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Hero, Bajaj, Maruti Suzuki stocks touch 52-week lows

Auto experts believe the new norms will significantly impact the sector and they continue to be underweight on the Auto Original Equipment Manufacturers.

Published: 30th July 2019 08:12 AM  |   Last Updated: 30th July 2019 08:12 AM   |  A+A-

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By Express News Service

NEW DELHI:  Auto stocks fell 1-6 per cent on the Bombay Stock Exchange (BSE) on Monday with Hero MotorCorp, Bajaj Auto and Maruti Suzuki India (MSIL) falling to a fresh 52-week low. Reports of the forthcoming regulatory hurdles that may spike registration fees, poor June quarter results in the sector and the push given to Electric Vehicles (EVs) are said to have pulled down stock prices.

In the early hours of Monday’s trading, Hero MotoCorp’s share prices hit fresh 52-week low at Rs 2,339 and closed at Rs 2,405.20 a share, 2.55 per cent lower than the previous day’s closing. Shares of Pune-based Bajaj Auto, which has posted a marginal rise in profits the first quarter, also fell to a 52-week low at Rs 2,400 on Monday.

Overall, the S&P BSE AUTO index fell 3.55 per cent on Monday to close at Rs 15,610.93. Tata Motors, which has seen a dismal Q1 profits, saw the biggest slump in intraday trading as its stock fell 6.52 per cent to close at Rs 137.60 on BSE.MSIL also fell more than 4 per cent to touch a fresh 52-week low after it reported 27.3 per cent YoY decline in Q1 profits.  Following this, some of the brokerage houses downgraded Maruti stock from a ‘Buy’ to ‘Sell’ or ‘Hold’.

Auto experts believe the new norms will significantly impact the sector and they continue to be underweight on the Auto OEMs (Original Equipment Manufacturers). “With deficient monsoon and NBFC crisis, the consumer sentiment has also been weak. In such a gloomy scenario, increase in registration costs will only worsen the outlook for automobile sales in the near term. We continue to be underweight on the Auto OEMs,” said Prayesh Jain, executive vice-president at YES Securities.

In a draft notification on July 24, the Centre proposed to increase vehicle registration fees for motorcycles from Rs 50 to Rs 1,000 and for heavy goods vehicles from Rs 1,500 to Rs 20,000. It also plans to change motor vehicle norms to allow scrapping of vehicles older than 15 years to spur adoption of electric vehicles. “By giving 1-2 per cent discount, an old vehicle buyer is unlikely to buy a new vehicle, in our view. We think it is better to charge significant fees for renewing old vehicles, which will lead to scrappage of vehicles,” Kotak Securities said in a note.

Rock bottom

  • Rs 2,339 - Hero MotoCorp
  • Rs 2,400 - Bajaj Auto
  • 4 per cent decline in MSIL stock prices
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