Automobile industry scale up as per volume: Nitin Raheja

In a chat with ET NOW, Nitin Raheja, Chief Investment Officer, AQF Advisors, says economy in the automobiles industry starts to ramp up as per the volume.

ET Now: What is the sense that you are getting about individual names like Maruti and would the management’s clarifications over the weekend be enough for you to go out and buy into the stock?

Nitin Raheja: Well if you really look at it, it has been a little bit of give that they have done as such. Who knows what is going to be the mark up pricing as far as it is a private company, you are never really going to come to know what they market up and give it so and so forth.

The other concern that I really have is that, this whole business of automobiles is a business where the economies of scale start playing as you ramp up volume.

Now once you sourcing everything from outside from a different plant you really will not enjoy that whole jump up in margins going forward. So in that sense, that concern yet remains but especially considering the Japanese companies, I have not really been great wealth creators and Maruti has been an exception to that case.

ET Now: So you will not like to buy Maruti at 1860, 1850 is that what you are indicating?

Nitin Raheja: Yes.