Automobiles Q3 Results Preview - Demand Largely Stable Post Festive Season, Supplies Improving: Motilal Oswal
Demand largely remained intact across segments, except for the entry-level passenger vehicle segment.
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Motilal Oswal Report
Q3 FY23 volumes were reasonably good, considering channel inventory filling for the festive season in Q2 FY23. Demand largely remained intact across segments, except for the entry-level passenger vehicle segment.
Stable demand environment in the domestic market, along with limited impact of supply-side issues, boosted wholesales.
In terms of wholesale volumes, PVs posted 19% YoY growth (down 10% QoQ), commercial vehicles saw 12.5% YoY growth (down 2% QoQ), two-wheelers volumes declined 6% YoY (down 22% QoQ) and tractors grew 10% YoY (up 6% QoQ).
This was despite the timing difference in the festive season (Diwali was in Nov in FY22).
We estimate margins to improve for the second quarter in a row, with 160 basis points YoY (up 40 bps QoQ) expansion in Ebitda margins for our auto original equipment manufacturer universe (excluding Tata Motors Ltd.), led by benefits of raw material cost moderation (down 100 bps YoY, down 70 bps QoQ).
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