Emkay Global Financial Services has come with its September`12 quarterly earning estimates for auto and auto ancillaries sector. The research firms maintains neutral stance on the sector and believe auto ancillaries are a better investment theme at this point than OEMs.
- We expect the automobile OEM universe to report lackluster results in Q2 owing to poor volumes (demand environment) and continued pressure on margins from input cost and currency headwinds
- The relatively better performers within the sector are likely to be M&M (UV/LCV demand continues to hold on) and TTMT (driven by JLR). We expect auto ancillaries to report better results than OEMs driven by company specific factors like replacement demand (batteries), correction in prices of certain commodities (tyres) and turnaround of
subsidiaries (MSSL). - The relative disappointments during the quarter are likely to be Hero Motocorp and Maruti owing to the poor volume show reporting volumes dip of 14% and 9% YoY respectively.
- We expect our automobile universe to report a revenue growth of 14% YoY, -3% QoQ. EBITDA margins are expected to decline 30 bps QoQ to 12.0% owing to higher input costs and lower operating leverage. APAT growth will be restricted to flat YoY/ -7% QoQ
- To get a better sense of the domestic demand environment, if we consider only standalone business of TTMT in calculation of aggregates, then overall auto universe to report a revenue growth of 1% YoY, -4% QoQ. EBITDA margins are expected to decline 30 bps QoQ to 10.0% owing to higher input costs and lower operating leverage. APAT is expected to decline 11% both YoY & QoQ.
- Key things to focus in the sector at this time will be any signs of demand revival during the upcoming festive season, performance of new launches and any unfavorable movement in commodity/currency prices
- We maintain our neutral stance on the sector and believe auto ancillaries are a better investment theme at this point
than OEMs.
| Company | Net Sales (Rs mn) | APAT (Rs mn) | ||||
| Q2FY13 | Q1FY13 | Q2FY12 | Q2FY13 | Q1FY13 | Q2FY12 | |
| Amara Raja Batt | 6445 | 6938 | 5604 | 616 | 761 | 519 |
| Apollo Tyres | 30940 | 31647 | 28712 | 1542 | 1389 | 781 |
| CEBBCO | 1413 | 1690 | 1172 | 119 | 182 | 95 |
| Exide Industries | 14309 | 15536 | 11761 | 1471 | 1520 | 660 |
| Motherson Sumi | 62660 | 63880 | 23387 | 648 | 2090 | 986 |
| Ashok Leyland | 31888 | 30073 | 30946 | 947 | 670 | 1541 |
| Bajaj Auto | 48225 | 48657 | 52673 | 7556 | 7184 | 7926 |
| Eicher Motors | 15447 | 15850 | 14513 | 782 | 760 | 737 |
| Hero Motocorp | 50482 | 62473 | 58293 | 4062 | 6155 | 6036 |
| Mah & Mah | 96518 | 93674 | 73606 | 8747 | 7256 | 7373 |
| Maruti Suzuki | 79991 | 107782 | 78316 | 1925 | 4238 | 2404 |
| Tata Motors | 449599 | 433236 | 361975 | 32501 | 26854 | 23161 |
| TVS Motor | 16358 | 18198 | 19918 | 400 | 511 | 765 |
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