Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobiles
India
2QFY12 results preview. We expect a weak quarter for auto companies driven by raw
material cost pressures. We estimate revenues to increase by 17% yoy and 4% qoq for
companies under our coverage but expect EBITDA margins to decline by 140 bps yoy
due to raw material cost pressures and adverse product mix. For our coverage universe
we expect adjusted earnings (excluding forex translation losses on foreign debt) to
decline by 3% yoy but improve by 3% qoq.
Raw material cost pressures to continue in 2QFY12 before declining from 3QFY12
We expect EBITDA margins to remain under pressure and decline by 140 bps yoy in 2QFY12 for
the companies under our coverage due to fixed steel contracts and increase in tyre prices. Decline
in aluminium prices is likely to partially offset impact of raw material cost pressures for Bajaj Auto,
Hero Motocorp and Maruti Suzuki, in our view. We expect raw material prices to decline in
3QFY12 as benefits of decline in natural rubber prices are passed on by tyre companies to OEMs.
We expect currencies to remain neutral for this quarter except for forex translation losses on
foreign debt, which is likely to impact Ashok Leyland, Bharat Forge and Tata Motors in 2QFY12.
Sharp appreciation of Yen versus Rupee in this quarter will likely impact Maruti Suzuki in 3QFY12
as direct imports have been hedged at favorable rates till October while currency impact on
indirect imports comes with a quarter lag.
Bajaj Auto, Hero Motocorp, Bharat Forge and M&M likely to report positive growth in earnings
We expect Bajaj Auto to outperform peers in terms of earnings growth in 2QFY12 driven by 16%
yoy growth in volumes, neutral product mix and benefit of decline in aluminium prices. Hero
Motocorp’s EBITDA margins are likely to decline by 50 bps qoq due to rebranding expenses
impacting the company in this quarter but earnings are expected to increase by 8% yoy due to
20% yoy growth in volumes.
M&M’s earnings growth is likely to remain muted at 5% yoy despite a 42% yoy growth in
revenues due to an 80 bps decline in EBITDA margins (higher share of utility vehicles + Maxximo +
Gio in the mix), higher depreciation expenses and lower dividend income from subsidiaries. We
expect Bharat Forge to report 84% yoy growth in earnings boosted by strong domestic, non-auto
and exports growth.
Ashok Leyland, Tata Motors, Exide and Maruti Suzuki to report negative earnings growth
We expect Maruti Suzuki’s earnings to decline by 35% yoy due to a sharp fall in volumes, adverse
product mix and increase in discounts. Ashok Leyland is also likely to report a sharp yoy decline in
profits due to a 6% yoy decline in volumes and raw material cost pressures. Exide Industries is also
likely to be impacted due to adverse product mix and decline in profitability of the industrial battery
business while Tata Motors’ earnings are likely to be muted due to a yoy decline in JLR’s operating
margins.
We remain selective in the sector
We remain selective in the sector and prefer stocks with inexpensive valuations. M&M, Tata Motors
and Maruti Suzuki remain our preferred picks in the space. We believe Maruti could face near-term
pressures due to decline in volume growth and margin pressure before volumes start improving
from 1QFY13E.
2QFY12 results preview: Margin pressures likely to weigh on earnings growth
We expect a weak quarter for auto companies driven by raw material cost pressures. We
estimate revenues to increase by 17% yoy and 4% qoq for companies under our coverage
but expect EBITDA margins to decline by 140 bps yoy due to raw material cost pressures and
adverse product mix. Raw material costs are expected to decline from 3QFY12 as most auto
companies have contracts on steel till October and tyre prices are expected to soften with a
quarter lag. Decline in aluminium prices will likely more than offset impact of rise in tyre
prices this quarter for Bajaj Auto, Hero Motocorp and Maruti Suzuki. For our coverage
universe we expect adjusted earnings (excluding forex translation losses on foreign debt) to
decline by 3% yoy but improve by 3% qoq.
We expect Bajaj Auto, Hero Motocorp, Mahindra and Mahindra and Bharat Forge to report
positive yoy earnings growth while Ashok Leyland, Maruti Suzuki, Tata Motors and Exide
Industries are likely to report a decline in earnings.
We expect currencies to remain neutral for this quarter except for forex translation losses on
foreign debt which is likely to impact Ashok Leyland, Bharat Forge and Tata Motors in
2QFY12. Sharp appreciation of Yen versus Rupee in this quarter will likely impact Maruti
Suzuki in 3QFY12 as direct imports have been hedged at favorable rates till October while
currency impact on indirect imports comes with a quarter lag.
We expect Bajaj Auto to outperform peers in terms of earnings growth in 2QFY12 driven by
16% yoy growth in volumes, neutral product mix and benefit of decline in aluminium prices.
Hero Motocorp’s EBITDA margins are likely to decline by 50 bps qoq due to rebranding
expenses impacting the company in this quarter.
M&M’s earnings growth is likely to remain muted at 5% yoy despite a 42% yoy growth in
revenues due to an 80 bps decline in EBITDA margins (higher share of utility vehicles +
Maxximo + Gio in the mix), higher depreciation expenses and lower dividend income from
subsidiaries. Tata Motors’ earnings are likely to be muted due to a yoy decline in JLR’s
operating margins. Ashok Leyland is also likely to report a sharp yoy decline in profits due to
a 6% yoy decline in volumes and raw material cost pressures.
