Automobiles sector results preview for Q3FY12: PINC

PINC Research has come with its December quarterly earning estimates for automobiles sector.

PINC Research earning estimates:

• Hero MotoCorp posted its highest ever quarterly volumes (up 2.9% QoQ) even as competitors Bajaj Auto and TVS Motor showed fatigue with volumes declining 7.6% and 12.3% QoQ respectively.
• The price hikes undertaken by manufacturers would enable them to maintain margins on a QoQ basis. Bajaj Auto's profitability is expected to get a 30bps QoQ boost due to the appreciating dollar.
• Maruti Suzuki had another dreadful quarter as labour unrest during Oct'11 hampered production leading to a 28% YoY decline in volumes. Despite a richer product mix, we expect margins to be impacted by the Yen appreciation vis-vis INR. Profits expected to half to Rs 2.7 billion.
• Ashok Leyland margins are expected to contract 70bps QoQ as the product mix has been diluted with the launch of the SCV 'Dost'. Profit is expected to decline 27% YoY to Rs1.1bn.
• M&M automotive and tractor volumes on a YoY basis grew 31.3% and 24% respectively. We expect QoQ margin expansion owing to price hikes undertaken and higher operating leverage.
• Sona Koyo is expected to report a modest 5% growth in topline as volume decline at principal client Maruti Suzuki is compensated by other OEMs. Margins expected to contract 30bps QoQ due to the impact of Yen appreciation.
• Apollo Tyres consolidated profit is expected to grow 78.1% QoQ as its European subsidiary which specializes in winter tyres has its peak season.

Company	Revenue			PAT			Reco
	Rs mn	QoQ%	YoY%	Rs mn	QoQ%	YoY%
Bajaj Auto	49,414	-6.2	18.3	7,815	-1.2	17.2	BUY
Hero Motocorp	60,604	4	17.4	6,190	2.6	27.7	ACCU.
TVS Motor	17,707	-11.1	7.5	549	-28.2	-1.5	BUY
Ashok Leyland	28,325	-8.5	27.2	1,120	-27.3	158.2	BUY
M&M	83,001	12.8	35.6	6,584	-10.7	6.7	BUY
Maruti Suzuki	76,314	-2.6	-19.6	2,717	13	-51.9	ACCU.
Apollo Tyres	30,657	6.8	29.4	1,392	78.1	15.2	ACCU.
Sona Koyo	2,871	5.4	5.2	78	14.7	-10.9	BUY

* ACCU. = Accumulate

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.