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Recommendation Date : 01-May-2010 Last Update Date : NA
Automobiles :

Automobile companies have done well, thanks to a strongly growing economy that India has been. Recent growth statistics suggest, after a brief lull, demand for automobiles across segments has been picking up once again. We believe this pickup in demand is sustainable in future too. Problem is, the component suppliers market has turned around from being a buyer’s market to a seller’s market and this is likely to squeeze margins for automobile manufacturers. Also the input costs of companies are likely to go up due to rising commodity prices further creating a strain on their margins. Increasing competition especially from global players who have entered into the Indian market are likely to give Indian companies a bumpy ride ahead. Also stocks in this sector have run up quite a bit and offer a limited upside for now.  

 
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Ashok Leyland Ltd
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