EUR 120.00 For Business Accounts Only

MOSL: AUTOMOBILES: Realigning Model Portfolio as new headwinds emerge; Overweight on PVs

AUTOMOBILES: Realigning MOdel Portfolio as new headwinds emerge; Overweight on PVs, global plays; remain Underweight on 2Ws

 

 MOFSL Auto MOdel Portfolio has delivered a moderate outperformance of 160bp since its inception in Dec’20 in an operating environment challenged by relentless headwinds. With more headwinds on the anvil, we realign our MOdel Portfolio to navigate the near-term headwinds. In terms of major changes, we are Overweight on MSIL, companies with global exposure (BHFC, TTMT, MSS), and APTY, whereas we reduce weight on MM (to Neutral) and remove BOS, BIL, and CEAT. 

Auto underperforms Nifty 50 in CY21YTD

• The Auto sector (NSE Auto Index) has underperformed Nifty sharply by ~12.5% in CY21YTD, with a broad-based underperformance across stocks. This is attributable to several factors impacting the Auto sector. The NSE Auto index has delivered just ~6% returns in CY21YTD, against the Nifty 50’s ~18.6% returns.
• Further analysis of this underperformance reveals broad-based underperformance across stocks, with only a handful of stocks outperforming – TTMT (+34% outperformance over NSE 50), ENDU (+17%), BIL (+15%), MSS (+13%), and BHFC (+12%).
• The broad-based underperformance has been due to relentless headwinds in the form of a) high commodity cost inflation, b) weaker demand recovery post the second wave led lockdown, c) higher fuel prices, d) the semi-conductor shortage, and e) the increasing threat from EVs (particularly in 2Ws).