Automobiles Q2 Results Preview - Four-Wheelers To See Margin Boost: HDFC Securities

"BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities .The auto sector has underperformed the Nifty Index over the last six months due to concerns over rising inflationary pressures hurting the demand momentum. In this scenario, we believe companies with a strong product pipeline would be able to outperform the market and emerge as major beneficiaries of a softening commodity cycle. Our top picks for the sector are Mahindra and Mahindra Ltd., Maruti Suzuki India Ltd. and TVS Motor Company Ltd. In auto ancillaries, we like Bharat Forge Ltd..Given that the festive season this time has been pushed by a month into November, Q2 volume growth appears lower YoY. In passenger vehicles, while utility vehicle demand has held up extremely well, car demand has further decelerated, driving a rich mix for most original equipment manufacturers. Commercial vehicle demand momentum continues to be healthy in Q2. However, two-wheeler demand has failed to revive even in Q2. Two wheeler industry is estimated to decline 1% YoY in Q2. While two-wheeler exports seem to have bottomed out, recovery is likely to take a while given the adverse geopolitical trends. Within this, the entry-level commuter segment continues to underperform as rural recovery has remained elusive. Even the tractor segment has witnessed an estimated 3% YoY decline in volumes in Q2 due to sub-par monsoon..Auto ancillary companies set to benefit from benign input costs For Apollo Tyres Ltd., we expect both demand and margins to largely remain stable QoQ. For Balkrishna Industries Ltd., we expect margins to improve around 140 bps QoQ, led by softening input costs and a gradual pick-up in demand QoQ over a low base. For Endurance Technologies Ltd., we expect a 2% earnings decline QoQ due to weak demand in Europe. For Bharat Forge, the standalone entity is expected to see margin improvement led by steady revenue growth driven by execution of its defense exports order and PV exports ramp-up. Performance of overseas subsidiaries is also expected to improve QoQ..Click on the attachment to read the full report:.Auto, Auto Ancillary Q2 Results Preview- Commodity Tailwinds, Richer Product Mix To Boost Margins: Nirmal Bang.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Automobiles Q2 Results Preview - Four-Wheelers To See Margin Boost: HDFC Securities

Volume growth has decelerated in Q2 on seasonality; four-wheeler OEMs likely to post strong earnings growth.

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Automobiles Q2 Results Preview - Four-Wheelers To See Margin Boost: HDFC Securities

Volume growth has decelerated in Q2 on seasonality; four-wheeler OEMs likely to post strong earnings growth.

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