M&M and Maruti look attractive in auto sector: Manish Sonthalia

In a chat with ET Now, Manish Sonthalia, Sr. Vice President & Head – Equity Portfolio Management Services, Motilal Oswal Asset Management shares his views on auto sector.
ET Now: What is the take on autos? Sure enough there was an evident slowdown with the monthly sales data coming in but would it be an opportune time to pick out anything from the auto basket?

Manish Sonthalia: Autos also represent cyclicality. So within that, passenger car segment is more cyclical than the two wheeler segment per se and that is why the whole euphoria about Maruti and you have definitive reasons why yen to rupee equation is now turning much favourable. So you will see continued margin expansion, although there is hope that second half recovery in volumes would be there. So the assumption is predicated on that. Maruti has some more way to go and closer to around odd Rs 2000 looks like a reasonable price for Maruti. M&M again UVs are not doing well but the tractors are doing quite well and SOTP valuations on M&M adds Rs 970, seems to suggest that there is another 10% or 12% upside based on how valuations on assumptions that there will be some recovery in UV volumes as we move into the next fiscal year.