India's auto stocks are not attractive as strong profit growth is now behind the sector, according to Avendus Capital Alternate Strategies' Chief Executive Officer Andrew Holland.
"Forecasts have yet to be brought down to the levels they need to be at, 10-15 percent downgrades in the sector,” he said. “We can wait for those downgrades to happen before we buy them.”
Holland said that higher spends on advertisement and discounts will squeeze margins for the companies. “At the same time, demand will not be at the pace it was in for the last four to five years, so that means maybe you get single-digit growth.”
I'm not saying the demand for cars is going to stop. But the heady days of strong profit growth are over and the valuations have to reflect that way.Andrew Holland, CEO, Avendus Capital Alternate Strategies
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