PVs, Two-Wheelers To See Double-Digit Revenue Growth, CVs Catching Up | Auto Sector Q4 Preview
Among tyre companies, this quarter is all about margin resurgence as seen in the past couple of quarters.
Top automobile companies are expected to report robust results in the fourth quarter of fiscal 2024. Passenger vehicles and two-wheeler players are estimated to see double-digit growth in revenue, according to Bloomberg estimates. Commercial vehicles, on the other hand, are expected to see margin expansion.
Passenger Vehicles
Maruti Suzuki India Ltd. is expected to outperform its peers and expects to report double-digit growth in revenue, as well as margin on a year-on-year and monthly basis. While revenue is expected to grow upwards of 20%, margin will show roughly 190 basis points increase compared to last year.
Tata Motors Ltd. is expected to report double-digit revenue growth, while building on the margin growth shown in the first three quarters of FY24. These estimates include numbers from its commercial vehicle division as well.
While Mahindra & Mahindra Ltd. will show mid-single digit growth, with margin expected to remain flat.
Two-Wheelers
Two-wheeler makers are expected to witness double-digit growth in revenue as well. Hero MotoCorp Ltd. will be the only laggard showing low double-digit revenue growth, while Bajaj Auto Ltd. and TVS Motor Co. are expected to cross 20% growth.
Margin for TVS Motors is expected to expand by 80 basis points, while Bajaj Auto will maintain its high-teen margin to end FY24.
Eicher Motors Ltd., including VECV numbers, is also expected to report mid double-digit growth, while maintaining margin.
Tyre Companies
Among tyre companies, this quarter is all about margin resurgence as seen in the past couple of quarters.
The biggest margin growth is expected in JK Tyre and Industries Ltd., with roughly 500 bps growth, while Apollo Tyres Ltd. and Ceat Ltd. are expected to show between 50-180 bps growth in margin.
Apollo Tyres, specifically, is expected to report fall in revenue growth due to lower average selling prices. Other players are expected to show mid to high single-digit revenue growth.
Commercial Vehicle And Tractor Maker
Ashok Leyland Ltd. is expected to report record margin, roughly close to 13% for the quarter. Over the past few quarters, it has shown better product mix, while also keeping costs under control, supported by commodity costs.
Escorts Kubota Ltd. will show low single-digit revenue growth, while margin will remain range-bound as seen in the first three quarters of FY24. Going forward, the commentary would be key for the company, since the year has been a washout for all tractor makers.
Brokerage Views
Excluding Tata Motors, auto companies would show roughly 25-30% Ebitda and PAT growth, according to Elara Capital. Bajaj Auto is the brokerage's top pick.
Nomura expects Maruti Suzuki, Bajaj Auto and TVS Motors to see the biggest growth in revenue. It has a 'buy' on M&M, but expects that the company could surprise on earnings negatively.
Most two-wheeler makers will see high double-digit Ebitda and PAT growth, while Ashok Leyland would see similar trends on the back of operating leverage, according to ICICI Securities Ltd. It has a 'buy' on Eicher and M&M and a 'reduce' on Tata Motors.
Citi expects Maruti to outperform and reaffirmed it as its top pick. It also expects TVS Motors to be impacted by higher competitive intensity in EVs, impacting margin. The brokerage maintained a 'buy' on Ashok Leyland, Maruti Suzuki, Eicher Motors, Hero Motocorp, M&M and Apollo Tyres.