A couple of price hikes are coming up in the auto sector as most of the majors are facing input cost pressures at this point. Do you see this impacting demand going forward?
It won’t impact as long as the price increases are not beyond 2-3% because Maruti did one round of price hike in January.. Successive price hikes over the next say six months, can have some impact on the sentiment and demand outlook also. But so far what we have seen is if the price hikes are in the range of 3 odd per cent, there would not be much impact on demand.
We have to see how things pan out. What the market would really want to see is how the overall situation has been in terms of sales growth for most of the auto companies. Our overall outlook in terms of next year for the auto sector continues to be good. For companies like Mahindra & Mahindra, Ashok Leyland and Maruti, overall things are looking pretty okay.
We have been seeing a lot of activity in cement of late. Action has picked up in Shree, Ambuja, ACC and UltraTech. Any preferred picks in that basket?
Renewed interest in cement is because of the mineral policy that has been passed. Cement companies can actually sell their captive plant volume outside also. Overall, we have been quite positive on the cement sector for almost six to eight months and we believe that both the volume growth and the operating profit and the leverage would play out extremely well for the sector. We continue to prefer UltraTech Cement, Birla Corp, Dalmia Bharat and
. These are the names that we like and in the next one or two years, there can be a significant earning-led recovery in these names and a significant upside to our price targets also.
