Elara sees strong quarter for autos but says all eyes are on festive demand
Jay Kale, Senior Vice President, Research at Elara Capital, expects a strong second quarter show from the auto sector but says a lot now depends on the festive demand.
Jay Kale, the Senior Vice President of Research at Elara Capital expects a good quarter for the auto sector. However, the festive season will play a pivotal role in shaping the volumes for Q3 and Q4, particularly in the two-wheeler space, he said.
Kale likes the tyre space as things are looking up for the industry as of now. However, he also pointed out that with the recent increase in crude oil and natural rubber prices, some softening of margins in Q3 and Q4 might be anticipated.
Ceat's strong quarterly show led to an intra-day rally in tyre stocks on October 17 with some stocks gaining nearly 11%. Ceat ended the day nearly 4.5% higher at Rs 2,195 a piece. Shares of JK Tyre and MRF traded at their respective record highs.
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Within the two-wheeler sector, Kale prefers Bajaj Auto, TVS Motors, and Hero MotoCorp. But he is negative on Eicher Motors.
Bajaj Auto's product mix is consistently improving, which has historically translated into stable margin performance, he pointed out.
Elara Capital has a buy rating on the company.
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(Edited by : Shweta Mungre)
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