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Auto stocks rise on encouraging July auto sales numbers; Tata Motors up 7%

market | Aug 3, 2020 12:26 PM IST

Auto stocks rise on encouraging July auto sales numbers; Tata Motors up 7%

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Shares of auto companies rose on Monday after the automakers reported encouraging sales numbers for the month of July.

Shares of auto companies rose on Monday after they reported encouraging sales numbers for the month of July. The Nifty Auto index outperformed, rallying over 2 percent in intra-day deals but later pared some gains to end half a percent lower. In comparison, the Nifty50 index ended over 1.5 percent lower.

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Among individual stocks, Tata Motors surged 7 percent in intraday deals and was the top gainer on the index. Motherson Sumi, TVS Motor, Ashok Leyland and Eicher Motors also ended the day in the green.
Maruti shares advanced as much as 2.76 percent during the day but later fell 1.5 percent. Bajaj Auto and Hero Moto also ended lower after opening higher in trade today.
The country's largest carmaker Maruti Suzuki India on Saturday reported a 1.3 percent increase in domestic passenger vehicle sales in July while that of the second-biggest maker Hyundai Motor India fell by just 2 percent, signalling a recovery in the sector hit hard by COVID-19. However, other manufacturers, Mahindra & Mahindra (M&M) and Toyota Kirloskar Motor (TKM) reported huge declines in their domestic sales during the month.
Maruti Suzuki India said its domestic sales in July stood at 1,01,307 units as against 1,00,006 units in July 2019. Rival Hyundai Motor India Ltd (HMIL) saw its domestic sales at 38,200 units last month as against 39,010 units in July 2019, down by 2 percent.
Meanwhile, M&M reported a 35 percent decline in domestic sales at 24,211 units last month compared to 37,474 units in July 2019.In the two-wheeler segment, Hero MotoCorp reported a 3.97 percent dip in sales to 5,14,509 units as compared to 5,35,810 units sold in July 2019.
CLSA in its brokerage report upgraded Tata Motors' share target price to 'buy' from 'underperform', by raising the target price to Rs 135 from Rs 103 apiece earlier. It said, "Q1 was significantly driven by aggressive cost reduction measures. Both JLR and India's businesses have surprised on EBITDA and FCF (free cash flow) despite volume decline of 45-82 percent YoY." The management continues to guide for positive FCF in Q2-Q4FY21 & FY22, added the brokerage.
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