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These auto shares, including Tata Motors, Ashok Leyland, will earn, companies expect earnings to increase in Q4

According to the report of the brokerage house, pressure can be seen on two wheelers, but in other categories, double digit growth is expected. Commercial vehicle may outperform.

Auto Sector Q4FY22 Preview: The automobile industry has been an underperformer for a long time. The industry was affected due to the first BS4 to BS6 conversion and later the Kovid 19 lockdown. While the sector was trying to get out of the challenges of Kovid 19, then the difficulties have increased once again due to the shortage of semiconductors. Now the market is eyeing the results for the fourth quarter of FY 2022. The March quarter results will give a fair idea of ​​the outlook for the sector. At present, experts and brokerage houses are giving earnings estimates of the auto sector. According to the report of brokerage house ICICI Securities, two wheelers may see pressure right now, but in other categories, double digit growth is expected. In these too the commercial vehicle segment can outperform.

Strong demand in passenger vehicle segment

According to brokerage house ICICI Securities, there is a rapid improvement in economic activities. The commercial vehicle segment is cyclical recovery. There is a good pickup in volumes in retail sales (March 2022 retail at 93% of pre-covid levels). On the other hand, despite the shortage of semiconductors, rising raw material prices and costlier crude, there remains strong demand in the passenger vehicle segment.

CV space can outperform

According to the brokerage, the overall volumes of the industry is expected to decline by 3.6 per cent on a quarterly basis during Q4FY22. There is pressure in the 2-W space. Its volume can see a decline of 8 percent on a quarterly basis. However, the brokerage house believes that all other categories (except tractors) can see double digit returns on a quarterly basis. In this too, 20 percent growth can be seen in the CV space.

volume growth

In the 2-W space on the OEM front, Eicher Motors may outperform its peers. The company’s RE volumes grew by 9.5 per cent on a quarterly basis. Hero MotoCorp’s volume declined by 8 per cent on a quarterly basis. While the overall volume of Baja Auto has declined by 17.3 percent. In the PV domain, Maruti Suzuki has witnessed a 13.5 per cent quarter-on-quarter growth in volumes. The volume (PV+CV) of Tata Motors (TML) has increased by 22 percent to 2.4 lakh units. M&M volumes grew by 28.7 per cent. Ashok Leyland saw a growth of 43 percent in volume. The sales of the OEM universe grew by 7.6 per cent in QoQ.

Which stocks to invest in

(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of Markets are risky, so take expert opinion before investing.)

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