Time to bet on auto with sector rotation taking place? Vinit Bolinjkar answers
As the global economy recovers from the COVID-19 pandemic, investors are now focusing on sectors that are expected to perform well in the coming months. Among these sectors is the automobile industry, which has shown a promising growth outlook in recent weeks. In this article, we speak to Vinit Bolinjkar, Head of Research at Ventura Securities, to get his insights on whether it is time to bet on the auto sector.
According to Bolinjkar, the auto sector has been a laggard in the Indian market for the last two years. However, he believes that things are changing for the better. “The auto sector has been witnessing a recovery in demand, which has been boosted by government stimulus measures, such as the reduction in GST rates and the scrappage policy,” he says.
The scrappage policy, which aims to replace old vehicles with new ones, is expected to give a major boost to the auto industry. Bolinjkar believes that this policy will not only increase demand for new vehicles but also create a demand for used vehicles, as people who opt for new vehicles will be selling their old ones. “This will result in a virtuous cycle for the auto industry,” he says.
Bolinjkar also points out that the auto sector is benefiting from a shift in consumer preferences towards personal mobility. “The pandemic has made people more cautious about using public transport, and this has led to an increase in demand for personal vehicles,” he says.
Moreover, he believes that the rise in electric vehicles (EVs) is also going to be a major growth driver for the auto sector. “The government has announced a target of achieving 30% EV penetration by 2030, and this will lead to a huge demand for EVs in the coming years,” he says.
Overall, Bolinjkar is bullish on the auto sector and believes that it is a good time to bet on it. “The sector has been a laggard for a while, but now is the time to buy, as we are seeing a sector rotation taking place,” he says.
However, he advises investors to be selective when it comes to picking stocks in the sector. “Investors should look for companies that have a strong product portfolio, a robust distribution network, and a focus on R&D,” he says.
In conclusion, Bolinjkar’s insights suggest that the auto sector is poised for growth in the coming months. While investors should be selective when it comes to picking stocks, it is a good time to bet on the sector as a whole.