Motilal Oswal prefers 4-wheelers over 2-wheelers & commercial vehicles due to strong volume growth & stable competitive environment.

Motherson Sumi Systems

Brokerage - Motilal Oswal | Rating - Buy | Target - Rs 458

Motilal Oswal has initiated coverage with a Buy rating on Motherson Sumi Systems and set a target price at Rs 458 per share, citing strong organic growth opportunities for the company in international & domestic market.

The research house expects revenue to grow 22 percent between FY17-20.

Autos

Motilal Oswal said 2-wheeler demand remained mixed as the momentum gained from the wedding season in the northern belt is partially negated by muted sales in Rajasthan, Gujarat and Maharashtra. Hero MotoCorp witnessed strong demand for motorcycles during the recently concluded wedding season in north.

It prefers 4-wheelers over 2-wheelers & commercial vehicles due to strong volume growth & stable competitive environment.

Top picks in autos are Motherson Sumi, Bajaj Auto, Tata Motors & Amara Raja Batteries, Motilal Oswal said.

BFSI

Edelweiss said the research house perceived high probability of interest rates hardening given rising inflation expectations, likely fiscal slippage and higher-than-anticipated government borrowing programme.

Also, liquidity is normalising from excess and banks are now raising bulk deposit rates, it added.

The rise in interest rate, primarily goaded by macro factors rather than growth, will essentially entail earnings pressure and be negative for the BFSI sector, it feels.

Within NBFCs, Edelweiss prefers niche players like Shriram Transport (will manage NIMs well). Equitas, being a small finance bank (SFB), will not be impacted much as it will see a shift towards deposits at relatively lower funding cost, it feels.

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