Bullish on M&M, Tata Motors within the auto space: Dr Tirthankar Patnaik, Religare Capital

In a chat with ET Now, Dr Tirthankar Patnaik, Director, Strategist-Institutional Research, Religare Capital Markets Limited, shares his views on the auto space.

ET Now: How does one approach the market and more importantly the auto pack with the kind of turnaround that some of the auto companies have posted like Tata Motors, M&M etc? All these stocks are really holding out well, so how would you now place yourself when it comes to the auto pack?

Dr Tirthankar Patnaik: I think, autos have been a positive surprise. Analysts were writing it off as a wash-out quarter which has not happened clearly.

Numbers have been good across the board. In case of Maruti, there were some expectation that numbers would be good with the yen weakening but numbers have been good everywhere. Hero MotoCorp, Tata Motors and then M&M's numbers have also been fairly good.

In our model portfolio, we have an overweight rating on auto stocks. Our top picks in the auto space remain Tata Motors and M&M. We have actually raised their target price in M&M from Rs 1100 to Rs 1170 on the basis of better margins.

Tractors are steaming to come around the management’s guidance of 6%-8%. Our own estimate is around 7% volume growth in the tractor segment. Automotive segment is also likely to do fairly well. So, we remain positive on the auto sector.