We expect Bharat Forge to report 84% yoy growth in earnings boosted by strong domestic,
non-auto and exports growth. Maruti earnings are expected to decline sharply due to a
sharp fall in volumes, adverse product mix and increase in discounts. Exide Industries is also
likely to show a sharp decline in earnings due to adverse product mix and decline in
profitability for the industrial battery business
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobiles
India
2QFY12 results preview. We expect a weak quarter for auto companies driven by raw
material cost pressures. We estimate revenues to increase by 17% yoy and 4% qoq for
companies under our coverage but expect EBITDA margins to decline by 140 bps yoy
due to raw material cost pressures and adverse product mix. For our coverage universe
we expect adjusted earnings (excluding forex translation losses on foreign debt) to
decline by 3% yoy but improve by 3% qoq.
Raw material cost pressures to continue in 2QFY12 before declining from 3QFY12
We expect EBITDA margins to remain under pressure and decline by 140 bps yoy in 2QFY12 for
the companies under our coverage due to fixed steel contracts and increase in tyre prices. Decline
in aluminium prices is likely to partially offset impact of raw material cost pressures for Bajaj Auto,
Hero Motocorp and Maruti Suzuki, in our view. We expect raw material prices to decline in
3QFY12 as benefits of decline in natural rubber prices are passed on by tyre companies to OEMs.
We expect currencies to remain neutral for this quarter except for forex translation losses on
foreign debt, which is likely to impact Ashok Leyland, Bharat Forge and Tata Motors in 2QFY12.
Sharp appreciation of Yen versus Rupee in this quarter will likely impact Maruti Suzuki in 3QFY12
as direct imports have been hedged at favorable rates till October while currency impact on
indirect imports comes with a quarter lag.
Bajaj Auto, Hero Motocorp, Bharat Forge and M&M likely to report positive growth in earnings
We expect Bajaj Auto to outperform peers in terms of earnings growth in 2QFY12 driven by 16%
yoy growth in volumes, neutral product mix and benefit of decline in aluminium prices. Hero
Motocorp’s EBITDA margins are likely to decline by 50 bps qoq due to rebranding expenses
impacting the company in this quarter but earnings are expected to increase by 8% yoy due to
20% yoy growth in volumes.
M&M’s earnings growth is likely to remain muted at 5% yoy despite a 42% yoy growth in
revenues due to an 80 bps decline in EBITDA margins (higher share of utility vehicles + Maxximo +
Gio in the mix), higher depreciation expenses and lower dividend income from subsidiaries. We
expect Bharat Forge to report 84% yoy growth in earnings boosted by strong domestic, non-auto
and exports growth.
Ashok Leyland, Tata Motors, Exide and Maruti Suzuki to report negative earnings growth
We expect Maruti Suzuki’s earnings to decline by 35% yoy due to a sharp fall in volumes, adverse
product mix and increase in discounts. Ashok Leyland is also likely to report a sharp yoy decline in
profits due to a 6% yoy decline in volumes and raw material cost pressures. Exide Industries is also
likely to be impacted due to adverse product mix and decline in profitability of the industrial battery
business while Tata Motors’ earnings are likely to be muted due to a yoy decline in JLR’s operating
margins.
We remain selective in the sector
We remain selective in the sector and prefer stocks with inexpensive valuations. M&M, Tata Motors
and Maruti Suzuki remain our preferred picks in the space. We believe Maruti could face near-term
pressures due to decline in volume growth and margin pressure before volumes start improving
from 1QFY13E.
2QFY12 results preview: Margin pressures likely to weigh on earnings growth
We expect a weak quarter for auto companies driven by raw material cost pressures. We
estimate revenues to increase by 17% yoy and 4% qoq for companies under our coverage
but expect EBITDA margins to decline by 140 bps yoy due to raw material cost pressures and
adverse product mix. Raw material costs are expected to decline from 3QFY12 as most auto
companies have contracts on steel till October and tyre prices are expected to soften with a
quarter lag. Decline in aluminium prices will likely more than offset impact of rise in tyre
prices this quarter for Bajaj Auto, Hero Motocorp and Maruti Suzuki. For our coverage
universe we expect adjusted earnings (excluding forex translation losses on foreign debt) to
decline by 3% yoy but improve by 3% qoq.
We expect Bajaj Auto, Hero Motocorp, Mahindra and Mahindra and Bharat Forge to report
positive yoy earnings growth while Ashok Leyland, Maruti Suzuki, Tata Motors and Exide
Industries are likely to report a decline in earnings.
We expect currencies to remain neutral for this quarter except for forex translation losses on
foreign debt which is likely to impact Ashok Leyland, Bharat Forge and Tata Motors in
2QFY12. Sharp appreciation of Yen versus Rupee in this quarter will likely impact Maruti
Suzuki in 3QFY12 as direct imports have been hedged at favorable rates till October while
currency impact on indirect imports comes with a quarter lag.
We expect Bajaj Auto to outperform peers in terms of earnings growth in 2QFY12 driven by
16% yoy growth in volumes, neutral product mix and benefit of decline in aluminium prices.
Hero Motocorp’s EBITDA margins are likely to decline by 50 bps qoq due to rebranding
expenses impacting the company in this quarter.
M&M’s earnings growth is likely to remain muted at 5% yoy despite a 42% yoy growth in
revenues due to an 80 bps decline in EBITDA margins (higher share of utility vehicles +
Maxximo + Gio in the mix), higher depreciation expenses and lower dividend income from
subsidiaries. Tata Motors’ earnings are likely to be muted due to a yoy decline in JLR’s
operating margins. Ashok Leyland is also likely to report a sharp yoy decline in profits due to
a 6% yoy decline in volumes and raw material cost pressures.
We expect Bharat Forge to report 84% yoy growth in earnings boosted by strong domestic,
non-auto and exports growth. Maruti earnings are expected to decline sharply due to a
sharp fall in volumes, adverse product mix and increase in discounts. Exide Industries is also
likely to show a sharp decline in earnings due to adverse product mix and decline in
profitability for the industrial battery business
No comments:
Post a Comment