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CV more a FY17 story; bullish on Maruti, Tata Motors: Kotak

From the commercial vehicle segment, Hitesh Goel, senior auto analyst, Kotak Institutional Equities thinks Ashok Leyland would be a pure play from liquid stock point of view.

From the sidelines of the Kotak Global Investors Conference Hitesh Goel, senior auto analyst, Kotak Institutional Equities, says both  Maruti Suzuki and  Tata Motors look exciting stories from a two-three year perspective backed by new launches.

According to him Maruti is not only slated to market share in the passenger vehicle space but will also see uptick in margins from depreciation of yen. Similarly for Tata Motors too he sees a good demand on the Jaguar Land Rover (JLR) side.

The January auto sales were a mixed bag with Maruti and Tata Motors the only two companies reporting better than expected sales

Basically, the sluggishness seen in the two-wheeler space was because weakness in rural growth and hence demand may continue remain soft for some more time to come. However, with direct benefit transfer scheme (DBT) taking effect and if monsoons are normal then the rural demand is likely to come back, he adds.

Comparing the two-wheeler players  Bajaj Auto and Hero MotoCorp , he says Hero is much better placed in the domestic market because of stronger franchise in rural areas.

However, from a five-year perspective people would still want to play Maruti over a two-wheeler.

In the commercial vehicle segment, he thinks  Ashok Leyland would be a pure play from liquid stock point of view.

According to him the FY16 projected growth of 25-30% on the truck side is likely to disappoint because of lack of financing to the small fleet operators. It is likely to grow at 10-15 percent and would be more of a FY17 story.

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