Auto stocks are a good buy if an investor has a time horizon of 12 months and won't get upset with the daily volatility, says SP Tulsian of Sptulsian.com. He was talking about the fundamental side of the market as well as specific stocks and sectors.
Tulsian remains upbeat about Reliance Industries. “Post this AGM by Mukesh Ambani, everything has changed on the company. You need to develop your conviction because if you keep the cautious approach, probably you will not be able to make money. I had said that after the AGM, I wouldn't be surprised to see the share hitting a new lifetime high in the calendar year 2019 which would be at about Rs 1,425-1,450. I maintain my view, and we have been giving this buy call on the stock post AGM,” the market export pointed out.
Speaking about Godfrey Phillips, he said, “We have been giving buy call on the stock since it was ruling from the levels of about Rs 750-800 in this last couple of months. I won’t be surprised to see that they are positing an EPS of about Rs 90 for FY20. In spite of seeing a jump of about 40 percent the share is still ruling at a PE multiple of may be sub 12 or sub 13. Share having risen, we are now giving the hold call or maybe profit booking because having recommended the stock at Rs 750-800 in the last 2-3 months, the results are really phenomenal.”
Talking about auto stocks, he said, “Auto stocks are a good buy provided you have a time horizon of 12 months and you don’t get upset with the daily volatility. Going forward, things will be quite positive for the auto sector. To give an example, tractor August sales will be very bad so if you are banking on Escorts and Mahindra & Mahindra (M&M) now you are going to get disappointed but the moment you see the September and the October month sales of tractors, you will really be cheered with the sales numbers. I won’t be surprised to see M&M positing September sales at 40,000 and Escort at 10,000 which will be 60 percent of that in the month of August. The medium term to long-term is seen is too be extremely positive.”
“With the monsoon spreading across India, things would improve on the ground and you get to buy these auto stocks when they are ruling at a low. So I think be a select buyer in stocks like Maruti Suzuki or M&M. I am refraining to buy stocks like Tata Motors,” Tulsian observed.
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