Auto Industry Volume Update: June 2017 - Kotak

Volume performance by various OEM's in June 2017 was mixed amid issues pertaining to GST transition. In the two wheeler segment, Hero MotoCorp and TVS Motors reported growth, whereas Bajaj Auto reported lower volumes. In the passenger car segment, most of the companies suffered on GST transition and as such the industry volumes is expected to have declined. In the commercial vehicle segment, performance improved for key players like Tata Motors and Ashok Leyland on the back of improved demand and availability of BSIV products. Tractor segment performance was mixed with M&M reporting growth and Escorts witnessing decline due to de-stocking at dealers end. We expect the two wheeler, passenger car and tractor industry to witness growth in the near to medium term. For the MHCV segment 1HFY18 is expected to be subdued and we expect growth in 2HFY18. We like M&M (BUY rating, TP Rs1,565) in the auto OEM space.

Source : Equity Bulls

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