The lower repo rate improves the availability of operating capital for auto firms. Small-cap auto stocks and auto OEM vendors were negatively impacted as more prominent automakers continued to manage the problem. As a result, experts now suggest a few small-cap automakers.
The lower repo rate improves the availability of operating capital for auto firms. Additionally, small-cap auto stocks and car OEM vendors were negatively impacted as major automakers continued to manage the problem.
Among the businesses recommended by the experts are JBM Auto, Rico Auto Industries, Fiem Industries, and Samvardhana Motherson International Ltd.
Views of Analysts on Auto Stocks following the RBI Rate Decrease:
The RBI’s 25 basis point rate decrease will lessen working capital issues for rate-sensitive segments. According to Avinash Gorakshkar, Head of Research at Profitmart Securities, many vendor companies in the auto industry have had their working capital compressed due to the large companies’ late payments to these small businesses.Â
The large corporations will now begin to release their payments, and their bank obligations will decrease concurrently. In light of the RBI’s rate decrease after a nearly five-year lag, Gorakshkar continued, “I would advise investors to look at small auto companies to maximize one’s gains as small auto vendors are expected to fall under the bulls’ radar.”
Following the RBI Monetary Policy meeting, Avinash Gorakshkar, Head of Research at Profitmart Securities, advised anybody interested in adding auto stocks to choose public vendor businesses such as JBM Auto, Rico Auto, Fiem Industries, etc.
“Small-cap and mid-cap stocks are under tremendous purchasing pressure, and aggressive investors can easily find discounted stocks in this segment,” stated Anshul Jain, Head of Research at Lakshmi Shree Investment & Securities. Short-term investors in small-cap or mid-cap car companies may consider Samvardhan Motherson shares. Jain said that investors who want safe wagers could wish to look at Maruti Suzuki stock in the near to medium term.
