Equity mutual funds actively deployed cash in the month of August, as their overall cash balance fell from ₹1.85 lakh crore to ₹1.76 lakh crore. Multiple block deals during August gave fund houses an opportunity to put inflows to work.
Here’s a look at how India’s top mutual funds positioned themselves in auto stocks in August, according to the latest note by Nuvama Alternative and Quantitative Research.
Axis Mutual Fund added Maruti Suzuki worth ₹564 crore and Hyundai Motor India worth ₹305 crore.
Franklin Templeton Mutual Fund increased its exposure to Mahindra & Mahindra (₹285 crore) and Ashok Leyland (₹257 crore).
SBI Mutual Fund also made big auto bets, adding Maruti Suzuki worth ₹656 crore.
On the other hand, HDFC Mutual Fund trimmed its stake in Mahindra & Mahindra by ₹235 crore and fully exited CarTrade Technologies.
ICICI Prudential Mutual Fund majorly reduced its holding in Maruti Suzuki India by ₹4,382 crore.
Aditya Birla Sun Life Mutual Fund cut its exposure to Hyundai Motor India by ₹209 crore.
Auto stocks to buy
Recently, global brokerage firm Citi raised its price targets on Maruti Suzuki India, Mahindra & Mahindra and Hyundai Motor India on September 12, in anticipation of the industry growing better than what they previously anticipated.
With ‘Buy’ ratings on all the three, Citi has raised its price target on Maruti Suzuki to ₹17,500, on M&M to ₹4,170 and on Hyundai Motor India to ₹2,900. Maruti Suzuki remains a top pick for Citi within the auto space, and its target is the fifth highest on the Street for India’s largest passenger carmaker.
| Stock | Rating | Old Target (₹) | New Target (₹) |
| Maruti Suzuki | Buy | 14,400 | 17,500 |
| Hyundai Motor India | Buy | 2,400 | 2,900 |
| M&M | Buy | 3,700 | 4,100 |
The brokerage said that a combination of the Goods and Services Tax (GST) rate cuts, along with the late impact of the income tax revision, and lower interest rates creates an environment where the broader industry growth could turn out to be better than what the brokerage had earlier anticipated.
GST rate structure
The government has restructured GST rates for vehicles and auto parts. The Compensation Cess has been removed, making vehicles more affordable in several categories.
As part of the overhaul, the 12% and 28% GST slabs have been scrapped, while the 5% and 18% slabs remain in place. In addition, a new 40% slab has been introduced for luxury and sin goods.
18% slab
– Petrol, hybrid, liquefied natural gas (LNG) and compressed natural gas (CNG) cars
(Petrol: up to 1,200cc engine and under 4 meters length; Diesel: up to 1,500cc engine and under 4 meters length)
– Motorcycles with engine capacity up to 350cc
– Commercial vehicles for goods transport
– Three-wheelers
– Tractors (engine capacity above 1,800cc)
– Ambulances and buses
– Auto parts (other than tractors)
– Tyres
5% slab
– Electric vehicles (EVs)
– Tractors up to 1,800cc engine capacity
– Tractor parts
– Tractor tyres and tubes
– Bicycles and other cycles
– Tanks and other armoured fighting vehicles
40% slab
– High-end cars
– Petrol cars with engine capacity above 1,200cc, diesel cars above 1,500cc, or length exceeding 4 meters
– Motorcycles above 350cc
– Station wagons
– Racing cars