Top auto stocks to buy as semiconductor shortage eases in July

Auto sales July 2022: After a seemingly endless lull in India’s auto segment, a key barometer of the economy, showed positive trends in July, signaling companies eased the production hurdle caused by the shortage of semiconductors. But industry executives have warned that this improvement could be hurt by any interest rate hikes and commodity price inflation.

Auto majors like Maruti Suzuki, Tata Motors, Hyundai Motors and Mahindra & Mahindra posted strong sales figures for the month of July. At 3,24,650 units, total car sales saw a year-over-year increase of 15.2% in July 2022, from 2,81,576 units sold during the same period in 2021.

Last week, Tata Motors Group Chief Financial Officer PB Balaji said the semiconductor shortage problem was easing and he expects it to improve further as the months go by.

Experts said the numbers point to an upward trajectory that could be further boosted during the holiday season when automakers expect to record more sales. Even amid fears of recession, lingering inflation and other unforeseen domestic and international events, the rise is a beacon of hope for the auto industry desperate for a win, they said.

Punit Patni, Equity Research Analyst, Swastika Investmart Ltd., said: “July 2022 auto sales were positive as semiconductor shortages ease and covid effects eased. We have a positive view of the sector from a long-term perspective; however, the recent row between China and Taiwan could lead to a resurgence of semiconductor-related issues and hurt the sector’s recovery. Additionally, the recent surge in auto stocks makes us cautious about the sector in the near term. »

Stocks to buy

Posting strong monthly auto sales figures for July, Vikram Kasat – Chief Advisor, Prabhudas Lilladher Pvt Ltd recommends buying the stocks mentioned below –

Ashok Leyland

Target price – Rs 177

Market share gains aided by new launches, going forward AL will continue to regain its lost share on rear model launches and revival of the bus segment.

Mahindra and Mahindra

Target Price – Rs 1,400

Record bookings for Scorpio-N, a healthy turnaround in its automotive segment thanks to back-to-back successful launches in the highly competitive SUV space and its proactiveness to capitalize on the electric vehicle trend may lead to value release


Target Price – Rs 9,500

Improved performance over 2QFY23, New Brezza and Grand Vitara plus other model launches will add additional volumes and improved margins thanks to yen depreciation and lower raw material costs

While Patni said: “Our long term picks are Tata Motors Ltd, Mahindra and Mahindra Ltd, TVS Motor Company Ltd and Ashok Leyland Ltd.”

The views and investment advice of the experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before making any investment decision.

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