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Dolat Capital Report
Companies which are likely to show strong numbers in Q2 FY24 are– Lumax Industries Ltd., Ashok Leyland Ltd., Maruti Suzuki India Ltd. Subros Ltd., JBM Auto Ltd. and Asahi India Glass Ltd.
Weak Performers would be SML Isuzu Ltd., Escorts Kubota Ltd,. and Apollo Tyres Ltd.
The total revenue (excluding Tata Motors Ltd.) is expected to jump by 14 % YoY (+ 8 % QoQ).
Volume of two-wheelers grew 6% QoQ. Commercial vehicles and passenger vehicles grew 17 /9% QoQ. Despite high base, tractor is volume grew 10% YoY but down 20.8% QoQ.
Operating margin- (QoQ) Expect gross margin to remain stable, benefit of benign commodity prices would be offset by lower replacement volume. Ebitda margin is also expected to expand 13 bps QoQ to 13.4 % (excluding Tata Motors).
In tyre, two-wheeler replacement demand remains weak, but would be offset by higher volume from original equipment manufacturers and rise in export volume. Gross margin would go down sequentially due to weaker mix, offset by lower advertisement cost.
PVs dispatches remained strong in Q2; however, increasing inventory and discounts would be key concern for H2 FY24. Domestic two-wheeler business is still in a weaker zone, recovery in export to be key to watch.
In CV, after a strong growth in FY23, growth rate to moderate at 5-7% YoY in FY24. Recovery in metal prices could put pressure on H2 FY24 earnings.
Top picks in large cap: Maruti Suzuki, Mahindra and Mahindra Ltd. and Hero MotoCorp Ltd.
Top picks in smallcap: Sandhar Technologies Ltd., Lumax Industries and Subros, Steel Strip Wheels Ltd.
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