BUZZ-India's auto index could drop another 10%-15%, CLSA warns

Reuters03-20 13:15
BUZZ-India's auto index could drop another 10%-15%, CLSA warns

** India's Nifty auto index .NIFTYAUTO could see another 10%-15% drop in the current environment after a 13% fall since the Middle East war started, says CLSA

** Concerns over potential production disruption due to supply-chain hurdles linked to the U.S.-Israel war on Iran, along with steep inflation in the commodity basket could lead to 30%-40% cuts to fiscal year 2027 earnings, brokerage says

** Cuts price targets of all the auto companies under coverage, saying "crude is still rude" to the sector

** CLSA says the question in auto sector is whether higher crude will lead to earnings decimation in FY2027 or will it just have one-quarter impact

** A 10%-15% correction in auto index will present an attractive opportunity for long-term investors, according to the brokerage

** CLSA identifies Mahindra & Mahindra MAHM.NS, Bajaj Auto BAJA.NS, TVS Motor TVSM.NS, Tata Motors Passenger Vehicles TAMO.NS and Ashok Leyland ASOK.NS as top picks

** Shares of MAHM, BAJA, TVSM, TAMO and ASOK up between 0.2% and 2%

** India's auto index fell 10.6% last week, its worst in six years

(Reporting by Bharath Rajeswaran in Bengaluru)

((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))

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