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ICICI Securities Report
We expect automobile space to report Q3 FY24 YoY revenue/Ebitda/profit after tax growth of ~15%/~30%/~30% (excluding Tata Motors Ltd.), with equal contribution of revenue growth and recovery in Ebitdam.
Against ~12% volume growth in original equipment manufacturers, ~8-10% growth in average selling price and Ebitdam improvement, driven by reversion in raw material cost, would be the key triggers for earnings growth.
Growth would likely be more pronounced for auto ancillary players on a YoY basis as they are set to benefit from raw material reversal, strong operating leverage benefit and gradual exports revival.
We expect tyre players to deliver strong YoY earnings growth of ~70% plus. Sequentially, we expect earnings to decline for both OEMs and ancillary players due to seasonality.
Our top picks include: Mahindra and Mahindra Ltd. and Eicher Motors Ltd. in OEMS; CIE Automotive Ltd., Sansera Engineering Ltd. and Craftsman Automation Ltd. in ancillaries.
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