Auto and auto component stocks have been big gainers in the last one year, thanks to multiple factors. For one, overall vehicle sales have grown by about 9 per cent so far this fiscal, compared to the 2-3 per cent levels in 2012-13 and 2013-14.

Excise duty cuts in the interim budget last year and its extension later on till December 2014 also boosted sentiments of vehicle buyers. Third, some component makers such as tyre manufacturers benefited from a sharp decline in raw material prices, which helped better bettermargins and profits.

For the nine months ended December 2014, net sales of auto companies part of the CNX 500 index grew by 14 per cent over December 2013 and net profits, by 16 per cent. Those may seem healthy overall figures. But the turnaround is yet to reflect uniformly across all auto makers.

While companies such as Maruti Suzuki, TVS Motors, Hero MotoCorp have reported a profit growth of 20-30 per cent, profits of others such as Mahindra and Mahindra and Bajaj Auto have dropped 3-10 per cent.

Both these companies have not been able to make the best of the increasing demand due to gaps in their product portfolio.

Similarly, although almost all stock prices have moved upwards, there are variations in valuations.

Trailing PE multiples of companies such as Automotive Axles, Wabco, Jamna Auto have risen to around 50 times, while those of Sundaram Fasteners, JK Tyres, Gabriel India still trade at around 25 times. Budget announcements may not be a make-or-break factor for auto stocks. Prospects of a cyclical turnaround, declining inflation and reversal in interest rate cycle already are in favour of these stocks. But the days of across the board gains in auto stocks may be over.

Investors can, therefore, adopt a stock-specific approachto reap maximum benefits.

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