Saturday, July 1, 2017

Auto sector analysed and stocks that can give good returns | Faadoo Stocks

Good news for the auto sector

The passenger car segment is expected to see an overall reduction in tax outgo, with bigger cars and sport utility vehicles (SUV) benefiting from lower tax rates. ICRA Ltd has estimated the total tax on small cars at 29% from the current 31.4%, while for an SUV, the tax rate will fall from 55.3% to about 43%. In the near term, however, car dealers have been cutting down on stock levels, which is expected to affect sales growth. The bright spot is that demand growth forecasts are robust, and analysts expect sales growth of 8-12% in FY18 for passenger cars and two-wheelers. GST is not expected to have a significant impact on commercial vehicle sales, according to ICRA. The base tax rate for the segment is 28%, compared with the current rate of 30%


Bad News for the auto sector

Newly implemented GST adds to the challenges the auto sector has faced, from demonetisation and then implementation of more stringent emission norms.
The June Sales

June Sales indicate robust growth from well established market players like Maruti and Eicher whereas the sales for Tata motors and Hyundai dwindled. 

Source: Company Filings and Bloomberg | Quint

Technical view on the auto stocks 

Maruti

Confusion and uncertainty swept through India’s 2 trillion economy as businesses and consumers alike attempted to navigate a new nationwide sales tax that replaced a spiderweb of more than a dozen state and territory taxes and levies.

Technical Analysis on Maruti source : Faadoo Stocks

Eicher Motors

As usual the sales of Eicher Motors were fantastic 25% increase in sales accompanied by huge order books will continue to push stock to new highs. GST could be a dampner for companies importing parts which is not the case with Eicher which uses most of the components made by itself or its subsidaries.



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