Automobile Monthly Sales Update - PINC Sector Report

Festive Cheers during Monsoon

The Indian automobile sector continued its dream run with strong demand across the product segments. Companies have been able to maintain their sequential run-rates despite monsoons which is traditionally a lean season. Major manufacturers maintained that dispatches would have been even higher but for supply constraints. In a lean season, major players are reporting their highest ever dispatch figures which signifies the strong underlying demand for automobiles.

Commercial vehicles segment reported robust performance despite higher operational cost for the truck operators led by increase in fuel and tyre prices. In the passenger car segments, customers are split for choices with a new product getting launched every month. Nissan started dispatches of of its new compact car 'Micra' during the month. Maruti will launch a new model of its best selling model 'Alto' in August. In the 2- wheelers segment, scooters has made a strong comeback and new launch by TVS Motor has helped in expanding the market.

Our Viewpoint

We remain confident regarding the industry growth and expect the industry to achieve double digit volume growth during the year. However, given the strong performance by automobile stock in the last one year, we are getting selective in our stock picking. Our top picks in the sector are Mahindra & Mahindra and Bajaj Auto.

Source : Equity Bulls

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