Tata Motors may report narrowing of losses for the December quarter while Maruti Suzuki and Mahindra & Mahindra (M&M) may post strong bottom line growth in the quarter gone by, suggests quarterly projections by domestic brokerage Prabhudas Lilladher (PL).
The brokerage has a target of Rs 520 on Tata Motors, Rs 10,000 on Maruti Suzuki and Rs 1,560 on M&M for now, PL said the premiumisation trend will continue to play out across segments: In the personal vehicle segment, it sees OEMs with focus on SUVs such as M&M and Tata Motors to continue to do well. Maruti Suzuki, it said, is expected to do well given strong distribution reach and sustained demand in New Brezza and Grand Vitara.
PL said OEMs in the passenger vehicle segment continue to service their healthy order book, although electronic component supplies were still not back to normal levels – which affected production for some OEMs.
Data showed Nifty Auto index outperformed Nifty in 2022, by rising 15 per cent against a 4 per cent rise for Nifty during the same period. This, PL said, was on the back of improving sentiment for the sector, driven by semiconductor supply easing out, expectations of gross margin improvement and successful new model launches.
Tata Motors
For the December quarter, PL sees consolidated sales for Tata Motors at Rs 82,795.80 crore, up 14.6 per cent YoY over Rs 72,229.30 crore in the year-ago quarter. It sees Q3 losses at Rs 54.90 crore compared with Rs 1,602.30 crore in the year-ago quarter. Ebitda is seen rising 8.8 per cent to Rs 9,852.70 crore from Rs 9,056.80 crore YoY, but margin is seen falling to 11.9 per cent from 12.5 per cent YoY.
“Tata Motors’ standalone revenue may decline 2.5 per cent QoQ, owing to 4.5 per cent drop in volumes. Ebitda margin to expand 60 bps as raw material cost easing out. We expect JLR volumes to grow in mid-single digit led by servicing of order book and semiconductor supply improving,” it said.
Maruti Suzuki
In case of Maruti Suzuki, PL expects profit to jump 88 per cent YoY to Rs 1,903.10 crore compared with Rs 1,011.30 crore YoY. Sales are seen rising 17.7 per cent to Rs 27,356.80 crore from Rs 23,246 crore YoY. Ebitda is seen rising 70 per cent YoY to Rs 2,653.60 crore from Rs 1,559 crore. Margin jumping 300 bps to 9.7 per cent from 6.7 per cent YoY.
“Maruti’s revenue may decline 9 per cent QoQ, led by 10 per cent drop in volumes. We expect Ebitda margin expansion of 40 bps QoQ on the back of RM cost easing out and price hikes,” it said.
Mahindra & Mahindra
M&M is expected to report 26 per cent YoY rise in net profit at Rs 1,705.20 crore from Rs 1,353.10 crore in the year-ago quarter. Sales are seen rising 42.5 per cent YoY to Rs 21,712.90 crore from Rs 15,238.80. Ebitda is seen rising 52.7 per cent YoY to Rs 2,757.50 crore from Rs 1,805.80 crore. Margin is seen at 12.7 per cent against 11.9 per cent YoY.
“We expect 4 per cent increase in revenue largely led by 3 per cent increase in volumes and change in product mix. Ebitda margins to improve led by easing RM costs and higher share of SUVs in the mix. PAT growth YoY to be lesser than Ebitda growth, considering lower other income (down 50 epr cent) and higher depreciation (up 20 per cent),” PL said.
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