The earnings season for the fiscal fourth quarter has begun, with major IT services companies already announcing their Q4 results. This week, the auto sector will start reporting its figures. On April 25 (Friday), Maruti Suzuki India is set to release its Q4FY25 figures. Brokerage firms indicate that volume growth in Q4 will likely be modest across most segments, except for tractors and 2Ws, which excelled during the quarter under review.
According to analysts, the growth in volume within the automobile industry is anticipated to stay moderate across all segments, except tractors, which excelled in Q4 due to favorable customer sentiments and the early start of the festive season. Nuvama stated, “We believe that tractor/2W is in a better position, with volumes expected to increase in the high single digits over FY25–27E, compared to low single digits for PV/CV. We favor companies that have greater domestic exposure and are gaining market share. Domestic tractor volumes increased by about 17 percent year-on-year. The analysis report indicates that revenue is expected to grow 18% YoY for MM’s farm division and 16% for ESCORTS, supported by the merger with Kubota Agri Machinery and Escorts Kubota India entities.
It stated that while exports have increased by about 23% year over year, domestic 2W volumes have increased by 1% year over year. “We anticipate strong revenue growth in Q4 for market share gainers, including TVSL at 15% and EIM RE at 23%. BJAUT/HMCL, on the other hand, will increase by 6% and 2%, respectively.
Although most equities now appear to be priced in, Nomura stated that its domestic volume forecasts for domestic OEMs could have a 5% downside risk from US tariffs. “In our opinion, the downside risks should be minimized by prospective tailwinds including lower interest rates, lower income taxes, and possible drops in oil prices. “Any decline in commodities may also support earnings,” it stated.
Key standards and metrics for major carmakers
Maruti Suzuki India: According to Nuvama, revenue growth year over year will be supported by volume growth and higher realisation. Due to increased other costs (Auto exhibition and E-vitara launch), the EBITDA margin is anticipated to decline somewhat. The demand outlook and the timing for new products are important factors to keep an eye on.
Tata Motors: According to Nuvama, revenue will remain unchanged year over year. It further stated that the reduced JLR margin would cause the EBITDA margin to shrink, even though the India CV/PV margin improved. The JLR demand and margin outlook is a crucial factor to keep an eye on.
Hero Motocorp’s revenue growth YoY to be bolstered by a rise in realization. Higher marketing expenses will result in a decline in the EBITDA margin. It also stated that the demand outlook and the schedule for new releases are the most important factors to keep an eye on.
TVS Motors: YoY revenue increase will be bolstered by volume growth. Due to a favorable regional mix, benign currency, and PLI incentives, the EBITDA margin will increase on a higher gross margin. Demand prognosis and e-mobility projects are important items to keep an eye on.
Mahindra & Mahindra: improved realization and higher auto/farm volumes will underpin strong revenue growth. Better tractor segment margins will lead to an expansion of the EBITDA margin. The demand outlook for both passenger cars and tractors is are important factor to keep an eye on.
Ashok Leyland: According to Nuvama, revenue is expected to increase by double digits year over year due to improved product mix and volume growth. The EBITDA margin will increase due to cost reductions and price control. The forecast for CV demand is a crucial factor to be aware of.
Eicher Motors: According to Nuvama, a strong volume will help revenue increase year over year. When the gross margin declines and marketing expenditures increase, the EBITDA margin will decrease. The demand outlook for the current main models is one of the most important things to keep an eye on.
