Mon. Jan 27th, 2020

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4 Indian Stocks To Gain From Brexit

4 min read
In this article, we are going to see 4 Indian stocks To gain from Brexit, how could auto sector in India Be Benefited From Brexit Deal? Which Auto and Auto ancillary stocks will have positive effect of the Brexit?
Brexit Effect on Indian Firms

Brexit Impact on Auto Sector in India

How Could Auto Sector in India Be Benefited From Brexit Deal?

Introduction

In this article, we are going to see 4 Indian stocks To gain from Brexit, how could auto sector in India Be Benefited From Brexit Deal? Which Auto and Auto ancillary stocks will have positive effect of the Brexit?

Detailed Stock Analysis by Invest Yadnya
Detailed Stock Analysis by Invest Yadnya

4 Indian Stocks To Gain From Brexit – Brexit Impact on Auto Sector in India

  • Boris Johnson, who leads Britain’s Ruling Conservative Party, has won the UK general election with an incredible majority.
  • A decisive outcome to a Brexit-dominated election should allow Johnson to fulfill his plan to take the UK out of the European Union by January 2020.
  • Why Boris Johnson’s win and Brexit is good news for Indian Stock Market? Boris Johnson defeated his nearest rival and Labour party leader Jeremy Corbyn, who has now announced that he will not lead his party in the next general elections.
  • Johnson’s victory over Corbyn is good news for India for many reasons. What you need to really understand is the overall impact on the Indian Stock Market – which Indian Stocks will benefit?
  • How Will The Brexit Impact Indian Companies?
  • The Brexit would benefit the Indian firms that have exposure to the country. The potential decoding of regulatory changes in the new order could spell opportunity in the form of new businesses to the Indian firms with Europe exposure. However, this may be only over the medium-to-long term.
  • Here is a list of some 4 Indian Stocks To Gain From Brexit, major Auto Sector stocks in India to watch out for this week which could be impacted by the Brexit deal.
Brexit Impact on Auto Sector in India
4 Indian Stocks To Gain From Brexit

1. Motherson Sumi

  • Motherson Sumi Systems Limited (MSSL) the flagship company of the Motherson Group, was established in 1986 as a joint venture with Sumitomo Wiring Systems (Japan). The company is engaged primarily in the manufacture and sale of components to automotive original equipment manufacturers.
  • % Revenue from UK / Europe = 72%
  • Total revenue TTM = Rs.66,359 Cr
  • Thus, Revenue from UK / Europe = Rs.48,000 Cr, almost $7 Billion
  • Return on Capital Employed = 16.91%
  • Return on Equity = 15.42%
  • Though the current operating profit margin of the company is 8%, the highest operating margin in its peak operating efficiency was 11%.
  • Motherson is a leading supplier to Automotive Industry globally. As we have seen above, its almost 72% revenue comes from UK / Europe. Thus, with the successful Brexit Deal, Motherson Sumi could be benefited on account of is higher exposure from European market.

2. Balkrishna Industries

  • Balkrishna Industries is engaged in the business of manufacturing and selling of Off-Highway Tyres (OHT) in the specialist segments such as Agricultural, Industrial & Construction, Earthmovers & Port, Mining, Forestry, Lawn & Garden and All Terrain Vehicles (ATV).
  • % Revenue from UK / Europe = 53%
  • Total revenue TTM = Rs.4,800 Cr
  • Thus, Revenue from UK / Europe = Rs.2,250 Cr
  • Return on Capital Employed = 22.08%
  • Return on Equity = 17.22%
  • The current operating profit margin of the company is 24%.
  • It is one of the best company in Tyre sector, which could be benefited from the Brexit due to its diversified portfolio and considerably good exposure in Europe.

3. Tata Motors

  • Tata Motors is a leading global automobile manufacturing company. Its diverse portfolio includes an extensive range of cars, sports utility vehicles, trucks, buses and defence vehicles.
  • % Revenue from UK / Europe = 33%
  • Total revenue TTM = Rs.2,90,000 Cr
  • Thus, Revenue from UK / Europe = Rs.95,000 Cr, almost $13.5 Billion
  • Return on Capital Employed = 2.23%
  • Return on Equity = -1.80%
  • Though the current operating profit margin of the company is 8%, the highest operating margin in its peak operating efficiency was 15%.
  • Tata Motors has a strong global network of subsidiaries and associate companies, including Jaguar Land Rover in the UK. It would benefit the company amidst Brexit deal’s positive impacts on Indian firms.

4. Apollo Tyres

  • Apollo Tyres Limited is engaged in manufacturing and sale of automotive tires. The Company’s segments include India, Europe and Others. The Indian segment includes manufacturing and sales operations through India.
  • % Revenue from UK / Europe = 30%
  • Total revenue TTM = Rs.17,309 Cr
  • Thus, Revenue from UK / Europe = Rs.5,200 Cr
  • Return on Capital Employed = 8.74%
  • Return on Equity = 8.39%
  • The current operating profit margin of the company is 11%.
  • Along with Asia, Apollo Tyres is having manufacturing presence in Europe. As far as distribution is concerned, it has extensive distribution network with almost 3,550 dealer outlets in Europe, with a Global Marketing Office at London, UK. In early 2013, Apollo Tyres has opened its Global R&D centre in the Netherlands.

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