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ICICI Securities Report
We expect a robust Q2 FY24 across the segments on a YoY-basis – overall earnings growth expected at ~40% (excluding Tata Motors Ltd.).
With the semiconductor shortage impacting production in Q2 FY23 and input commodity costs rationalising since then, other than gradual price hikes by the players in due course, earnings growth would look robust YoY.
After supply-chain and weather related issues, export dependent manufacturers would continue to see limited demand traction QoQ in export revenues, be it two-wheeler makers, ancillary makers or tyre exporters, as a weak macro setting in target markets is hampering demand revival.
We believe the current ~40% plus YoY earnings growth trend is set to recede and align more with revenue growth levels within the next couple of quarters, as Ebitdam is expected to stabilise at current levels across segments, including commercial vehicles, in FY25.
Our top picks:
Mahindra and Mahindra Ltd. and TVS Motor Company Ltd, in original equipment manufacturers; CIE Automotive India Ltd., Sansera Engineering Ltd. and Craftsman Automation Ltd. in ancillaries.
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