Select stocks from the auto and auto ancillary space have been on a roll for the past 10 years. They have managed to change the fortunes of investors and market watchers are still bullish on a couple of stocks. With a rally of 7,622 per cent, UNO Minda has emerged as the top gainer in the list. Shares of the company have soared to Rs 544.25 on November 1, 2022 from Rs 7.05 on November 1, 2012. The massive rise indicates that an investment of Rs 1 lakh in the stock a decade ago have would have now turned to over Rs 77 lakh at present.
UNO Minda (formerly Minda Industries) is an auto ancillary company with products ranging from switches, lighting, alloy wheels, seats and acoustics, among others. According to Asian Market Securities, the premiumisation of the auto industry is likely to benefit UNO Minda by growing its kit value along with volume growth.
“UNO Minda is also well positioned to take advantage of the transition of 2W from ICE to EV.” Asian Market Securities said in earlier in a report while setting a target price of Rs 650. Shares of the company traded at Rs 540 in the afternoon trade on November 2.
Other top gainers
Escorts Kubota (up 2,983 per cent), TVS Motor Company (up 2,851 per cent), Eicher Motors (up 1,515 per cent) and Balkrishna Industries (up 1,388 per cent) have also turned an investment of Rs 1 lakh to over Rs 10 lakh in the past 10 years.
Global brokerage UBS is positive on TVS Motor Company with a target price of Rs 1,385. “We are now more convinced that TVS will emerge as the market leader in EVs over the medium to long term.”
The road ahead
The BSE Auto index gained also advanced 102 per cent during the same period. Commenting on the further movement of the auto sector, Pravesh Gour, Senior Technical Analyst, Swastika Investmart said, “The overall outlook for the sector is bullish as the Indian economy is showing strong resilience. However, higher interest rates and a slowdown in global growth will remain near-term challenges.”
He further added that commodity prices are moderating and the semiconductor chip shortage issue has been resolved. “Therefore, we can expect improvement on the margin front. In terms of segments, commercial vehicles (CV) sales are likely to remain robust amid the capex cycle, while new product launches in PV and the two-wheeler segments are likely to lift consumer sentiments. Our top pick is Ashok Leyland from the CV segment.”
On the other hand, Yogesh Mehta, Founder, Yield Maximisers said, “Only electric vehicle could be a game changer for auto passenger vehicle segment. And this will take longer time. At present, Mahindra n Mahindra is the one which is a good portfolio stock.”