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4 auto and metal stocks to bet on now: Rahul Shah

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“The risk to reward in Maruti would be quite negligible from here. I could see at least 15-20% upside in the near term in Maruti,” says Rahul Shah, V-P-Equity Advisory, .

got re-rated because of the EV deal but the EV deal and the benefits of that will not happen in FY23 or FY24. Is the market pricing in the big EV business two or three years in advance?
Definitely. The market is just pricing in the first mover advantage. We were ready with two-three models of the Tata Motors with their EV play and if you look at the focus and strategy of the company itself, the full focus on the EV side. So my sense is this has already been factored in. We have other listed passenger vehicle stocks but their announcement or their traction on this EV play has been a little bit late. My sense is that the stock should benefit going forward from here and when one sees the presentation of the company and their management commentary, the focus is going to continue with the new launches, especially on the EV front. My view is one should buy Tata Motors with a horizon of next year or so.

EV deal is out, the JLR business because of problems in China is still a single digit business. So what could be the trigger because EV re-rating has happened and the stock has moved from Rs 280 levels to Rs 450-460 already?
The market has also rallied in that perspective when the talks came out about six-eight months back as also a lot of stocks. That push is also regarding the markets moving along with it. So the JLR business, then the chip shortages were the reason the stock was hovering around these levels. Going forward, the domestic economic recovery and with the traction in passenger vehicles coming back, in the EV space, Tata Motors should continue to do well. With global recovery, the stock should do well in the coming years.

Within the listed plays, do you get exposure to the EV up cycle? Would you bet on anything via the ancillary route?
I would directly bet on the stock in that space. One should look at Maruti. A couple of weeks back, the management announced their foray into EV. Plus three launches are coming up in the next three months and valuations are quite comfortable at this level and the risk to reward in Maruti would be quite negligible from here. I could see at least 15-20% upside in the near term in Maruti. One can look at Maruti in playing the EV cycle.

What is your perspective on metals. Have they corrected enough to be bought again or should one avoid them right now given the global linkage?
I would play selectively on metal stocks. A lot of them have corrected more than 20-25%, the reason being that the prices of metals have cooled off from near term highs. There are two specific stocks that I personally feel could see some money being made from here onwards in this fall. One is obviously

. It is better poised within the entire steel sector in terms of iron ore and coking coal prices.

The impact of raw material price rise also has been much less for them. The prices have obviously fallen but are much more stable and overall JSW makes a right spot in terms of this thing.

The second one is Hindalco which is in the aluminium pack. The stock has corrected 15-20% from their highs and the stock looks quite interesting from here. One should go for these two stocks for a bounce back from here in metal play.

Read More: 4 auto and metal stocks to bet on now: Rahul Shah


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