The automobile sector, in terms of growth momentum, is currently at a 10-year-low, and from here, the industry will only recover, said Pankaj Murarka, founder of Renaissance Investment Managers. Murarka said that he now remains positive on the sector.
"We like auto sector, but we have been avoiding the sector for a while now. However, if you put things in context, if you look at it, this is the first year where we are having a decline in two-wheeler sales in the last 10 years. The commercial vehicles (CV) sales decline of something like 30 percent at the industry level was last seen in 2008 and passenger vehicles decline of 25 percent plus at the industry level is something again which we saw in 2008," said Murarka in an interview with CNBC-TV18.
"The auto sector in terms of growth momentum today is at a 10-year low or probably the worst point in the last 10 years. Things have gone so bad that from here on things will recover and I think the market is taking cognizance of that," he added.
On the market front overall, he said, âWhile Nifty is at an all-time high, valuations are still modest or reasonable... so, I think the rally has many more legs."
On State Bank of India (SBI), Murarka said, âOver the last 4-5 years, they have been significantly impacted because of the significant provisions they had to do for the bad loans and the corporate loan book but now it is apparent that they are now at the end of the provision cycle. So SBI will get to more normalised profit growth and normalised profit outlook going forward from next year onwards."
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