Automobiles Q3 Results Preview: Commercial Vehicles Could Outperform: HDFC Securities

Auto sector has underperformed the Nifty Index in Q3 due to concerns over rising inflationary pressures hurting demand momentum.

<div class="paragraphs"><p>Vehicles moving on road. (Photo: Malhar Garud /Unsplash)</p></div>
Vehicles moving on road. (Photo: Malhar Garud /Unsplash)

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HDFC Securities Institutional Equities

In Q3, while two-wheeler demand failed to pick up even in the festive season, passenger vehicle, tractor and commercial vehicle demand remained healthy. Supply chain constraints for major original equipment manufacturers seem to have eased QoQ. Export demand continues to be weak, given the geopolitical tensions.

Overall, we expect auto, auto ancillaries and tyre companies to see the benefit of softening input costs from Q3 onwards. Benefits from currency depreciation would become visible for the export-oriented companies.

However, the extent of margin expansion in Q3 would largely depend on volume growth QoQ as well as discounting trends in Q3.

We expect CV players to outperform two-wheeler and PV players in terms of QoQ earnings growth in Q3.

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HDFC Securities Institutional Equities Autos - Q3FY23 Results Preview.pdf

More Research Reports On Automobiles Sector Q3 FY23 Earnings Preview


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