Did you buy Maruti Suzuki, Tata Motors, Mahindra and Mahindra? Hefty money lost! Buy now? Find out

Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Eicher Motors. All iconic brands and Indians have definitely showered much love on them. So, is this the right time to make money from them? Yes, investors have lost hefty amounts, but should they buy now to get enriched?  Okay, so which are the least favorite stocks on exchanges today? Well the answer would be auto stocks as they witnessed breathtaking selling pressure from investors. Nothing seems to go well in auto stocks and even beginning of new year 2019 is adding more woes to this sector. Both benchmark indexes are on negative trend, with Sensex losing nearly 450 points trading below 36,000-level, whereas Nifty 50 gave away a massive 150 points and fell below 10,800-mark. One of the reasons for the bloodbath in these two indices can be attributed to the beating auto stocks are facing. To investors horror, Nifty Auto has plunged by nearly 3% trading at 8,910.20. On the other hand, S&P BSE Auto nosedived by 627.40 points or 3.03% trading at 20,098.93. Almost every stock in this sector was on hotbed. 

On S&P BSE Auto index, at around 1432 hours, the worst performers list was led by Royal Enfield parent Eicher Motors, which has tumbled by nearly 8% at Rs 21,390.10 per piece, followed by TVS Motors at Rs 532.35 per piece down 5.81%, Mahindra and Mahindra at Rs 740.15 per piece below 4.32%, Bharat Forge at Rs 494.35 per piece lower by 3.25% , Ashok Leyland at Rs 99.40 per piece below 3.07% and Maruti Suzuki at Rs 7266 per piece down 2.83%. 

Other auto stocks like Tata Motors (Rs 169,95 per piece), Hero Motocorp (rs 3046.15 per piece), Balkrishna Industries (Rs 910 per piece), Exide Industries (Rs 262.30 per piece), Apollo Tyre (Rs 230.60 per piece), Bajaj Auto (Rs 2686 per piece), Motherson Sumi (Rs 163.85 per piece), Cummins India (Rs 844 per piece), MRF (Rs 66,429.80 per piece) and Bosch (Rs 19,457.50 per piece) slipped in the range of 0.50% to 2.80%. 

One of the major reason for decline in auto stocks could be weak sales witnessed by major companies of this sector. Many auto companies have released their sales for the month of December 2018. 

Maruti Suzuki!

Maruti posted sales of 128,338 units in December 2018 down by 1.3% compared to 130,066 units recorded in December 2017. 

Passenger cars like Alto, Wagon R, Swift, Celerio, Ignis, Baleno, Dzire and Ciaz cumulatively registered sales of 83,729 units down by 4.7% compared to 87,864 vehicles in December 2017. 

Even UV segment having cars like S-Cross, Vitara Brezza, Ertiga and Gypsy gave single-digit growth as sales stood at 20,225 units higher by 4.9% versus 19,276 units in December 2017. 

Hence, investors are under panic mode to what will happen in auto stocks in 2019 ahead, as 2018 turned out to be not so good year for this sector. 

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Tata Motors! 

The trend of muted consumer sentiments continued in December 2018, impacting the sales performance of Tata Motors Commercial and Passenger Vehicles Business in the domestic market, which dropped by 8% at 50,440 units as against 54,627. 

In December 2018, liquidity crisis in the industry, higher interest rates and rising fuel costs continued to impact the commercial vehicle sales, with M&HCV and I&LCV segment witnessing a decline while the passenger vehicle business bounced back. The cumulative sales for the domestic market (April-December 2018) was at 497,972 units compared to 398,764 units over last year, a growth of 25%. 

Eicher Motors! 

This company’s two-wheeler superstar Royal Enfield witnessed 13% drop in December 2018 sales with 58,278 vehicle being sold compared to 66,968 units recorded in same month a year ago. 

53,790 Royal Enfield bikes with engine capacity up to 350cc were sold in December 2018, down by 15% compared to 63,269 units in December 2017. 

For April - December 2018 period, a total 629,936 Royal Enfield bikes have been sold which recorded single-digit growth of 6% versus 593,450 units in the corresponding period of previous year. 

TVS Motors! 

TVS Motor Company registered a growth of 6% with sales increasing from 256,870 units in December 2017 to 271,395 units in the month of December 2018.  Total two-wheelers registered a growth of 4% with sales increasing from 247,591 units in December 2017 to 258,709 units in December 2018. Domestic two-wheeler sales registered a growth of 1% from 207,739 units in December 2017 to 209,906 units in December 2018. 

Mahindra and Mahindra! 

M&M announced its auto sales performance for December 2018 which stood at 39,755 vehicles, compared to 39,200 vehicles during December 2017.

Company’s domestic sales touched 36,690 vehicles during December 2018, as against 36,979 vehicles in December 2017. The Passenger Vehicles segment (which includes UVs, Cars and Vans) sold 15,091 vehicles in December 2018, as against 15,543 vehicles in December 2017. 

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Should you invest in auto stocks?

In Motilal Oswal’s view, “ Demand remains weak in Dec-18, led by deferral in purchase due to the constraints in vehicle financing and the impact from an increase in axle load capacity. This apart, the base remains high due to pre-buy in Dec-17 ahead of the implementation of mandatory ACs/air blowers. However, LCV volume growth remains respectable, with wholesale estimated to grow at ~4%. We expect CV wholesales to decline 10-12% YoY, primarily led by the M&HCV segment (our estimate: -19-21% YoY).”

Analysts at Kotak Institutional Equities said, “Weak festive season and need for reduction in dealer inventory levels impacted OEM’s dispatches in December 2018. As per our checks, demand is still subdued across most segments due to weak consumer sentiment, which would impact industry volumes over the next few months.”

Considering this, Motilal says, “Our top picks in autos are MSIL, EIM and MSS among large caps, and EXID and ENDU among midcaps.”

While Kotak explains that, they see downside risks to our FY2019E volume estimates for most companies, particularly for four-wheeler OEMs (Ashok, M&M and Maruti) and Eicher; we note that our two-wheeler industry volume estimates are already below Street expectations.