|
Automobiles and Auto Ancillaries
n Automobile: Most companies under our
coverage are likely to report lackluster YoY revenue growth as volumes have
remained tepid. While the impact of INR depreciation in likely to be felt
in this quarter on higher cost for commodities and imported content, they
are likely to be partially offset by price increases taken early on in Q3.
Companies reporting the highest YoY revenue growth were MSSL (+22%), TTMT
(+30%) while MSSL, MSIL reported highest EBITDA growth of 51%, 45%
respectively.
n Outlook: Rural demand is expected to
remain buoyant on good harvest and farm realizations while recovery in
urban demand still remains elusive as per our channel checks. While signs
of recovery remain elusive, hopes are high - we prefer bottom up ideas
– HMCL (rural play and margin expansion), TTMT (play on global
recovery and new product cycle), AMRJ (diversified business and strong
revenue growth), and MSS (earnings growth).
Possible
Surprises: Positive
|
Company Name
|
EPS
(Rs)
|
YoY gr (%)
|
Reason
|
|
Tata Motors
|
9.1
|
72.3%
|
We are
factoring 10% QoQ growth for JLR which alongwith superior product
/geographic mix can support operating margin at 15.8%. Existing currency
hedges can offset unfavorable currency movement for the quarter
|
|
Motherson Sumi
|
2.6
|
39.9%
|
We are foreacasting stable margin for SMR/SMP operations
sequentially, however positive operating leverage impact due to stronger
than anticipated revenue growth can result in margin surprise
|
Possible
Surprises: Negative
|
Company Name
|
EPS
(Rs)
|
YoY gr (%)
|
Reason
|
|
Ashok Leyland
|
-0.7
|
NA
|
Margins could
surprise negatively given (a) continued higher discounting can further
impact realizations and (b) negative impact of operating leverage
|
|
