How did you read the numbers? Does it merit this cool off on the stock?
ITC has been a laggard for quite some time and recently started moving up. The Q3 results were in line with our estimates in terms of profit as well on the EBITDA front and obviously the payout policy has been robust as it was last year also.
The entire sector is reasonably valued in terms of valuation. If you are a long-term investor, there is a lot of value in the company at the current market price. If one is looking at a horizon of more than six months or a year, consider buying ITC at this price.
When does a stock like Maruti become a buy because Maruti, Tata Motors these have seen high levels of interest?
Auto has been in the focus in the last three months. They have done very well. The numbers have been good for Maruti as well. I think at Rs 7150-7200, that is another 4-5% fall from here, Maruti would again be attractive. If you compare Maruti with Tata Motors, the latter is more in the favour right now. As it is in the grip of the bulls, the way up could be faster in Tata Motors than Maruti. Maruti is a portfolio stock one should look at this juncture.
How have you looked at Motherson Sumi’s numbers? It is a pretty strong set of revenues and margins are well expanded beyond the consensus estimates. What is your view on the entire auto ancillaries sector?
Rahul Shah: Auto as a sector has done quite well. Auto ancillary stocks have started doing well in the last few sessions. Motherson numbers were quite impressive and the stock has been up significantly.
So, in the auto ancillary space, Motherson Sumi is one pick. In the battery space, I like both Exide and Amara Raja. Both look quite interesting from current levels. Among tyre companies, I like Apollo Tyre and Ceat. Apollo Tyre has done quite well in recent times. Ceat still trades at a decent valuation. The ancillary space should do much better than the auto companies in the next couple of months.
