The Hindu Business Line : Breather for auto stocks

AUTO stocks appeared to have come in for a breather on Tuesday in the wake of oil prices dipping below $46 and a cut in steel prices. Counters such as Bajaj Auto, Tata Motors, TVS Motors, and M&M witnessed fresh buying interest.

The recovery, though marginal in some cases, has allayed concerns of a drop in volume growth.

Analysts said that a cut in steel prices would augur well, particularly for Tata Motors, given that its raw material contract is coming up in September.

Steel is a key raw material for auto companies and a cut in prices would mean a drop in input prices. Select domestic funds and a few leading FIIs were said to be active particularly in counters such as Tata Motors and M&M on Tuesday.

Bajaj Auto ended at Rs 873.70, up 1.73 per cent, on the BSE, while Tata Motors ended 2.33 per cent higher at Rs 381.65 and TVS ended at Rs 71.65, up 3.69 per cent.

Still hot property

CEMENT stocks continued to rule as market favourites with several mid-cap counters witnessing significant ramp-up in prices. In the limelight on Tuesday was the counter of Mysore Cement.

Apart from being a fundamental play, the counter was also dogged by speculation over whether it would see a change in management. Pilani Investments, a Birla group company, reportedly holds around seven per cent of the company's equity.

Word on the street is that there may be some significant development in the near term. Analysts, however, chose to take a more logical view on the interest at this counter.

They said that the stock was quoting at a significant discount to its asset value. Any possible change in management could unlock this value.

Sources said that in terms of enterprise value per tonne, the stock was quoting at around $43 vis-à-vis Prism Cement or ACC or GACL.

Given that it is located in right (central) market, the scope of earnings improvement is large, according to the analysts.

The stock ended the day at Rs 16.23, up 8.20 per cent, with around 52.94 lakh shares traded. Given that the company has a Rs 6.8-crore equity, almost 15-20 per cent of the equity was said to have been traded.

Feel-good factor

WITH the TCS debut awaited on Wednesday, a feel-good factor appeared to surround most Tata group companies. Trent in particular witnessed significant amount of buying interest on Tuesday.

Brokers said that another factor adding to the upside was that Shoppers Stop is planning an IPO within a month. Interest was also high on account of the company's expansion plans. The stock ended at Rs 310.60, up 7.10 per cent, with 30,032 shares traded on the BSE.

Deeptha Rajkumar

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