Exercise caution in selecting auto component stocks; two-wheeler a contrarian play: Ajay Bagga

In a chat with ET Now, market expert Ajay Bagga shares his view on auto ancillary stocks including Bosch India and Motherson Sumi.

ET Now: The numbers from auto component makers have been a mixed bag, Motherson Sumi on Friday reiterated that its revenue target for 2020 is intact despite the Volkswagen issue; Bosch India has had some small issues as well, but clearly they are not as favourites as they were six or nine months ago. What are your thoughts particularly on Bosch?

Ajay Bagga: Absolutely. The Q2 numbers were a mixed bag. Some have not had very good results also. You have to look at leverage, you have to look at their export markets, I think that is very critical for the Indian auto component makers. So it is not a macro call that you can just buy anything in the sector. You will have to be much more careful. I would say auto manufacturers themselves might be better playsr, especially the two-wheeler makers, where we see a turnaround on the cards. Over the next six months, you will see better results coming in. So two-wheeler stocks could be one contrarian play to bet on.