Maruti a preferred pick in the auto space: Pankaj Pandey, ICICIdirect.com

In a chat with ET Now, Pankaj Pandey, ICICIdirect.com, shares his view on the prospects in the auto sector.

ET Now: Coming on Ashok Leyland, this stock has been on a tear and what a 2015 it is turning out to be for Ashok Leyland. Are markets in the right in assuming that Ashok Leyland is a clear bet on economic recovery and are you satisfied and happy with the numbers they have reported, the trajectory has been strong, but is all the good news in the price?

Pankaj Pandey: The numbers were largely in line with our expectation. In the auto space, we would prefer the passenger vehicle space more. Given that in the CV space the LC segment is still witnessing a slowdown while medium and heavy commercial vehicle has been doing quite well since last October onwards. On the passenger vehicle side things have been robust in terms of numbers, in terms of the kind of margin expansion that we have seen; for example, with regard to a company like Maruti, from 10-10.5 per cent kind of EBITDA margins we would expect margins to sustain at about 16 per cent going forward.

Which is why we would want to believe that the passenger vehicle segment should do far better compared to the players which are more inclined towards the CV side or on the two wheeler side. Therefore, Maruti would be a preferred pick in this sector.