Auto, Auto Ancillary Q3 Results Preview - Raw Material Tailwinds To Aid Margins: Nirmal Bang
Volume To See Sequential Decline.
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Nirmal Bang Report
We expect Q3 FY23 revenue of our auto and auto ancillary coverage companies to decline by 3% QoQ, affected by a decline in two-wheeler and passenger vehicle volume.
Original equipment manufacturer volume (excluding Jaguar Land Rover) declined by 2%/11% YoY/QoQ, mainly due to moderation of demand post a strong festival season and inventory corrections in two-wheeler and PV segments.
We are building in the low single-digit growth in realisations QoQ on the back of the price hikes taken by the OEMs. Revenue of our OEM coverage universe is expected to improve by ~22% YoY but decline by 5% QoQ.
Two-wheeler volume declined by 22% QoQ and 6% YoY in Q3 FY23 due to lower exports and inventory liquidation amid slow demand in the domestic market. In the PV segment, the demand scenario largely remained stable amid a strong response for the new models. However, demand for entry segment PVs continued to remain weak.
For tyre companies, revenue is expected to decline by 4% QoQ largely due to lower volume even as tyre companies had taken a price hike of 2-3% during Q3 FY23.
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