NIFTY 50

Auto industry slowing down, have a 'sell' on Eicher Motors, says Elara Capital

Updated : February 13, 2019 08:26 AM IST

It is a season of guidance cuts for auto makers as poor demand and higher ownership costs have hit sales this quarter. After Escorts and Mahindra and Mahindra (M&M), Eicher Motors is next in line to trim its FY19 production target.

Sharing his outlook on Eicher Motors, Jay Kale, VP-research at Elara Capital, said that he expects actual sales for the company to be lower than the production guidance.

“Therefore, we have a 'sell' rating on the stock and we believe that there could be further downside risks from these levels,” he said.

On the volume front, Kale said, “For the next 2 months odd they could still do around 70,000-72,000 per month but going forward you will not see double-digit growth in FY20 in our view, the industry is kind of slowing down and Eicher’s outperformance over the motorcycle industry has narrowed substantially.”
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