Brokers’ call on Indian market, automobile companies

Deutsche Bank bullish on India

Deutsche Bank is bullish on Indian rural basket, infrastructure basket and selects financials stocks. In a recent note the foreign bank has said that India still looks good for six reasons such as sentiment, money supply, good valuation, more reforms, P/E expansion and twin deficit which are better for equities.

Deutsche Bank estimates that India’s RoEs and EBIT margins are in the lowest quintile in the past two decades and are likely to rise as prior under-investment, policy reforms, contained commodity prices from a slowing China, and increases in infrastructure spending kick in.

Drawback cuts to hit auto cos

Nomura in its recent note said that Bajaj Auto, Ashok Leyland, TVS and Bharat Forge will be most affected by this cut in duty drawback rates. In a notification, the ministry of finance has reduced duty drawback rates on exports.

As per the notification, duty drawback rates on motorcycles, 3-wheelers and MHCVs have been reduced to 2% from 5.5% previously.

In LCVs, duty drawback rates have been reduced to 2% from 4% earlier, while the rates have been largely unchanged for the cars segment at 3%. For auto components, rates have been reduced from 3-5% to around 2.4-4%.