BofA Securities said that both Tata Motors and TVS Motor offer a credible electric vehicle (EV) play and are now trading at a better risk/reward ratio.
BofA Securities on Tuesday listed Maruti Suzuki India Ltd. and Ashok Leyland Ltd. as its preferred plays within the Indian automotive space.
It also upgraded both Tata Motors Ltd. and TVS Motors Company Ltd. to ‘buy’ with a price target of Rs 460 and Rs 1,250, respectively.
Explaining the reason behind the upgrade, BofA Securities said that valuations of these stocks are near their mean or a tad lower, while their earnings growth is likely to be meaningful.
It also said that both Tata Motors and TVS Motor offer a credible electric vehicle (EV) play and are now trading at a better risk/reward ratio.
Talking about its preferred plays, BofA Securities said it prefers companies with good model cycles like Maruti Suzuki whose new SUV models are likely to drive market share gains for the company.
It also said that it preferred Ashok Leyland as it is one of the laggards in the auto space that is delivering well. “The commercial vehicle (CV) cycle of the company and share gain are surprising positively,” the BofA Securities note said.
On the flip side, BofA Securities downgraded Hero Motocorp to ‘neutral’ in the two-wheeler space and Escorts Kubota Ltd to relative ‘underperform’.
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