Financial services firm Jefferies stated that the auto industry wholesales performed well in the fourth quarter, and expects aggregate revenues for the original equipment manufacturers (OEMs) that the brokerage firm has covered to grow 36 percent year-on-year (YoY).
The brokerage note stated: "The margins should contract by 110 basis points sequentially due to higher commodity prices. We expect aggregate earnings before interest, taxes, depreciation, and amortization (EBITDA) to fall 10 percent quarter-on-quarter, despite the automotive sector's 41 percent YoY growth.
Jefferies said M&M, Bharat Forge, and Motherson Sumi are expected to see profits increase by 2-3 times YoY. It also said profit for TVS and Eicher Motors could increase by 80-104 percent YoY and 2-15 percent YoY for Bajaj Auto, Hero Moto, and Maruti.
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The firm expects the fourth quarter aggregate recurring profit for its covered OEMs to rise 39 percent YoY. According to the brokerage, Ashok Leyland should report a profit of Rs 160 crore as compared to a loss last year.
The Indian automobile sector had a positive month in March 2021, as most automakers posted significant revenue growth compared to March 2020. This increase can be attributed to unexpectedly low sales in March 2020 due to the lockdown in the last week of the month due to the COVID-19 outbreak in the country.
Last month, only four-wheelers and tractors had an increase in sales from the previous month. Registrations for passenger vehicles increased by 28.39 percent, from 2,17,879 units in March 2020 to 2,79,745 units last month.
(Edited by : Jomy)
First Published: Apr 9, 2021 6:23 PM IST
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