Auto companies report strong earnings on back of softening commodity prices
The biggest gainers in 2023 so far are Tata Motors (up 15 percent), Bajaj Auto (up 8 percent) and M&M (up 8 percent), and Maruti (up almost 6 percent). This increase in stocks also suggests that there has been a bit of a comeback in the auto space.
Auto stocks have been in top gear this year with several domestic manufacturers like Tata Motors, Bajaj Auto, Mahindra and Mahindra (M&M) and Maruti Suzuki India placing themselves among the top gainers on the Nifty.
The biggest gainers in 2023 so far are Tata Motors (up 15 percent), Bajaj Auto (up 8 percent) and M&M (up 8 percent), and Maruti (up almost 6 percent). This increase in stocks also suggests that there has been a bit of a comeback in the auto space.
Key triggers
The earnings this time are very strong as most of the companies have risen above the street estimates and some earnings upgrades have come in as well. The companies are gaining from a low base of FY22, as well as from the benefit of softening commodity prices and operating leverage.
Beating street estimates in Q3
Tata Motors, M&M, Maruti, and Bajaj Auto are the companies that have beaten street estimates. Tata Motors reported its first profit in the last two years. For M&M, it had achieved the number one revenue market share for four consecutive quarters in a row.
Maruti recorded margins above 9 percent for two consecutive quarters and Bajaj Auto saw record high EBITDA in this quarter.
What's the way forward?
Motilal Oswal has put out a note stating the auto sector, in their coverage universe, saw 22 percent growth in the revenues and the top earnings upgrades in FY24 are expected from Tata Motors and Bajaj Auto.
Tata Motors they have upgraded earnings by 19 percent and Bajaj Auto by 6 percent.
Also Read | Eicher Motors’ Royal Enfield may see double-digit growth and margin expansion via price hikes: Analysts
(Edited by : Vivek Dubey)
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