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Auto Stock Tips: Expected strong sales of vehicles in FY23, market experts bet on these stocks

Auto Stock Tips: According to the data released by the auto industry body Society of Indian Automobile Manufacturers (SIAM), last month the sales of vehicles (excluding commercial vehicles) in the country were down by 19 percent on a year-on-year basis. Sales of all types of vehicles decreased in January 2022, but due to chip shortage and weak demand from villages, most of the sales of passenger vehicles (passenger vehicles) and two-wheelers were reduced. Apart from this, the third wave of Corona also negatively affected its sales. According to market experts, its demand is likely to remain sluggish for the next one to two months, but in the next financial year 2023, its growth can be better, so market experts have bet on Maruti Suzuki, Bajaj Auto and TVS Motor.

This was the condition of sales last month

  • Passenger Vehicle Segment: Passenger vehicle sales fell 8 per cent year-on-year in January 2022 last month due to chip shortage, though it grew by 16 per cent on a quarterly basis. Last month, 2,54,287 passenger vehicles were sold. Due to the shortage of chips, the production of vehicles was affected, due to which sales were affected.
  • Scooter and motorcycle segment: In January 2022, the sales of scooters fell by 23 percent on a year-on-year basis and the sales of motorcycles were down by 19 percent. However, there was a jump in their sales on a monthly basis and last month there was 42 per cent more sales of scooters and 2 per cent more of motorcycles. Overall, the sales of two-wheelers were down 21 percent last month. However, it was 12 per cent higher on a monthly basis. Two-wheeler sales were hit due to weak demand from villages amid erratic rains.
  • Three-wheeler segment: In the domestic market, sales of three-wheelers were down 10 per cent on a yearly basis and 14 per cent on a monthly basis in the last month. In January, 24091 three wheelers were sold. Sales of three-wheeler passenger vehicles were up by 4 per cent on a yearly basis (15 per cent on a monthly basis) while sales of three-wheeler vehicles for carrying goods were down 35 per cent (11 per cent on a monthly basis) on a year-on-year basis.
  • Commercial Vehicle Segment: SIAM has stopped publishing commercial vehicle sales figures every month due to non-availability of monthly volume data. Their quarterly figures are published.
  • Exports: Last month, vehicle exports declined by 2 per cent to 4,54,953 units. Passenger vehicle sales grew 10 percent year-on-year, while three-wheeler sales fell 4 percent. Motorcycle exports fell 5 per cent year-on-year. Its exports were affected due to container problems and geopolitical issues, but now the situation is expected to improve in the coming months. Its growth is expected to be in double digits in FY 2022.

Sales expected to pick up in FY2023

Analysts of brokerage firm Reliance Securities believe that due to the current slowdown, the demand for vehicles will be affected for the next one to two months. However, due to rapid vaccination and increasing coverage, there is a possibility of recovery from the beginning of the next financial year 2023. Auto companies may have lower profits in the January-March 2022 quarter due to slow recovery and higher raw material cost, but operating margins may improve in the next financial year on the back of rising vehicle prices and pick-up in sales. At the same time, the concerns related to chip shortage and availability of containers are expected to be resolved in the next financial year. There is a strong possibility of launching new vehicles and having a healthy order book. In such a situation, investors can take advantage of the growth of the auto sector in the next financial year by investing in Maruti Suzuki, Bajaj Auto and TVS Motor.

The stock recommendations given in the story are those of the respective research analyst and brokerage firm. Digitnews Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)

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