homemarket Newsstocks NewsPositive on autos; prefer Ashok Leyland, Bharat Forge, Ramkrishna Forgings: Reliance Securities
Positive on autos; prefer Ashok Leyland, Bharat Forge, Ramkrishna Forgings: Reliance Securities
The auto industry is facing persistent semiconductor shortage woes, the demand in the sector has been under pressure, taxes have gone up, insurance has gone up, so the vehicle prices and the acquisition cost has risen. Mitul Shah, head-research at Reliance Securities, shared his view on the sector.
The auto industry is facing persistent semiconductor shortage woes, the demand in the sector has been under pressure, taxes have gone up, insurance has gone up, so the vehicle prices and the acquisition cost has risen. Mitul Shah, head-research at Reliance Securities, shared his view on the sector.
He said, “We remain positive on the sector and within the sector, we prefer the commercial vehicle space right now.”
According to him, players like Ashok Leyland, Bharat Forge, Ramkrishna Forgings would be strong outperformers.
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Maruti Suzuki’s strategy of going slow on electric vehicles (EV) is the right strategy, he noted. “The biggest challenge right now for Maruti Suzuki is the semiconductor issue, not EVs. Its strategy of going slow on EV space is the right strategy,” he said.
He said, “Maruti stock may not perform well for the next quarter or two because the semiconductor shortage will create pressure on volumes as well as profitability in the near-term.”
He further mentioned that it’s a temporary phenomenon; he remains positive on Maruti and advises to buy on dips.
“Passenger vehicle (PV) and two-wheeler segments are facing problems in terms of demand weakness,” he said.
“Two-wheeler retail demand is much weaker because the second wave of COVID-19 penetrated deeply in the rural market. As the rural market was the largest market for two-wheelers, PV players are facing problems because of the semiconductor shortage,” he said.
Global outlook remains strong from the two-wheeler space. He believes, Bajaj Auto can give positive surprise on the volume front particularly on the export side.
For the full interview, watch the accompanying video.
(Edited by : Dipika Ghosh)
First Published: Aug 31, 2021 11:40 AM IST
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