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Automobile sector
FY13 - Red flags become more prominent
· Budget 2012-13 has raised red flags which can postpone the cyclical recovery in demand/profitability for 4-wheelers Believe 2-wheelers is a safer segment despite concerns w.r.t. to ATOT
· Passenger cars – risk arises due to demand polarity towards diesel, imminent fuel price hike (as per roadmap on subsidies), limited int. rate cut may fail to spur demand vs expectation
· CVs - ~400 bps excise hike, fragile demand recovery and subdued freight rates will lead to higher demand for used vehicles in near term. Sharp rebound in GCF will be the key
· Upgrade HMCL to ACCUMULATE, Downgrade BJAUT to ACCUMULATE and TVS to HOLD. Retain HOLD on MM,AL, EIM, REDUCE on MSIL and ACCUMULATE on TTMT
Company
|
Prev Reco
|
Current Reco
|
CMP
|
TP
|
Ashok Leyland
|
HOLD
|
HOLD
|
28
|
29
|
Bajaj Auto
|
BUY
|
ACCUMULATE
|
1,721
|
1,920
|
Eicher Motor
|
HOLD
|
HOLD
|
1,903
|
1,915
|
Hero Motocorp
|
HOLD
|
ACCUMULATE
|
1,955
|
2,245
|
Maruti Suzuki
|
REDUCE
|
REDUCE
|
1,377
|
1,270
|
Mahindra & Mahindra
|
HOLD
|
HOLD
|
677
|
740
|
Tata Motors
|
ACCUMULATE
|
ACCUMULATE
|
287
|
320
|
TVS Motor
|
ACCUMULATE
|
HOLD
|
44
|
50
|
|
|
|
|
|
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