It is seen that FII are increasing the stake in auto companies and share prices are showing better than expected rise ahead of other sectors. Co Name March Low Price on 15th April % rise Bharat Forge 26/03 87 135 55 Amtek 25/03 73 96 32 SS Duncan 25/03 80 130 62 Minda 18/03 80 113 42 Bosch 25/03 2890 3118 8 * AIA 24/03 112 175 56 Exide 12/03 32 49 53 Apolo Tyre 12/03 16 23 44 Cummins 12/03 149 199 33 MRF 09/03 1511 2325 56 * Due to buyback. There is marked improvement in auto shares in last one month on the back of improved sales nos except in 2 wheelers where only Hero Honda has performed well. The recovery is auto is seen from the recovery in auto component sector also. Except Bosch and MRF all other stocks have moved up in this period. Though Sensex has recovered 30% from the March low the majority of auto component stocks have recovered by more than 40 to 50% in last one month. The auto component companies could announce expansion in margins even though there is pressure on the top line. The margin expansion is coming from lower metal and plastic prices. The only pressure auto component is facing is delayed payments by the OEM and non availability of the working capital. Domestic consumption has shown marked improvement in auto sells due to VI pay commission, inclusive growth agenda, lower interest rates and higher disposable income in rural India which has direct bearing on the auto component segment. Also the entry of foreign car manufactures in India such as BMW, Mercedes, Nissan, Toyato, Hyundai and closure of GM, Chrysler etc will have positive impact of Indian auto ancillary. After the recovery in large cap companies, small cap companies will give handsome returns from hereon. Co Name March Low Price on 29th April % return Book Value Dic to B V % Sona Koya 5.35 9.11 70 9 Nil Motherson 52 76 46 10.08 Nil Subros 14 19.66 40 29.01 47 ANG 29.60 30.10 1 65.97 119 Fairfield 12 22.35 87 7.45 Nil Auto Corp Goa 95 159 67 186.37 17 Autolite 14 22 57 25.35 15.22 JMB Auto 16 25.25 58 45.15 78.81 Dagger Forst 7 12 71 89 641 Lumax Ind 60 87 45 144.72 66.34 Munjal Auto 25 46 84 58.40 26.95 Omax 15 22 46 67.78 208 Talbros 15 21 40 57.07 171.76 Triton Valves 456 650 42.56 954.54 46.85 Ucal Fuel 24 33 38 127.44 286 Z F Steering 72 96 33 120.27 25.28 Amar Raja Battery 30.5 53 74 39.67 Nil Evinix 1.49 2.40 61 6.53 172 Goa Carbon 35 55 58 66 20 Therefore irrespective smart rise, auto component sector has huge potential to give good returns and stocks which are available at maximum discount to book value are Dagger Forst 641% Ucal Fuel 286% Omax Ind 208% Talbros 172% Evinix 172% ANG Auto 119% Investors who are bullish on auto and auto component sector will do well by picking above 6 stocks for long term where the chances of going wrong are almost nil. The study is made by Rajkumar Jha