PV or 2-wheel?  How to play the impending array in the automotive sector

PV or 2-wheel? How to play the impending array in the automotive sector – Mail Bonus

NEW DELHI: At a time when the market was growing, the automotive industry was angry. And now, when the market is in complete disarray, strength seems to be back in the car counter, helped by healthy volumes and hopes for the benefits of commodities after the government moved to lower steel prices.

The Nifty Automated Index is stable, with a positive bias, on an annualized basis (YTD) against a 13 percent decrease in the Nifty50 benchmark.

Cars are a good business that is being built especially from the point of view of recovery volume, said Vikas Khemani, founder of Carnelian Capital Advisors. “We know that due to the lack of semiconductor chips, demand and growth have been silenced, but 2023 could be a very good year from that perspective,” Khemani added.



The car index has been doing poorly in the market for the past four years. Even now, semiconductors and supply chain problems are still lagging behind, but demand for automobiles is still high, with a three-month to two-year waiting period.

Industry experts suggest that a healthy booking and one-digit cancellation show that demand could remain, even when normal supply resumes in the coming months. This optimism is reflected in the price changes of leading car stocks.

M&M,

and increase by 2-11 percent in one month against a 6 percent decrease in Nifty50. and although trading slightly in the red has managed to perform better.

“After years of underperformance, we are seeing auto stocks come back quite strong. They are in a kind of blue sky at this point. We have seen a clear turnaround in their favor. With higher volumes and with this latest government action to lower steel prices much “Car stocks are likely to become leaders in the coming months and quarters,” Dipan Mehta, CEO of Elixir Equities, told ET NOW.

Where to bet: PVs, CVs, 2Ws?
Although the overall valuation of the car sector appears to be profitable, analysts are leaning towards consumer-facing stocks, especially in the four-wheel drive segment. Solidarity is still weak on two wheels.

Hemang Jani from

Demand for passenger cars (PV) is expected to improve behind easing supply chain problems. However, he sees a slow recovery in 2-wheels (2Ws).

Data showed that retail sales of passenger cars increased last month, but sales of two-wheelers and commercial vehicles remained low compared to May for Covid 2019, according to the FADA.

“While PV and tractors have continued a positive journey … on two-wheelers, three-wheelers and CV cars, sales have not yet shown any signs of a healthy driving speed,” FinkA President Vinkesh Gulati said in a statement.

Heavy competition and the disruption that could result from electric cars does not make me optimistic about Bajaj Auto, Hero MotoCorp and

, said Dipan Mehta. Companies like Tata Motors, Mahindra & Mahindra remain in its top picks.

On the contrary,

Research shows that there is excessive pessimism in the case of 2W and some overconfidence in PV and CVs, which is reflected in the valuation.

“That’s why we choose 2W in the automatic package and have a ‘BUY’ on those three shares in our review – Bajaj Auto,

and Hero MotoCorp, “he said.

Headwind to car history
Although the demand scenario is in favor of car stocks, increased liquidity and slower economic activity during the quarter could slow down.

“If car loan rates rise by 1.5-2 percent, then margins will affect demand to some extent because most ATVs are financed and that is the only challenge some of these companies will face,” said independent market analyst Sandip Sabharwal. watched.

(Disclaimer: Recommendations, suggestions, opinions and opinions given by experts are their own. This does not represent the views of the Economic Times)

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