Top Auto Stocks to Watch Out for in March Quarter
The automobile sector is not out of the woods yet and investors should brace themselves for a mixed set of numbers
ETMarkets.com: The auto sector is not out of the woods yet, and investors should brace for a set of mixed numbers from the auto companies in the March quarter. ETMarkets.com collated views from various brokerages firms on the top stocks from the auto sector for the quarter ended March 31: 13.3% YoY fall in the net profit to ₹ 11,135 crore for the quarter ended March compared to ₹ 12,842 crore in the year-ago period. Reliance Securities assumes 116 bps YoY contraction in EBITDA margin due to limitedvolumegrowthandexpected increase in marketing costs.
Reliance Securities said the JLR business is expected to register 11.7% YoY and 1.6% QoQ in- crease in volumes and expect company to register 30 bps QoQ contraction in EBITDA margin to 14.1% (IFRS).
DuringthequarterTVSMotorregistered 9.3% YoY increase in volumes and 5.9% QoQ decline in the volumes, said the Reliance Securities report. The export volumes were down 18.2% QoQ, the three-wheeler volumesweredownby6.9%QoQ, it said.
Reliance Securities is of the view that the sharp increase in volumes is likely to reflect in decent expansion in EBITDA margin. On YoY basis, EBITDA margin is expected to expand by 255 bps on the back of robust volume growth.
Reliance Securities said the two- wheeler maker may register 11.5% YoY increase in volumes and 8.3% QoQ decline in volumes.
Kotak Securities expects M&MandMVMLtoreport9% increase in revenues, supported by volume growth in auto and tractor segment. Operating margins during the quarter are expected to be impacted due to completion of excise duty benefit at the Haridwar plant.
KotakSecuritiessaidmutedrevenue growthandfallinEBITDAmarginis expected to impact standalone performance in 4QFY16. It expects performancetoimproveinsubsidiaries.
Kotak Securities said weak demand, high discounts, losses in other segments will likely keep operating margin low.