BSE Auto index hits over 3-mth high; M&M at record high, Tata Motors up 3%

Shares of automobile companies were in focus, with the S&P BSE Auto index hitting an over three-month high on Monday, after Mahindra & Mahindra (M&M) reported strong earnings for the quarter ended March 2022. Also, Tata Motors receiving a go-ahead from the Gujarat government for acquiring Ford Motors passenger vehicle plant in Sanand (with a capacity of 240,000 units/annum) boosted sentiment.

The auto index closed 1.94 per cent up at 26,224.77, its highest level since February 17, 2022. The benchmark Sensex too climbed 1.9 per cent.

The index has rallied nearly 25 per cent from its 52-week low level of 21,083, hit on March 8, 2022. Given the recent fiscal and monetary measures by the government and the RBI, the auto sector foresees cost pressures in the economy to ease out.

In the past month, stock prices of TVS Motor Company, Hero MotoCorp, and Ashok Leyland have surged between 10 per cent and 13 per cent, against a 4.5 per cent rise in the auto index. 

Among individual stocks, M&M closed at a record high of Rs 1,000 after rallying 4.95 per cent in Monday's trade, after the company reported a 17 per cent YoY rise in standalone profit (before exceptional items) at Rs 1,167 crore for the March quarter (Q4FY22), compared with Rs 998 crore in the same quarter last year. After accounting for exceptional items, the profit rose 427 per cent to Rs 1,292 crore from Rs 245 crore in the same quarter last year. The stock surpassed its previous high of Rs 992 touched on August 30, 2018.

Tata Motors' stock ended at Rs 442.30, up 2.96 per cent. Tata Passenger Electric Mobility Limited (TPEML), a subsidiary of Tata Motors, and Ford India Private Limited (FIPL), signed a memorandum of understanding (MOU) with the Government of Gujarat for the potential acquisition of FIPL’s Sanand vehicle manufacturing facility.

Rising customer preference for passenger and electric vehicles made by Tata Motors has led to a multi-fold growth for the company over the past few years. 

Analysts at Emkay Global Financial Services retain their positive view on the auto sector, underpinned by expectations of a cyclical upturn in the next three years.