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

The Economic Times - - The Jait­ley In­ter­view -

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.

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