Auto ancillaries to be good long-term bets: Neeraj Deewan, Quantum Securities

In a chat with ET Now, Neeraj Deewan, Director of Quantum Securities, shares his thoughts on the auto space. Excerpts:

ET Now: How are you approaching the overall auto basket? Are you tempted to book profits even when it comes to some of the auto ancillary names, given the stellar run up we have seen?

Neeraj Deewan: The kind of auto ancillary stocks that we track - JK Tyre, Motherson Sumi, Ahmednagar Forgings - have been performing very well. Quarter on quarter, their performance is good.

For example, JK Tyre is adding capacity, which will start getting results from FY16 and FY17 onwards. Similarly, Ahmednagar Forgings, the capacity utilisation of the capacity which had come in last year, is improving and they are adding more capacity also. When it comes to Motherson Sumi, the European company they had acquired, the margins are improving.

Thus, I do not see any reason to at least book profits there since now we are looking at economy revival and auto sales improving. Even CVs - which right now have not really starting contributing - will start contributing going ahead.

Thus, auto ancillaries should do very well even going ahead. One needs to have a little longer term perspective and one should look at the next two-three years.