Kotak expects EBITDA margin to decline by 120 bps YoY in the September quarter due to negative operating leverage.
Hit by weak demand, utility vehicle and tractor-maker Mahindra and Mahindra is likely to report a double-digit decline in the September quarter earnings later on November 8.
The stock has corrected 28 percent year-to-date and during the quarter also, it was down 16.6 percent.
Brokerage houses expect the profit to fall in the range of 12-40 percent year-on-year and revenue is likely to decline more than 11 percent compared to the year-ago period.
Overall volumes in Q2FY20 declined by 16 percent YoY led by 8 percent fall in tractor volumes and 21 percent drop in auto volumes.
"We expect revenues to decline by 11 percent YoY in Q2FY20," said Kotak Institutional Equities, which expects profit to fall 25 percent YoY.
Motilal Oswal, which expects a 12.4 percent drop in profits, said the company's realisation was expected to improve 3.7 percent YoY (down 1 percent QoQ), as the impact of price increase would partly be offset by the product mix.
At operating level, Kotak expects EBITDA margin to decline by 120 bps YoY due to negative operating leverage.
Motilal Oswal has cut its consolidated EPS for FY20/21 by 20.4 percent/12 percent, as it cut volumes by 11 percent/5.5 percent to factor in uncertainties in the utility vehicle volumes."We cut FY20/21 margins by 130bp/50bp each to 14 percent/13.5 percent due to operating deleverage and BS6 challenge and also factoring in the corporate tax rate cut benefits," said the brokerage, which maintained a buy call on the stock.