The Hindu Business Line : Better May sales figures drive up auto stocks

Mumbai, June 2 Better-than-expected monthly sales figures of automobiles for the month of May have given a much needed boost to the BSE Auto index on Monday. The index closed up 2.45 points or 0.06 per cent from its previous close, while the benchmark index, the Sensex was down 352 points.

Hero Honda was up 5.60 per cent to close at Rs 788.55, Mahindra and Mahindra was up by 0.18 per cent, TVS Motors (1.37 per cent) and Maruti Suzuki (2.85 per cent).

Mahindra and Mahindra and Maruti Suzuki were among the top gainers amongst the Sensex stocks today.

The recently re-listed Bajaj Auto (after the restructure) was up 1.52 per cent. It touched an intra-day high of Rs 618 before closing the day at Rs 586.

Market men say that there was buying happening in the auto stocks today due to the increase in the sales figures for May.

“The monthly sales numbers of few of the companies were slightly better than what everyone had expected it to be. It is a good surprise more so because a few months before the monsoon sets in the sales figures slacken,” said Ms Vaishali Jajoo, an auto analyst with Angel Broking.

Sales of Maruti Suzuki India rose 16 per cent for the second consecutive month to 69,001 vehicles. Hero Honda Motors posted a 9.5 per cent rise in motorcycle and scooter sales at 3,12,317 units. Sales of Bajaj Auto Ltd’s two and three-wheeler sales rose 4 per cent to 2,01,511 units. TVS’s sales in May rose 4.3 per cent in its two-wheeler sales to 1,12,770 units.

Mahindra & Mahindra announced a 19 per cent rise in sport-utility vehicle sales at 13,048 units. Three-wheeler vehicle sales surged 46 per cent to 3,708 units.

“This increase is not a clear indicator of things to come. You will have to see the sales figures of the next few months in conjunction in order to come to conclusions,” said Mr Anup Maheshwari, an auto analyst with KR Choksey Shares & Securities.

The reason why analysts say that the figures of the next few months should also be looked at is because the numbers for May would be mainly the figures of the inventory with the dealers and not the actual sales to the consumers.

“This number could be mainly what vehicle companies have sold to the dealers and not the actual sales figures to the consumers themselves. The dealers would be wanting to increase their positions as the prices are expected to increase. Therefore, we should wait for next month’s figures also to say if things are turning good for the auto sector,” said an auto analyst with a brokerage.

“With the marriage season just around the corner, the pre-marriage purchases of vehicles could have also helped in increasing the monthly sales of the auto companies,” said Mr. Maheshwari.

The general outlook is partially positive for the auto sector, said an auto analyst with a stock broking firm.

“Partially positive because there are still negative factors like rising interest rates, fuel prices and inflation but the industry will gain some momentum in a while as there are a few new launches expected from these auto companies,” he added.