Auto Q3 Results Preview- Moderation In Demand Outlook Post Festive Season; M&M Among Axis Securities Top Picks

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Axis Securities Report

We expect earnings downgrades across companies on the back of weakness in global and domestic demand. We expect the tractor segment to perform better than the two-wheeler/passenger vehicle/commercial vehicle supported by favorable monsoons and higher water reservoir levels leading to revival in rural demand.

Additionally, export volume recovery will play a crucial role in earnings visibility in Q4 FY25 and beyond. PV sales are expected to moderate on a high base, while new product launches from certain OEMs in the SUV segment are anticipated to drive growth. However, sluggish demand may persist for entry-level vehicles.

For commercial vehicles, we anticipate low-single-digit growth and 2wo-wheeler/tractors may witness mid-to-high single-digit growth in the near term.

Better average selling price on crop realisation , wedding season demand and rural-focused government budget may uplift the rural ssentiments in the coming months.

Given these factors, we remain selective in our approach towards OEMs under our coverage. We prefer Eicher Motors, Maruti (and Mahindra and Mahindra – under soft coverage) in the OEMs; and Endurance Technologies, Sansera Engineering in the auto ancillary space.

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