Shares of auto ancillary companies charged ahead on Thursday, with Igarashi Motors (India), Sterling Tools, Rane (Madras), Rane Brake Lining, Rane Holdings, Sundaram Brake Linings, India Nippon Electricals, and Lumax Auto Technologies ralling up to 20 per cent on the BSE in the morning trade. In comparison, the benchmark S&P BSE Sensex was down 0.07 per cent at 41,433 points at 10:35 am.
Individually, Minda Corporation, GNA Axles, Shivam Autotech, Banco Products (India), Lumax Industries, PPAP Automotive and Automotive Axles were up in the range of 5 per cent to 9 per cent on the BSE. Of the top 20 S&P BSE Allcap index gainers, 13 stocks are from the auto ancillary sector.
“After enduring tough 12 months, auto industry is seeing signs of stability across segment. This is partly driven by high discounts, improvement in availability of finance and rural sentiment improvement,” analyst at Motilal Oswal Financial Services said in automobile sector update.
“Indian automakers are all set to transition to Bharat Stage 6 (BS6) norms from April, 2020. After operating in a tough environment over the last 15 months, the auto industry now faces the last hurdle of BS-VI transition, post which it will likely be ‘business as usual’ from H2FY21,” the brokerage firm said.
Sterling Tools extended gains into second day, up 19 per cent to Rs 255, and surging 42 per cent in the past two trading days, after the company entered into a joint venture (JV) agreement with Jiangsu Gtake Electric Company, a China based company, to provide the Indian electric vehicle OEM’S with best in class motor control units (MCUs).
“The JV Company, which will commence production by Q1FY21, will be a subsidiary of Sterling Tools with an equity ratio of 51:44. The two companies have agreed to join hands to provide the Indian electric original equipment manufacturers (OEM’s) with best in class motor control units (MCUs),” Sterling Tools said in a regulatory filing on Monday after market hours.
Igarashi Motors (India), on the other hand, rallied 19 per cent to Rs 399 on the back of an over five-fold jump in trading volumes. A combined 6.02 million equity shares, representing 19 per cent of total equity of the company, have changed hands on the BSE and NSE so far. The stock is trading higher for the fifth straight day, zooming 67 per cent during the period.
On its part, the company clarified to the stock exchanges that it has no information/ announcement including pending announcement which may have bearing on the price/volume behaviour in the scrip across exchanges.