Should you bet on Eicher Motors stock? Dipan Mehta answers

economictimes.indiatimes.com:

«I think that it is a great opportunity, usual disclosure we and our clients are invested, and I think that around these levels also Eicher Motors is a decent proposition. It is not going to be like a multi-bagger it has been in the past, but I expect it to outperform the index at least in the near future, in medium term as well and there is a lot of fear around the two launches which have been taking place from Hero MotoCorp and Bajaj Auto,» says Dipan Mehta, Director, Elixir Equities.Cars, bikes it is a problem of plenty out there, what would we first talking about? And this is the reason why we are very positive on the auto industry.

I think last four-five years every auto company has realised that new model introductions is the way to grow the sales and expand the market and that is what they are doing. They are trying to move the consumer up the premium ladder and all the launches that we have seen today are at the premium end.

So, what that does is that although volumes remain in that high or low mid-single digit, the average realisation per vehicle tends to move up at least 10-12% that is what we have seen for last several quarters or so and that is how they are able to maintain the profitability going and improve the return on assets because the higher priced products certainly have a higher profit margin as well once they reach a certain scale. I think this trend is going to continue for a few more quarters and we remain very positive on the entire auto space including Eicher Motors which is right now under pressure last couple of days or so but I think it is a temporary phenomenon and, of course, Maruti has been going from strength to strength.What do you do right now as an investor? Do you buy into this fall