MUMBAI: Jefferies has cut the target share prices of some leading automakers as the downcycle in the sector continues and retail demand remains weak.
The brokerage downgraded Eicher MotorsNSE -0.40 % to ‘hold’ from ‘buy’ and reduced the target price to Rs 19,300 from Rs 23,400. It maintained a ‘hold’ rating on Hero MotoCorpNSE -0.37 % and raised the target price to Rs 2,610 from Rs 2,550.
Jefferies maintained a ‘buy’ on Maruti SuzukiNSE -0.51 % India and cut the target price to Rs 7,100 from Rs 8,000.
On TVS Motor, Jefferies has a ‘hold’ but cut the target price to Rs 460 from Rs 540.
Jefferies kept its ‘underperform’ rating on Bajaj AutoNSE -0.24 % and cut the target price to Rs 2,430 from Rs 2,620.
It upgraded Mahindra & Mahindra to a ‘buy,’ citing inexpensive valuations but trimmed the target price to Rs 720 from Rs 780.
Separately, CLSA downgraded the M&M stock on Tuesday to ‘sell’ from underperform and lowered the price target to Rs 590 from Rs 690, citing concerns over regulatory cost push and rising competition.
“The auto downcycle has completed its second (tractors, light commercial vehicles), third (medium and heavy commercial vehicles, two-wheelers) and fourth (passenger vehicles) quarter across segments. Historically, downcycles last an average of 7-11quarters but significant variation aroun ..
It said there are upside factors to the sector in the form of reduction in the GST rate for mass-market two-wheelers to 18 per cent from 28 per cent and a more aggressive vehicle scrappage policy, which targets vehicles older than 10-15 years. However, these factors are not the base case expectations of Jefferies.
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