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From Tata Motors, Tvs Motor, Eicher Motors to Balkrishna Ind

Auto stocks such as TVS Motor, Hero MotoCorp, Mahindra and Mahindra, Eicher, Tata Motors and Maruti Suzuki were trading well above the flatline on Friday after Morgan Stanley said cost pressures were easing.

As of 10:16 a.m., Nifty Auto was up 1.4%.

Morgan Stanley is constructive on the outlook for volume in all segments of the automotive sector. The foreign brokerage said automakers had raised prices but cost pressure was easing.

Several industries are bearing the brunt of soaring metal and commodity prices, which has prompted companies to pass on some of the rising input costs to customers.

The brokerage firm is “overweight” in Maruti Suzuki India, Ashok Leyland, Tata Motors, Mahindra and Mahindra and Eicher Motors, while it has an “underweight” position in Amara Raja Batteries, TVS Motor Company and Hero MotoCorp.

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Morgan Stanley has an “equal weight” recommendation over Bajaj Auto and Samvardhana Motherson International.

Meanwhile, Babudeb Banerjee of ICICI Securities told CNBC-TV18 during an interaction that he expects a consensus increase in profits for automakers.

However, he does not expect any decline in vehicle prices due to a strong demand outlook. He pointed out that retail demand is strong, especially in passenger vehicles.

Banerjee said he was positive about Maruti Suzuki India, even at current levels, as he sees the automaker benefiting from new launches, lower commodity prices and a weaker yen. Besides, he also likes TVS Motor because he thinks the company will grow faster than the two-wheeler industry.

Also, the news that Maruti Suzuki India and Toyota will start production of a new SUV august model. Both companies will market the product under respective brands. Shares of Maruti Suzuki rose 0.2%.


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