“Four-wheeler passenger vehicle companies like Maruti, which reported a very strong quarter and was followed by which also reported decent numbers. In commercial vehicles, Ashok Leyland numbers were also pretty decent. Launches of EV buses also showed good traction,” says Rahul Shah, VP-Equity Advisory, MOFSL
What is your take as far as the entire FMCG pack is concerned? The earnings were not really impressive and there is a bit of a dichotomy when it comes to the news coming in on rural India?
The earnings were by and large in line with what the street was estimating and by and large the profits and margins we were also estimating. But we have seen that the entire FMCG as a basket has underperformed and the numbers have been in line or slightly below but what the street is looking at right now is the valuation. High PE stocks getting rerated. We have seen that in most of the consumer names. It is the same thing with Nestle as well and we might see some kind of selloff in Nestle from the current levels.
What is your take as far as the entire FMCG pack is concerned? The earnings were not really impressive and there is a bit of a dichotomy when it comes to the news coming in on rural India?
The earnings were by and large in line with what the street was estimating and by and large the profits and margins we were also estimating. But we have seen that the entire FMCG as a basket has underperformed and the numbers have been in line or slightly below but what the street is looking at right now is the valuation. High PE stocks getting rerated. We have seen that in most of the consumer names. It is the same thing with Nestle as well and we might see some kind of selloff in Nestle from the current levels.
In the entire auto OEM sector, what are the top bets that you are watching out for?
This quarter, a lot of auto names reported a strong quarter. If I talk about starting with Four-wheeler passenger vehicle companies like Maruti, which reported a very strong quarter and was followed by which also reported decent numbers. In commercial vehicles, Ashok Leyland numbers were also pretty decent. Launches of EV buses also showed good traction. All three names look quite interesting starting with Maruti, which appears to have the best mix that we can see. So, we are seeing demand, rural as well as urban.
Plus, there have been a couple of few new launches also and good responses from them.
Thirdly, there is softening in commodity prices also, which has augured well for them. So all three things augur well for Maruti and looks like the stock can do much better from here. Similarly, for Ashok Leyland, that is for commercial vehicles we are seeing an uptick and things improving on the economic front and the spending on the commercial vehicles. Obviously, the EV play is rolling out for Ashok Leyland very well.My sense is both stocks should do well and obviously in M&M we have seen a sharp movement and one of the best performing auto names in the last one year. All three stocks look quite promising.
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