Vrooming on Indian roads

Indian automobile mobility market has grown by 5% in 4QFY16. Heavy commercial vehicles (HCV) by 22.4% while light commercial vehicles (LCV) by 12.9%. On the tractor side, there has been a turnaround, with demand picking on anticipation of monsoon to 9.9%. Passenger cars grew 5-6% in 4Q while 3 wheeler saw a decline of 3.3%. Supporting this growth, Auto Ancillary sector also observed robust growth. India is also emerging as global hub of auto component sourcing.

We analysed Auto sector performance in last one month for 41 auto companies and picked up top five companies with highest one-month stock returns. Minda Industries Ltd., Suprajit Engineering Ltd., Harita Seating Systems, Maruti Suzuki and Federal-Mogula Goetze have performed well with returns of 17.03 per cent, 16.53 per cent, 11.38 per cent, 7.23 per cent and 6.74 per cent respectively. Suprajit Engineering, Harita Seating Systems have attained their 52 week high of 166` and 646` per share respectively on account of positive quarter results so far and dividend recommendation.

We have observed that Auto Ancillary sector has performed well with 11 companies out of 41 companies with positive returns in last one month and most of them performed well over the span of last one year as well. Within the 11 companies, Pricol Ltd., Jamna Auto, Motherson Sumi etc., also gave average returns. Among Automobiles cars, three-two wheelers, tractor sector, Maruti Suzuki, Bajaj Auto and Escorts Ltd.,have climbed up the performance ladder in last one month.

Vehicles with alternate fuel options and replacement demand led to boost in the automobile industry. Aggressive target to shift to BS VI emission norms is leading to technology revolution and according to Union Minister Nitin Gadkari, the turnover is expected to increase by four times to Rs 20 lakh crore in the next five years.