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Nirmal Bang Report
We expect Q4 FY22 earnings of auto and auto ancillary companies in our coverage universe to be affected by lower volumes and sustained input cost headwinds, leading to margin pressure.
Revenue for our coverage universe is expected to decline by ~1% YoY due to weak demand scenario for two-wheelers and supply chain constraints for passenger vehicle volume. However, recovery in commercial vehicle volumes and higher average selling prices will aide revenue.
Two-wheeler original equipment manufacturers have posted a volume decline of ~17% YoY while CV and PV OEMs have posted positive volume growth.
Overall OEM revenue is expected to decline by 1% YoY while the auto ancillary universe's revenue is expected to grow by 5% YoY.
We anticipate gross margin contraction of up to 250 basis points on a QoQ basis due to continued raw material cost pressures.
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