Automakers Q4 Results Preview: Kotak Securities Sees Rise In Revenue, Operating Profit

The brokerage expects revenues of companies under its coverage to rise 14% year-on-year in Q4.

<div class="paragraphs"><p>Hero MotoCorp bikes. (Source: Company website)</p></div>
Hero MotoCorp bikes. (Source: Company website)

The revenue and operating profit of Indian automakers is expected to rise in the quarter ended March over a year ago led by increased volumes of two-wheelers and passenger cars.

That's according to a note by Kotak Securities, which forecast the fourth quarter earnings for companies under its coverage.

Here's what the note said:

Revenue Growth

The brokerage expects revenues of companies under their coverage to increase 14% year-on-year in the fourth quarter.

This will be led by:

  • 27% year-on-year growth in volumes of two-wheeler makers.

  • High single-digit growth compared to last year in the passenger vehicle segment’s production volumes.

  • Mid-to-high single-digit increase in average selling price due to price rises and richer product mix.

EBITDA Momentum Across Segments

Kotak Securities expects operating profit for companies under its coverage to rise 33% over the last year led by raw material tailwinds and operating leverage benefits.

While the metric may fall for Bajaj Auto Ltd. and TVS Motor Co. sequentially, Hero MotoCorp Ltd. and Eicher Motors Ltd. are expected to report quarterly growth.

Among four-wheeler makers, Maruti Suzuki Ltd.'s Ebitda will grow 54% during the fourth quarter. Peers M&M Ltd. and Tata Motors Ltd., too, will witness Ebitda growth, but in lower single digits.

Commercial vehicle makers are expected to report a better quarter sequentially amid higher seasonal demand Ashok Leyland Ltd. and Tata Motors are forecasted to report 39% and 34% quarterly Ebitda growth, respectively.

Top Picks

The brokerage listed M&M, Tata Motors, Motherson Sumi and bearing companies as its top picks. It expects Maruti Suzuki and Eicher Motors to report improved operating  performance.