ET asked Raamdeo Agrawal & Hiren Ved to recommend a few stocks for investment.
Raamdeo Agrawal, not surprisingly, is very bullish about auto stocks. He exclaimed that “we are in an amazing situation in terms of auto companies” and “the best of the auto boom is ahead”.
Raamdeo’s strong suggestion is that investors should buy top-quality auto stocks, whether they be two-wheeler companies like Bajaj Auto and Hero MotoCorp or four-wheelers like Maruti, Mahindra & Eicher.
He promised that there are “interesting times” ahead in the next five years for the auto stocks and suggested that investors should have “at least” 20-25% of their portfolio funds into auto stocks.
It may be recalled that Raamdeo Agrawal made his first super-duper multi-bagger fortune from Hero Motors. In recent times, he has made a fortune out of Atul Auto. He bought a truckload of the stock on 5th November 2013 at Rs. 129 each (adjusted for split). At the CMP of Rs. 379, Raamdeo is looking at a gain of 192% on his investment (in less than a year).
It is also noteworthy that Prashant Jain of HDFC MF has bought a chunk of the stock in August 2014. Also, Vijay Kedia is the largest shareholder of Atul Auto.
Interestingly, Hiren Ved of Alchemy Capital Management is also gung ho about the auto sector.
He pointed out that auto is “the leader of the pack in this bull market”. He explained that auto stocks will be one of the big beneficiaries of impending interest rate cuts. “The sector typically does well in the early cycle because it has got huge operating leverage” he added.
Amongst auto stocks, Hiren said that the best valuation play today is Tata Motors. He explained that in the entire Nifty one cannot get a stock which is still trading at single digit PE on a forward basis. “Tata Motors is a combination of a global play and a CV play in India and there is a lot of juice left in it” Hiren said and advised investors to use corrections to buy the stock.
It may be recalled that Rakesh Jhunjhunwala has given the same advice a few months back. His sage words are worth recalling:
“I am very bullish on Tata Motors … You can’t get a Jaquar car anywhere in the world without waiting. That is such a huge market … When you are talking of cyclicals the biggest beneficiary in India of cyclical market is Tata Motors. When you talk of cyclicals the biggest seller of trucks, the next persons market share is 20 percent. So, therefore you should but Tata Motors if you want to buy cyclicals”
HDFC Securities has also recommended an investment in Tata Motors DVR.
Hiren also advised investors to take a close look at Hero MotoCorp, Maruti, Sundram Fasteners & Gati. He promised that an investment in these stocks would yield hefty gains for investors.