co-Head Equities at Ambit Capital said that Maruti remains a tactical play, therefore the preference is for Tata Motors and Eicher Motors in the auto space.
He said, “Within the banking sector we like Axis, ICICI and SBI. In autos, our top picks, at this point, are Eicher and Tata Motors. However, Maruti has its own challenges, it, by and large, remains a tactical trading play, 10-15 percent move up and down.”
Agarwal's comments on Tata Motors are particularly interesting, given the company's recent performance. In the last few years, Tata Motors has struggled to turn a profit, with losses at its luxury car subsidiary, Jaguar Land Rover (JLR), dragging down overall earnings. However, it seems that Agarwal is optimistic about the company's prospects, suggesting that better capital allocation could help turn things around.
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That said, Agarwal did caution that JLR needs to address concerns around its long-term product relevance. As the automotive industry continues to evolve, with a greater focus on electric and autonomous vehicles, it will be crucial for JLR to stay ahead of the curve and maintain its competitive edge.
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