Scrappage policy: Leyland, TaMo, M&M, Cummins lead auto gains

Scrappage policy: Leyland, TaMo, M&M, Cummins lead auto gains

Mumbai: Automobile stocks surged Monday as the finance minister announced a voluntary vehicle scrappage policy. Analysts are most bullish on as it benefits both from the scrappage policy and the Rs 18,000-crore allocation for procurement of urban transport buses.

The BSE Auto index gained 4.2 per cent to 23,058.65, its best one-day climb since May 11, led by Ashok Leyland that surged 10.5 per cent. Tata Motors, also one of the biggest likely beneficiaries, surged 6.5 per cent.

India, M&M, Motherson Sumi, Bosch, MRF and Eicher Motors gained 4-9 per cent.

“It would have been more positive if the policy was mandatory in nature; however, the voluntary policy will also support volumes for the industry that’s at the cusp of cyclical recovery,” said Shashank Kanodia, lead analyst — auto sector, ICICIdirect.

“The announcements will benefit Ashok Leyland and Tata Motors the most. Ashok Leyland will be the biggest beneficiary as it has around 45 per cent market share in medium and heavy buses segment (FY20) and it is also a pure play in the CV segment.”

“Ashok Leyland will be the biggest beneficiary, followed by M&M and Tata Motors,” said Aditya Jhawar, analyst at Investec.

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